Recession Proof Business Ideas for 2023 and Beyond

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If you’re here, it’s probably because the current economic winter isn’t doing your entrepreneurial dreams any favours. Whether it’s high inflation or supply chain issues, it’s a tough time for budding businesses.

Nevertheless, economic downturn and entrepreneurship aren’t necessarily the opposite sides of the same coin. On the contrary, even during an impending recession, you can take hold of plenty of opportunities to start a business.

To give hope back to your inner entrepreneur, we’ve done in-depth research to source you the best recession-proof business ideas. Plus, we’ve spoken to businesses that have managed to succeed during trying economic times to give you an extra spark of inspiration. Lastly, we’ll let you walk away from this page with some handy tips on how you can apply recession-proof strategies to protect your new or existing business.

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What do recessions mean for small businesses?

Recessions are prolonged and pervasive reductions in economic activity. In practical terms, this means people spend less money, and as a consequence, there’s less manufacturing or trade of goods.

What does this mean for SMEs? Usually, not great news. For organisations of all shapes and sizes, a recession usually translates into decreased sales and profits. However, small businesses might be particularly vulnerable during an economic downturn as they lack the additional capital that large enterprises have to offset extended periods of loss. The Consequences include layoffs, red numbers in your account books, hiring freezes – all things that send shivers down the spine of any business owner.

In the UK, according to ONS statistics, SMEs have been feeling the crunch. Here’s what we know:

  • In December 2022, 16% of businesses with 10 or more employees reported that they had experienced global supply chain disruptions
  • In January 2023, more than a quarter (28%) of businesses with 20 or more employees reported that they were experiencing a shortage of workers and 40% reported they were unable to meet demands
  • Total company insolvencies in England and Wales in 2022 reached their highest quarterly level since 2009

What kind of business does well in a recession?

In a nutshell, one that is price inelastic. In other words, regardless of how dire the economy gets, it’s likely consumers will continue to demand the goods and services associated with these recession-proof ideas. Let’s zoom in to understand why.

What even is Price Elasticity of Demand (PED)?

If we go back to the whiteboard, elasticity of demand refers to whether demand for a product will consistently continue at the same level even if the price of the good or service changes. Why is this relevant to us? If a consumer keeps on demanding a good at consistent levels, even if the economy is in shambles, that tells us that good is price inelastic. On the contrary, if demand for a good or service disappears once it gets more expensive, that means it’s price elastic. The bottom line is that, as an entrepreneur staring at the precipice of a recession, you want to identify business opportunities for goods and services that are price inelastic.

Best recession-proof businesses ideas for 2023

Having that in mind, here are some of the best recession-proof ideas that you can consider for your next business venture:

🥡 Groceries – there’s no surprise in food being price inelastic. After all, everyone needs to eat whether they have lots of money to splurge or are counting pennies. Therefore, a business that sells groceries is bound to perform relatively well even during recessionary times.

👶 Baby products and childcare – while lots of adults will cut back on their own expenses, it’s unlikely they’ll be stingy when it comes to their kids. From diapers to baby formula, demand for baby products remains pretty stable throughout periods of negative economic fluctuations.

🩺 Healthcare – just like groceries, you can think of healthcare as a defensive industry. No matter the state of the economy, people will still look out for their health. Whether it’s pharmaceuticals or at-home medical services, the healthcare industry is replete with viable business ventures during economic turmoil.

🏫 Education – whether you’re catering to parents who need their kids to perform well in their A-Levels or to someone who got made redundant and wants to get an online certification, demand for education remains constant regardless of what happens to the economy. If you have specialised knowledge in any area and are good at transferring your wisdom to others, this could be a good bet.

🔧 Repairs – whether it’s home or car repairs, most people usually lack the craftsmanship to do it themselves. Therefore, even if there’s a recession, if there’s a leak in your house or your car’s engine is making strange churning noises you’ll probably need repairs service.

🍷 Beer, wine, and liquor – alcohol is a ‘guilty pleasure’ industry that tends to perform well even as the country’s economy begins to turn grey. By no means is this a healthy habit, but it certainly serves as a coping mechanism for some so there’s always a business opportunity here.

