If you’ve been thinking about starting a small business, going freelance, or becoming a sole proprietor, you’re not alone: According to the U.S. Census Bureau, Americans submitted 5 million new business applications in 2022 (down only slightly from a record high of 5.4 million applications the year before).
But what type of business will thrive in this (or any) economy? Is there such a thing as a recession-proof small business? Though there’s no foolproof answer, some small businesses tend to fare better than others no matter what the economy does.
We’ve gathered some proven, recession-proof business ideas to help you prepare in the event of a downturn, plus a few tips to help you bake some resiliency into your own new (or existing) venture.
What Is a Recession-Proof Business?
Growing a business in any economy can be a challenge—and no venture is completely recession-proof. That’s because almost all new entrepreneurs require some amount of funding along with a raft of skills to launch, market, and keep a successful business running efficiently.
However, some businesses seem better equipped to withstand a recession. For example, businesses with built-in, consistent demand for its products and services are typically less vulnerable to the ups and downs of a tight economy. And some new ventures may outperform during an economic downturn because they were created to address the needs and pain points brought about by recessionary times.
Operational skills also make a difference, especially during difficult economic periods. Developing a solid marketing plan, mastering financial skills and money management tools, and being flexible to the demands of starting a new business all contribute to a venture’s ability to endure. Starting a business can be simultaneously exhilarating and demanding. Thought and planning on the front end will save you some difficulty later.
7 Recession-Proof Business Ideas to Explore
If you want to go into business for yourself and are looking for inspiration, consider the following seven business ideas as a place to start. While these businesses aren’t completely immune to slowing sales or fluctuating supply and demand during a recession, they do have a track record of holding up when the economy is down. They may also spark more ideas about where to look for other opportunities that sound appealing to you.
1. Discount, Bargain, Or Used Goods
Affordability is a good look in an economic downturn. But even without a recession in play, thrifting and bargain hunting are gaining popularity. According to U.S. Census data, retail sales at used merchandise stores are on track to top $24 million in 2022, up from $16.4 million in 2020. Online reselling, retail pop-ups, and consignment businesses are capitalizing on this recession-friendly trend, which also helps sellers raise a few dollars in a tight economy and helps make for a more recession-proof business. Discount, bargain, and used goods aren’t limited to luxury items or vintage fashion. The key here is serving up in-demand goods at affordable prices, which is a decent business model in any economy but an especially timely one if the market starts to go south.
2. Home Repair and Maintenance
Recession or not, the demand for home repairs and the skilled professionals who perform the work continues unabated. While new home construction and high-end home renovations may lag during an economic slump, fixing a leaky pipe will always be a priority for homeowners. Along with home repair and maintenance contracting businesses, do-it-yourself products that help homeowners make their own repairs may prove to be smart recession-proof businesses ideas to consider.
3. IT and Technical Services
Regardless the size of business you may be focused on serving, most can’t operate efficiently without some hardware, software, or technical service providers. Online sales and customer management platforms, remote networks, and cybersecurity issues are only a few essential aspects of business technology. Business-to-business services that support and maintain technical operations or innovate for new efficiencies tend to do well when economic waters get rough.
4. Accounting and Financial Services
For consumers and businesses alike, taxes and finances are always top of mind and a constant concern. When the economy is in flux, that concern may intensify. In fact, a growing number of new businesses and self-employed workers may translate into an increased need for more accountants and bookkeepers. Economic changes may also create demand for more accessible financial and investment advice as people work harder to keep their businesses and personal retirement savings on track.
5. Auto Repair and Maintenance
Car maintenance and repair are in consistent demand, making this a recession-resistant market—and largely a recession-proof business. While new vehicle sales slow down and people hold onto their vehicles longer during a recession, the need for services such as maintenance, repairs, and mobile auto-detailing often expands. Because a slow economy could mean less money to spend on upgrades, recession-savvy entrepreneurs may want to focus on offering the essentials over luxuries.