5 Recession-Proof Businesses to Start in a Turbulent Economy

The economic downturn is no laughing matter. Recessions can be a huge obstacle to both new and established entrepreneurs. Startup Genome conducted a recent study that found 74% of startups had seen their revenue plummet after the pandemic. It is even more alarming that many (16%) of these startups were forced to layoff 80% of their staff.

It’s no wonder that businesses are afraid to start up a business or raise capital. Experts warn of an imminent global recession. As a result, companies are reluctant to hire new employees, expand their business, or retain those they have.

Some startups thrive during economic crises and recessions. Some startups can thrive in economic crises. Having worked in the VC business for over a year, sold several businesses and started an accelerator to help over 200 entrepreneurs, i have learned there is a huge difference between startups which survive and thrive in a downturn and those which struggle and fail. This difference is found in the model of business itself.

As the CEO at Builderall, a global all-in-one platform that supports more than 20,000 small businesses, I can see the best performing business models from a bird’s-eye perspective. Our ecosystem continues to grow, even when other startups are struggling. We don’t experience any economic downturn.

You can read about the five recession-proof business I recommend in turbulent times if you’re wondering what to do.

Starting a business that can weather any economic climate

1. Service-based business

A service-based company is one that provides a skillful service to its customers, online or off. For instance, a bookkeeping/accounting service or a digital marketing agency both provide services that require special knowledge and expertise. These companies are really crushing it today — and for more than one reason:

• Their startup costs tend to be low. The initial investment is lower and subsequent capital investments are less.

• They can run with a minimum workforce. They can either go completely remote and tap into the low-cost talent market, or go hybrid.

• Revenue generation and turnover are faster. Cash flow is generated much faster by receiving payments from new customers and increasing cash flow.

• Recurring payment keeps the money flowing. Subscriber or retainer-based models are beneficial to service-based firms. It guarantees both repeat business and a steady revenue stream for the ongoing services.

This reduces the need for working or venture capital. Three years later, the customer has built up a strong base of customers who pay on a regular basis. The money generated from these payments is used to cover your operating costs.

2. Influencer marketing

Influencers are a great choice. We can safely say that influencers rule the digital space right now. Take a look at what Khaby Lame, Zach King and Charli d’Amelio achieved. Throughout my career in business, i have closely tracked the rises of many influential people.

Influencers who are successful are all experts in their respective fields. They know what they’re talking about. Two, they are content creators and their content resonates strongly with their audiences. This helps them gain more followers.

Once you amass a substantial following on social media platforms such as Instagram, YouTube or TikTok — that’s when the magic begins. Your online presence is used to interact with your audience, promote products and services and become a brand advocate for the companies that you work with.

3. Brand ambassadorship

Influencer business is closely related to being a brand advocate. The brand ambassador is a key component of many successful marketing campaigns. In the days before social media, A-list celebrities, professional athletes, and musicians were paid top dollar to endorse products.

As with influencers they are experts in a specific niche. As thought leaders and experts, they lend credibility to brands that they endorse. Brand ambassadors work with the brand they represent for many years, while influencer relationships tend to be one-off agreements. They provide their audience with a higher level of exposure.

Related: Are you afraid of a recession? Follow These Five Tips To Ensure Your Business Is Recession-Proof

4. Online educators

Many people are asking me, “What else can I do?” Social media platforms such as Reddit and Twitter are a great way to find out what else you can do. Many people who lose their jobs want to upgrade their skills. They will happily pay hundreds of dollars or thousands of dollars to continue specialized training, rather than go back to school or get an advanced degree. Online educators make a lot of money by selling courses online.

People today are learning a wide range of skills using eLearning platforms. You can, for example:

How to convert sketches into digital artwork

How to compose music

How to create effective marketing channels

How to write a screenplay

Online educators can be anyone who is good at what they are doing. To become an online educator, you need to take the knowledge and skills that you have, put them into a course, and sell it. They create a comprehensive course structure, and offer courses covering a wide range of topics from practical skills to creative art and everything in-between. These platforms are now more accessible than ever, thanks to their user-friendly eLearning tools.

Learners are always interested in learning about marketing, business and entrepreneurship. They also enjoy creative arts, coding, personal development and entrepreneurship.

5. Unique products

A unique product is a difficult thing to sell. When a business achieves this feat it can be considered recession-proof. Startups are selling unique products to a small but interested subset of customers. You could sell T-shirts or stickers, plush toy, etc.

With the platforms that are available online, it’s easy to start an online store, build awareness, and attract customers. Big companies often use paid advertisements as they grow. When you are a small business, you can be creative and use Instagram and TikToks as a way to attract customers to your product. It’s better to focus on a specific niche than to try to sell t-shirts to everyone. Do something very niche-specific. You can, for example, create a line of unicorn-themed T-shirts.

Related: 3 Strategies that helped my business grow during a recession

Builderall has seen no negative impact on businesses. If anything, the recession has been a catalyst to help entrepreneurs. Gusto’s recent survey found that 56% of people started a business because they were worried about inflation. The World Economic Forum reported that the number of women entrepreneurs increased from 27% in 2019 to 47% in 2020.

So, while it may seem scary to try to launch or scale a company in today’s economy, with the right business model, now is the perfect time — and the future is bright.