And then apparently the economy went to have fun somewhere else and left you hanging in this ugly, full-blown recession. That’s not nice—but it doesn’t mean that you can’t start a successful business even when the economy is heading downwards. Why? Because a downturn in not just a time when the economy goes down but it’s also a time of change.
People read the news and get worried. Maybe they delay buying that new Tesla and repair the old Toyota instead—they still have to get to work. Others put aside the more expensive locally grown bio food and switch to cheaper variants. Businesses might realize that they need to cut costs but don’t want to let people go that carry so much expertise, so they invest in automation to become more efficient.
All these changes in how people and businesses behave are opportunities. Each change means that somewhere new demand is created. If you want to succeed in this time when cash is tight you have to go find that demand.
There are many sites out there giving you random ideas what’s a good business to start in an economic downturn. I’d like to do something slightly different, and I hope better: connect these ideas to the why—to the change in behavior. However, this isn’t (and won’t be) a complete list. Instead, what I want to do is to give you enough examples so that you start seeing recession opportunities everywhere.
Help people find cheaper alternatives for essentials
Everyone has to eat—recession or not. You have to heat your home in winter (if you’re living in a cold climate), you have to fill up the tank to get groceries. Those things are “essentials”—you cannot well avoid spending this money. That’s why presidents and prime ministers all over the world are concerned about the oil price: it affects many people’s purse & they have no choice.
But! People will want to spend less on those things now. They have less money to spend, so they’ll go for the cheaper of the two options. Maybe it doesn’t have to be the big brand name, they buy organic only once a month.
How can you help them?
Food: Switching Whole Foods for Costco
Food. You can’t avoid it. If you’re doing well financially, you might try to eat healthier and tastier: organic, locally produced, good brands. But if money runs low, you’ll focus on the price much more. Whole Foods? Costco is fine. That lovely Italian on the hill? Let’s just go to the pasta place at the corner.
So, if you’re running the restaurant on the hill, times could be tough. But if you think about opening the budget pasta place a recession might not be the worst of times.
One maybe less obvious area of the food industry that could do well in a recession is the private label food business: Grocery retailers will be extra eager to add new “value items” to their shelves.
Food: How to grow your own food or forage for it
When money gets tight, people look into opportunities to grow their own food, or forage for it. Can you provide information how to most cheaply grow your own food? How about if you don’t have a garden? Or can you provide information which mushrooms are edible, and which are definitely to be avoided? This may be mostly a content opportunity but judging by the news even from places such as New Zealand and rising levels of inequality in many countries it may unfortunately be a long-term one.
If you’re worried about the economy, glasses are one of those expensive purchases that you’ll likely postpone if you can. You’ll try to repair old glasses, you might try to do without. But there comes a point—when you can’t repair them anymore, if you need them to drive your car or bicycle safely, or if you need them for your job—when you can’t avoid it any longer. And that’s where Warby Parker saw an opportunity during the Great Recession of 2008+.
Warby what? Warby Parker got started in 2010 to offer glasses on the internet more cheaply than the traditional manufacturers did.
It all started when Blumenthal and company realized it was nearly impossible to pick up a reasonably-priced pair of prescription glasses—and, worse, retailers were neglecting the most important medium: the internet.
— Neil Blumenthal, interview at Forbes
Read more about Warby Parker On Wikipedia
Burials: Cheaper coffins & cremations
You’d think, if there is one industry that must be recession-proof, it must be anything burial-related, right?
Unfortunately, during a recession these products and services aren’t stable across the board. Here, too, people will be more cost-conscious. So a recession isn’t the best time to start a premium funeral parlor. Instead, think about for example offering more affordable burial options. In particular, crematories seem to have done better in 2008.
Read more about how burial services and funeral parlors are affected by recessions.
Help people use their things longer (and save cash)
There are things that you need to replace eventually but maybe not right now. So when a recession hits, people opt to repair things instead—this can offer opportunities. For example:
- Car maintenance
- Shoe repair
- Home upgrades
Many people will also try to do things themselves—a boon for the DIY market.
Help people downsize (and save money)—home staging
One way to save money is to downsize, in particular when it comes to housing costs. Here, home staging service can help people fix up the old house, so they can throw it on the market and replace the mortgage with a cheaper one, get rid of paying altogether or make a bit of cash.
