Businesses to start during a recession

Starting a new business can be overwhelming, and starting a new one during a recession can feel even riskier. But several businesses historically do well during economic slumps.

Entrepreneurs choosing new ventures should consider these industries fellow business owners consider recession-proof. The businesses listed here serve a need that persists even during times of economic hardship.

What makes a business recession-proof?

Recession-proof businesses typically have at least one of the following characteristics:

• Sells essential or mandatory goods, like food, diapers, or hardware supplies
• Offers necessary public services, like shipping or toll-road servicing
• Provides crucial repairs, like plumbing or electrical repairs
• Serves high-net-worth individuals or customers otherwise insulated from a recession

Recession-proof business ideas

Here is a list of 10 recession-proof sectors to consider so you can start a business on more solid ground.

1. Health Care and Related Services

Even during a recession, people need comprehensive treatment and preventative health care services.

• Seniors and sick patients will still require care, regardless of the state of the economy.
• Pharmacies will continue to fill orders.
• New and expectant mothers will require care and guidance.
• Young children will still need pediatric care.

What makes it recession-proof?

The industry has survived many economic downturns in the past, and healthcare and medical research are always essential. In fact, research indicated that the rollout of COVID-19 vaccines spurred economic activity.

2. Grocery and related businesses

The food industry can be very resilient during times of economic hardship. Not only do people need sustenance to survive, but food can also offer comfort and familiarity during times of stress.

• Convenience and dollar stores provide sustenance to people who might not have larger grocery chains nearby.
• Vending machine servicing keeps cheap food stocked in schools and offices.

Whether the business is related to food manufacturing, distribution, delivery, or retail, there are many options in this industry for businesses that stand a chance of weathering a recession. This doesn't always hold true for restaurants, however, as they charge a premium for service and convenience that can be out of reach for many during a recession.

What makes it recession-proof?

Demand for groceries stays relatively constant during recessions. While spending at restaurants may decrease, the number of home-cooked meals usually increases, leading to stable business for markets.

3. Tax and accounting services

Taxes are inevitable, even during a recession. While the Internal Revenue Service (IRS) has granted extensions in the past, the agency is not known to grant wide exemptions from filing taxes in the face of a recession.

• Small businesses will still need bookkeeping services to help them manage their books or, in some cases, prepare for bankruptcy.
• Individuals will still need accounting services to help them through tax season.

Many small business owners and individuals struggle with bookkeeping but might attempt to do it themselves during a recession. This can actually end up doing more harm than good if records get disorganized or filed incorrectly, as it could result in costly fees or tax penalties.

What makes it recession-proof?

The IRS does not stop collecting taxes during economic recessions. You will still be required to file your annual income tax return, and tax and accounting services will still be looking out for your bottom line to help you avoid costly fines and penalties during tax season.

4. Financial advisory services

During a recession, money management can be a touchy subject. Many people aren't able to afford expenses that they usually incur, forcing them to make choices about what to keep and what to cut.

• Advisers and planners can offer tips for individuals and families struggling to redo their budgets or save money during a slowdown.
• Investors and high-net-worth individuals will look for reassurance that they're covered in a recession.

Financial planning services won't be within reach of everyone, but for many, they'll feel essential for planning.

What makes it recession-proof?

An economic recession puts an immediate focus on personal funds. Financial advisers provide advice that can help investors gain a better understanding of how their portfolios perform through recessions.

5. Supply chain and delivery businesses

Delivery services continue to be more and more in demand, and that demand isn't subsiding during downturns.

• Delivery demand for essential products like groceries continues to grow.
• Most businesses still need to make and receive shipments of goods through a recession, and in the global economy, supply chain logistics continue to have major importance.

Virtual ordering shows no sign of slowing down, which means shipment volume will only get larger.

What makes it recession-proof?

Just as taxes don't halt because of a recession, neither does the mail! Shipment of goods in a global economy persists even in a recession, leading to a wealth of business for many delivery companies when other businesses might be struggling.

6. Daycare and childcare needs

The need for childcare doesn't subside in a downturn.

• Parents who work often need after-school care for children of all ages.
• Parents of young children often need full-time care if they work.

Babysitting agencies, daycares, and nanny businesses still see high demand.

What makes it recession-proof?

Children need supervision, no matter the economic climate, and parents need to work.

7. Auto maintenance businesses

Economic downturns don't make machines impervious to failure. Vehicles will still need servicing throughout a recession as people continue to commute to and drive for their jobs.

• Shipping and delivery vehicles will continue to see high mileage and require frequent maintenance.
• Taxis and rideshare services will likely continue to operate, creating more opportunities for auto repairs.

When things break down and money is on the line, it's more important than ever to have qualified professionals ready to assess and repair the problems.

What makes it recession-proof?

Some people will try to cut their driving to save money on fuel and maintenance, while others will choose to tackle the repairs themselves. But most people will still need a mechanic to assess and repair their vehicles.