🍬 Confectionary– at first glance, you might think candy is not price inelastic. After all, you don’t exactly need sweets. Even if the economic climate is murky, people might still flock to their own type of comfort food, which to many will be sugar. Fun fact: Hershey’s sales actually increased during the Great Recession back in the 1920s.

🐶 Pet products – people might joke about their pets being their children, but during a recession, the same logic to childcare products apply to pet products. Regardless of how tight someone’s wallet is, they will still need to buy dog food and pay for their vets so this is a viable recession-proof business venture.

💸 Financial advice and accounting – this one is pretty self-explanatory. When people are struggling in the middle of a recession, they reach out to financial connoisseurs to help them break even. If you have the tools and know-how, it’ll be easy to sell yourself to those looking for guidance to navigate turbulent economic waters.

📈 Digital marketing – although at first glance this one might sound counterintuitive (less people buy things and therefore less point in marketing), the flexibility and scalability of digital marketing agencies make them easily adaptable to difficult economic times. You’re only dealing with your staff rather than stock which makes you immune to disruptions in supply chains. Also, certain companies might make members of their in-house marketing team and may look to outsource to an agency, which is where you come in.

🧹 Cleaning – no one likes to live in near-squalor conditions, regardless of how badly the Bank of England says the British economy is doing. Hygiene, especially, became paramount after the COVID-19 pandemic so professional and domestic cleaning service have gradually become more price inelastic. Also, with the rise of hybrid working, an increase for domestic cleaners has increased. Overall, it’s a solid option for a recession-proof business.

🚢 Dropshipping – during a recession, you might be tempted to start an ecommerce business as there’s no rent attached to it. However, there’s ways of making it even more economical. Dropshipping allows you to pre-order the items you’re selling or keep them in stock which means you don’t need to pay for storage. All you do is order from a third party (usually a wholesaler) and make a profit by charging a higher rate than the original retailer. This is great for recessions as there are few overhead costs associated with it.

Real-life recession-proof business examples

Although there are plenty of historic examples of businesses that have thrived during recessions, like Hershey’s or Pure Gym, here are some startup businesses that are booming right now.

🚗 Caura

Caura is a one-in-all management app for your car. From paying MOT to insurance, you can now do it all in one place as opposed to bouncing between different apps and websites. This simple idea has recently secured £4 million in funding from Lloyds Banking Group plus topped our Startups 100 Index 2023.

Startups spoke with Dr. Sai Lakshmi about finding business ideas that work during a recession. He reveals, “It’s always about finding a problem statement that affects a lot of people, number one, and number two, building a solution that helps all of these people better manage whatever that is, and that’s what we’ve effectively done with Caura.”

Caura’s referral program has also made adapting to the current economic climate easier. Lakshmi shares that, “Instead of spending money on above-the-line marketing, we can give those advertising dollars to our users if they refer their friends and family onto the platform.” At the moment, Caura is the only platform where, if you refer a sufficient number of people, you can bring the cost of your insurance down to zero.

🍝 Pasta Evangelists

Sitting in 11th position in the Startups 100 Index 2023, Pasta Evangelists have managed to captivate consumers even as they feel the financial crunch. At first glance, deliveries and pasta kits would pass as more of a luxury during difficult economic times. However, in conversation with Startups, co-founder of Pasta Evangelists Finn Lagun, explains, “Although we are heading into a recession, customers will still want to celebrate a special occasion with the ‘restaurant experience’, but they might be looking to do this in a more affordable way.” At-home experiences therefore cut on things like transport, childcare, and corkage, all of which are associated with going out to dine in a restaurant.

Despite the current economic downturn , Pasta Evangelists have managed to find new business opportunities. Finn reveals that, “We have taken advantage of the growth in the takeaway market and the advent of new technologies, such as innovative food ordering software, to launch a brand new fresh pasta takeaway concept on pastaevangelists.com.” With this concept, pasta lovers across London can order a chef-made Italian takeaway directly from their local Pasta Evangelists kitchen.