Help people who worry about losing their job
As the economy falters, employees start worry a bit more about how safe those jobs might be. And if you’re an employee it’s just sensible to make yourself as valuable as you can, so that you reduce the risk of getting fired in a recession. How do employees do that? By upskilling or retraining. That extra accredetation that there was never time for. That other certificate that would allow for new customers to contract the company.
How can you help these employees secure their employment?
Help people who lost their job
Eventually job losses occur and people need to find new jobs. Right now (in July 2022) it doesn’t seem to be much of a problem … yet. But as unemployment soars, people need all kinds of help to find new or maybe different jobs.
Help companies and people find each other
Create a job board for a particular employment niche. Offer headhunting services.
Help people applying to jobs
- write cover letters
- offer to write or review CVs
Where would you find such gigs? If you start from scratch, you might looking into very generic gig apps like Fiverr (for example here are Fiverr’s resume writing gigs)) or Upwork. Alternatively, you could go for more niche specific sites.
Help people start new careers
While some professions require expensive degrees with years of certifications, other professions are easier to get started in. If you have skills in those, why not teach people?
Help people like you start a company!
Some people won’t be able to find a job. Or maybe they’re sick of the corporate treadmill. Perhaps they got tired of incompetent bosses with short tempers and want to be in control of their own lives. And those people think that a recession is a great time to start a company. In short: Help people like you!
Freelancers that start out always take some time to get sorted on the marketing side of things: what kind of customers can they help best, how do they best market their services to those people, and where do they find clients?
That’s a learning process—how can you help them?
Opportunities in the Creator Economy, anyone?
Help Entrepeneurs start companies
Business filings are one example.
I started CorpNet.com because I wanted to build a company that goes above and beyond just a service; one that offers one-to-one help on a daily basis for entrepreneurs looking to start, grow, or maintain a business. We launched in 2009 at the height of the recession and amongst an array of big name competitors but we have succeeded and recently celebrated a third expansion. https://hear.ceoblognation.com/2014/04/18/20-entrepreneurs-explain-started-businesses/
Help businesses save money
Like private households there are things that businesses always need to get done, and many services that fall under “essentials”. There is only so much you can reduce in terms of accounting—in the end you still need to keep your books in order. How can you innovate, offer a better price point, or fill a niche in such a sector that needs it?
Apart from essentials, how can you help businesses save money on operations? That’s how FedEx got started: even though they offered a premium product in a recession they helped their customers save money.
What is less emphasized is that the recession pushed businesses to automate—with computers by IBM and others. As computers became ever more critical to running those businesses they guaranteed that problems would be fixed the next business day. And so basically empty planes were flying around, shuffling replacement parts.
That’s where Fred Smith saw demand for FedEx to deliver “absolutely, positively” the next day. (The exact promise the computer companies made to their customers.)
Things that businesses need more in a recession
Many companies will be careful to hire full-time staff, but may still need more help. Can you help them hire agency or temporary workers, freelancers, etc?
As businesses falter and households get into trouble, bills and invoices don’t get paid. Following up on those invoices and recovering what’s possible is no one’s business—except that for debt collectors.
Companies will hold firesales of equipment and stock. Same idea with foreclosures on all kinds of properties. How can you find buyers? Is there a price arbitrage opportunity?
Business with competitors that struggle to downsize
During upturns, prospering companies tend to accumulate bad habits. When the downturn hits, they find themselves slow moving, and bogged down by costs.
Unfortunately, “trimming the fat”, as some people call it, takes time. And that’s an opportunity for a nimble new company to get ahead by avoiding all this bloat from the get go and passing on the savings to customers.
One of the most useless tips I hear again and again is that in a recession you have to “be creative exclamation mark”. Few people tell you what to be creative about, or how. So I figured I’ll collect examples that I stumble over, both small and fancy ones.
- Cash flow: Airbnb was founded during the 2008 recession. Did they have a tough time? Yes, they did. They even sold cornflakes to raise cash.
Other idea collections I found helpful
Yeah, I’m not the only one thinking about this, and my ideas above aren’t my ideas. I just read a bunch and keep what makes sense to me. Here are articles I liked.