Few people start a recession proof business, most start a business because it's what they know, it's what they're good at, and it's what they think can help make them some money. If you're looking to start your own enterprise to make a little money, or you're simply looking for sound employment, you'll want something that's recession proof to some extent.
Of course, nothing is absolutely recession proof, but it doesn't hurt to look in that direction.
Let's look at the characteristics of businesses that one might consider as recession proof. I think it's important that we understand the nature of a business and its place in the economy...that's how we're going to best determine whether it's resistant to a recession.
History tends to repeat itself, for many reasons, and if it's a teacher of any sort, it should show us historically what type of businesses have been largely recession proof. I'm certain this can help us sort through opportunities and job offerings in the marketplace so we pick one that works well for us.
Here’s my view of what a recession proof business might look like.
Offers products and services with an enduring demand. I can't think of a better example of this than oil. For generations, oil has been something that we've fought over, made great use of, and has been on the list of essentials for Americans for well over 100 years. And, as far as the world goes, we need and use it now more than ever. Just think of all of the products that oil provides us...lubrication, synthetic fabrics, fuel for industry, a key to powering our transportation system, and so many other uses.
Even with all the talk about "peak oil," it's clear to me that if you have a business that is tied to oil, you have a recession proof business. We're either drilling for it, fighting over it, cleaning up after a spill, exploring for more of it, refining it, or hauling it around so others can use it.
Positioned as essential in the marketplace. If the product or service offered by a business is optional, it may be the first to get cut in the event of a recession. How many people ever voluntarily cut off their electric service? Very few that I've ever heard of. Electricity isn't optional, it's vital, at least it is for the overwhelming majority of people and businesses in this country.
Irrespective of the economic climate, the demand for electricity will be high, and it only increases each year. If you think about things we use at home or on the road, most of them are powered by electricity. There are all-electric homes out there, and more rechargeable items coming on the market each week.
Get a job with an
electric company, or as a service provider to power companies, and
chances are you'll be smack dab in the middle of a recession proof
business. During my work in the electric utility sector, I never saw a recession.
Services a demand that is growing. I like to think of high technology when I think of growing demand. With all of the handheld electronic gadgets and computers and such, someone has to do all of the programming behind the scenes. When you think of it, there has been a leapfrog type relationship between hardware and software, with hardware expanding to accommodate ever more sophisticated programs, and programs becoming more sophisticated because of increases in the capacity of hardware. All of these changes have been going on for decades, and probably will continue to grow at predictable rates for many years to come. Even if hardware stopped improving, software applications would continue to make use of the platforms already out there.
If you're employed by a software or hardware company that is making the gadgets and applications of the future, you're employed by a recession proof business. We're just too hooked on handheld electronics to ever go backwards to corded phones, answering machines, paper and pencil and the like. Can you imagine a world without GPS, cell phones and flat screen displays?
Just think today how electronic billboards are sweeping the country. Growth in electronics and software is good for those seeking a recession proof business.
Has a customer base with depth and breadth. Let's say your business works for the government as a contract service provider. What happens when the government stops contracting out due to budget constraints? Well, you're left without a job. If, on the other hand, your business has government, private industry, trade associations and perhaps some international customers, then you have a much more recession proof business because of the broader base of customers.
There isn't anything wrong with specializing, but make sure there is a sufficiently broad customer base that one hiccup in the marketplace doesn't send the business into a tail spin. Take a look at the work and make an assessment of how much work there is (depth) and where it comes from (breadth).
If you only supply helicopters to the Department of the Army, then you'll likely see trouble when military focus shifts to a new weapons platform. You'll also see trouble when government spending shifts away from the military. A recession proof business might very well provide military and civilian products.
Helps provide services required by law instead of simply desired by the marketplace. I certainly don't advocate more government regulations, but it's one way millions of people make money. The one industry that comes to mind is tax preparation and everything that goes with it. Try not paying your taxes and see what happens. You'll soon be introduced to all the many people who are employed because of tax laws, and many who are employed from the standpoint of enforcement. If you run a tax advisory and preparation service, you likely have a recession proof business. If you work for a tax attorney, you're likely working for a recession proof business...if anything, pressure from government to pay taxes will be higher in lean economic years because they need to keep their revenues up as well.
So, look at the regulatory aspects of the job you might be considering. Some businesses spend lots of money trying to avoid trouble with regulatory agencies. Those who provide services in these areas can have a recession proof business, and you might be well advised to look for employment in these arenas.
As you can well imagine, if you're working for an outfit that has a source of work that matches more than one of the five characteristics noted above, you're probably working for a recession proof business. So, if you're looking for a new job, or you're looking to start your own enterprise as one of many money making ideas, consider these characteristics so your efforts are focused on a recession proof business in a market sector that generally fares well during economic downturns.
Of course, there is no guarantee that any business will be recession proof, but it helps if you at least think things through a bit and note the marketplace and customer base associated with the business. Armed with that information, you should be able to make a more informed decision.
The key is to go into employment with your eyes wide open so you can see into the future a little ways. If you're not proactive in this manner, you'll need to be good at being reactive. Proactive is much easier, and it provides insight that supports response to changes in the marketplace that will undoubtedly occur.