🌼 Flower Station

Flower Station is a same-day flower delivery service that has been around for over 20 years. Despite the Great Financial Crisis of 2008 and the current downturn, it continues to be one of the UK’s destination flower delivery services, with several central London shops open 24/7.

David Cohen, CEO of Flower Station, shares that their success stems from, “Keeping customer service a priority and checking in with our budget to adapt to these changes impacting our business.”

Tips for recession-proofing your existing business

We spoke to our real-life examples of recession-proof businesses to understand how they hacked the trick to riding a recessionary wave rather than being drowned by it.

  • Keep your costs as slim as possible: Although keeping your costs low is pretty intuitive during a recession, it’s equally key to keep a cool head if you manage to get lots of funding. For instance, although Caura’s £4 million funding from Lloyds Banking Group is definitely bright news for the driving app, CEO Lakshmi revealed that the team won’t be growing in a significant manner.
  • Focus on your core mission and stay true to it: Caura’s CEO shares that, “There’s always all of these other bells and whistles that people want to think about building and focusing on but when things aren’t great, it’s good to just get your core proposition firing on all cylinders.”
  • Identify areas where big brands are cutting back on and fill that gap: Pasta Evangelists see the recession as a time for opportunity. “We would remind entrepreneurs to view recessions as an opportunity for challenger brands to flourish. As bigger brands cut down on ad spend, challenger brands can double down on creativity and tap into the spirit of guerrilla marketing.”
  • Understand customer needs and trends in their behaviour: Pasta Evangelists suggest an omnichannel approach to spending, especially those revolving around events. This taps consumer hunger for in-person experiences in a post-pandemic world. CEO explains, “we are investing heavily in our Pasta Academy, for example, with ambitions to increase ourvents business three-fold in 2023, based on the success we’ve seen in 2022.”
  • Optimise your marketing efforts: David Cohen from Flower Stations gave us a few recommendations to keep your businesses blooming with recession looming. He first recommends concentrating on the customer you are targeting. “Without highly targeted recession marketing, you’re wasting already limited resources, marketing to clients who have already begun the buying process is more economical and produces more leads,” and adds that “it involves creating buyer personas and directing your marketing message towards them.”

Conclusion

Reading the news as a business owner these days can prove to be a terrifying act. Whether it’s reports on rising inflation or insolvency, it’s not an easy time to be chasing entrepreneurial dreams. However, that doesn’t necessarily have to be the case. If you can identify a price inelastic business venture that will supply goods and services that every customer needs (or continuously reaches for), you’ll be on a straighter path to business stability.

Do keep in mind that just because you picked one of the ideas suggested in this page doesn’t guarantee you business success. You should still be diligent with your costs and find gaps within the specific industry to better position yourself.

Frequently Asked Questions
  • What businesses do well during a recession?
    Although there are plenty of examples, the basic idea is that businesses that provide price inelastic goods or services will do well during a recession. In other words, businesses that provide necessities.
  • What is the most recession-proof industry?
    There’s no one single industry that is perfectly recession proof, but generally anything that sells a necessity – like childcare or food– will perform well even as the economy turns dark. The rule of thumb is anything that price inelastic will brace the economic winter well.
  • What sells best during a recession?
    It’s a list that’s more extensive than you’d actually think! Guilty pleasure products like confectionery or alcohol, food, childcare, pet products, and others are great products to sell during a recession. Think of things that are necessities or things that consumers will buy regardless of their monthly budget (i.e products that are price inelastic).
Written by:
Fernanda is a Mexican-born Startups Writer. Specialising in the Marketing & Finding Customers pillar, she’s always on the lookout for how startups can leverage tools, software, and insights to help solidify their brand, retain clients, and find new areas for growth. Having grown up in Mexico City and Abu Dhabi, Fernanda is passionate about how businesses can adapt to new challenges in different economic environments to grow and find creative ways to engage with new and existing customers. With a background in journalism, politics, and international relations, Fernanda has written for a multitude of online magazines about topics ranging from Latin American politics to how businesses can retain staff during a recession. She is currently strengthening her journalistic muscle by studying for a part-time multimedia journalism degree from the National Council of Training for Journalists (NCTJ).

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