Global Recession is a harsh and imminent reality.
The world is sliding into another financial catastrophe. The United States has enjoyed economical expansion for 11 years, until this spring. The economy is officially in a recession.
Unfortunately, many small businesses are forced to close shop. The owners have to look for jobs elsewhere. The uncertainty is soul-crushing for some.
The good news is that certain types of businesses thrive during economical downturns.
My family owns an IT retail and repair business. I’ve had an opportunity to see how different economical cycles affect different parts of the business.
During good times, the company sells new computer systems in bulk. However, during economic meltdowns, the sales can barely keep us alive.
Repair services come to the forefront when a recession hits. People have less money, and they are less eager to buy new stuff. Repairing an item is a lot more favorable than buying a new one. My father’s repair services business is booming right now as the economic history repeats itself.
Why do Recessions Happen?
America has seen five recessions since the 1970s.
Millions lose jobs, lives are ruined and some barely escape with heads on their shoulders. Individuals seize the opportunity and win big.
The economy naturally moves in two ways. The business can expand and contract. You might have more money during an economic expansion. The business comes with ease, and you’re tempted to buy stuff that you don’t need just because it makes you feel cool.
Mass spending behavior reaches a critical point after a while, and we create a ton of useless business. Nobody really needs a chunky cooler powered with speakers and touch screens right now.
How does the recession start? The same scenario happens every time.
The real value of things comes to question, a dodgy political decision or two happens, global crisis peaks, a huge corporation screws up and we reach another period of global distrust. The economy starts contracting, and another recession hits off. The recession is an economical way to flushing the toilet. The unnecessary business will perish, and the masses will focus on what’s more important.
New products and services start out as an answer to the change in cultural and economical momentum.
3 Types of Business That Thrive During a Recession
Economic recession offers an opportunity the same way it limits regular work. You can look for jobs in growing industries. And if you’re brave or desperate, you can start an essential business yourself.
1. Affordable Luxury Offers
Recessions are not the end of the world. People always buy stuff, and they love the feeling of prestige and uniqueness. Small businesses that offer handmade soaps, unique clothing, and specially tailored touristic offers are reporting a positive momentum.
Pricing a product above the average — but still below exceptionally expensive — can give you a headstart in this recession. Your company can create an offer that is luxurious but still affordable.
2. Spare Parts Manufacturing and Repair
The Global Auto Parts and Accessories Industry has grown by 6.2% since the beginning of this year. Cars are naturally expensive. Consumers don’t usually buy mobile assets on a whim. The economic uncertainty is making huge unnecessary expenses less sexy.
Repairing older cars is more favorable than buying new cars during a recession. The same trend translates to other industries too. You might try to repair your computer instead of buying a new one. And you might renovate your apartment instead of buying a new house.
3. Accounting and finance
Accounting is always good business. Corporations and people have to pay taxes, no matter the state of the economy.
Everybody is searching for a tax break, a financial benefits program, and ways to increase control over money.
Economic uncertainty brings more work to accountants. The job is super cyclical, which means it’s profitable at all times, but even more so during the economic upheaval.
The economic crisis has started early in 2020, offset by the global pandemic. The current industry reports can add another layer to what exactly might be profitable right now.
Here’s IBIS’ list of top 10 fastest growing industries in 2020:
- Global Respiratory Ventilator Manufacturing (54.8% reported growth)
- Global Sugar Manufacturing (8.8% reported growth)
- Global Military Shipbuilding & Submarines (8.5% reported growth)
- Global Public Relations Agencies (6.3% reported growth)
- Global Auto Parts & Accessories Manufacturing (6.2% reported growth)
- Global Consumer Electronics Manufacturing (6.2% reported growth)
- Global Music Production and Distribution (6.2% reported growth)
- Global Pension Funds (5.8% reported growth)
- Global Airport Operation (5.0% reported growth)
- Global Engineering Services (4.9% reported growth)
Individual industries are obviously performing better because of the global health crisis. This list might give you further insight into where to invest and what kind of business might be of greater need for the globalized world.
The current recession is scary. The global health crisis is adding another layer to an already broken economy. People are scared for their lives and their workplaces.
The American economy had survived 17 noteworthy recessions since The Second Continental Congress adopted the Declaration of Independence.
The following three industries enjoy more opportunities during economic turmoil.
- Affordable luxury
- Spare parts manufacturing and repairs
- Accounting and finance
More than one trend can affect the economy. Supply and demand for home office gadgets and softer ecosystems are on the rise as well. The workforce is moving away from traditional offices and we need new systems to support jobs from home.
You can find the right industry to invest in the following years. Individual industries come to the forefront during recessions because they solve immediate problems for society.
The counter-cyclical industries are both satisfying to working in and can make you feel good because you’re ultimately helping people