8. Home hardware stores

Any store offering the tools to help people repair things themselves is likely to see sustained business through recessions.

• House calls become less affordable, leading people to tackle some repairs on their own.
• Those responsible for repairing critical functions like refrigeration, plumbing, and air conditioning will need the tools to get the job done.

While some people might neglect repairs during a recession to save money, this won't be the case for everyone. Other recession-proof businesses will also require occasional repairs through a recession.

What makes it recession-proof?

During a recession, studies show that people are more likely to tackle home improvements. Costly improvements like digging swimming pools or buying new appliances might not be under consideration, but DIY renovations can offer people a chance to improve their quality of life and make necessary repairs while avoiding large bills.

9. Plumbing and utility services

Similar to auto mechanic services, people will require utility services throughout recessions.

• Many electrical repairs require the work of a licensed electrician and cannot be completed without one.
• Plumbing and appliance repair likely isn't familiar to most Americans, and outright replacement is expensive.

Plumbers and electricians provide valuable work that continues through almost any type of downturn.

What makes it recession-proof?

Leaks and electrical failures are not only inconvenient but can actually be hazardous or even life-threatening. Many home repairs in these domains require extensive knowledge, if not an actual license from the state, making professionals necessary.

10. Tech and IT support services

More people than ever are working from home, which means companies are increasingly reliant on technology.

• IT services facilitate smooth operations for companies with far-flung employees.

Maintaining essential technology increases productivity and allows operations to continue.

What makes it recession-proof?

In some ways, IT support is directly linked to the continued need for shipping services. As people continue to order goods and services online, many of those people will require technical support or customer service to help them with myriad issues, in addition to hardware and software support in their home offices.

Additional businesses to consider

1. Cleaning services

Smith also named industrial cleaning services as recession-proof, especially in light of the pandemic downturn, when cleaning took on new urgency. "The importance of maintaining a clean, healthy workplace has increased significantly, and larger businesses that are unaffected by the recession might be more ready to pay for cleaning services," Smith says. "Clients may also include smaller companies who strive to offer a healthy work environment to their customers and staff."

Residential cleaning businesses are also fairly recession-proof. Mike Walsh, the CEO of CloudMyBiz, which offers cloud-based solutions for businesses, says that cleaning is an essential service. "Senior citizens always require care regardless of the economic situation," he said. "Caring or cleaning for those unable to do it themselves will always be needed, so create a business that offers those services."

2. Reselling

While inflation means rising prices, people will still need to pay for necessities and affordable luxuries like clothes and home goods. Alexandra Fennell, the co-founder and co-CEO of an eco-friendly women's wellness company, suggests consignment stores, whether brick-and-mortar or online.

"The competitive prices on unique items will attract customers even during economic downturns," Fennel says. "What's more, consignment shop owners can directly implement consumer feedback and look for goods their audience wants, guaranteeing revenue."

3. Business service freelancing

Freelancing, or being an independent contractor, is a solid option for recession-proof work. Steve Wilson, financial expert and founder of Bankdash, a financial review website, says, "By contracting with independent contractors for certain jobs and activities, businesses can save a lot of money. Instead of hiring permanent staff, this enables them to pay for those duties separately as and when they are required."

Wilson says that virtual assistants are in high demand, since businesses may not need or be able to afford full-time assistants but still have tasks that need to be completed. A freelance virtual assistant can work for several different clients and fulfill their part-time assistant needs. Freelance writers are also needed for businesses, especially for marketing copy. Wilson says, "Being a writer can conjure up ideas of someone writing editorials for the New York Times or the contents page of a book, but it has more to do with producing material for all the business websites that require consistent new content to stay relevant and raise their search engine rating."

4. Property management

According to Doug Greene, the owner of Signature Properties, in times of economic crisis, people still need three basics — food, health care, and housing. In order to choose a recession-proof business, prospective business owners should focus on these essential services.

"In real estate, this could be starting a property management company," Greene says. "You get all the benefits of rising valuations/rents without the risk of actually owning the property."

Greene says, "If you opt to manage short-term rentals, you could pull in 20-25% of the revenue the owner is earning, and all you have to do is manage the house. That's a business model with low overhead that could easily scale. Starting this kind of business during a recession is optimal because you can decide what kinds of properties you want to manage, name your price, and you don't need to invest in property or equipment."

While a recession is a daunting prospect, starting a recession-proof business may be the solution to tightening margins and declining sales as consumers cut back on their spending.

Plan ahead to help weather the storm

Recessions are uncomfortable for most, and it can be difficult to plan for hard times when things are going well. In addition to financial uncertainty, the added stress of a recession can mount to create heightened tensions. The good news is that there are many business opportunities that can help you weather a recession depending on your skills and interests.

A good place to start is speaking with a qualified professional who can help you get your business started now. That way, if and when the next recession hits, you may be more prepared to face uncertainty.

Freelancer Jenn Morson contributed to this article.