7 Recession-Proof Small Businesses

If you’ve been thinking about starting a small business, going freelance, or becoming a sole proprietor, you’re not alone: According to the U.S. Census Bureau, Americans submitted 5 million new business applications in 2022 (down only slightly from a record high of 5.4 million applications the year before).

But what type of business will thrive in this (or any) economy? Is there such a thing as a recession-proof small business? Though there’s no foolproof answer, some small businesses tend to fare better than others no matter what the economy does.

We’ve gathered some proven, recession-proof business ideas to help you prepare in the event of a downturn, plus a few tips to help you bake some resiliency into your own new (or existing) venture.

What Is a Recession-Proof Business?

Growing a business in any economy can be a challenge—and no venture is completely recession-proof. That's because almost all new entrepreneurs require some amount of funding along with a raft of skills to launch, market, and keep a successful business running efficiently.

However, some businesses seem better equipped to withstand a recession. For example, businesses with built-in, consistent demand for its products and services are typically less vulnerable to the ups and downs of a tight economy. And some new ventures may outperform during an economic downturn because they were created to address the needs and pain points brought about by recessionary times.

Operational skills also make a difference, especially during difficult economic periods. Developing a solid marketing plan, mastering financial skills and money management tools, and being flexible to the demands of starting a new business all contribute to a venture’s ability to endure. Starting a business can be simultaneously exhilarating and demanding. Thought and planning on the front end will save you some difficulty later.

7 Recession-Proof Business Ideas to Explore

If you want to go into business for yourself and are looking for inspiration, consider the following seven business ideas as a place to start. While these businesses aren’t completely immune to slowing sales or fluctuating supply and demand during a recession, they do have a track record of holding up when the economy is down. They may also spark more ideas about where to look for other opportunities that sound appealing to you.

1. Discount, Bargain, Or Used Goods

Affordability is a good look in an economic downturn. But even without a recession in play, thrifting and bargain hunting are gaining popularity. According to U.S. Census data, retail sales at used merchandise stores are on track to top $24 million in 2022, up from $16.4 million in 2020. Online reselling, retail pop-ups, and consignment businesses are capitalizing on this recession-friendly trend, which also helps sellers raise a few dollars in a tight economy and helps make for a more recession-proof business. Discount, bargain, and used goods aren’t limited to luxury items or vintage fashion. The key here is serving up in-demand goods at affordable prices, which is a decent business model in any economy but an especially timely one if the market starts to go south.

2. Home Repair and Maintenance

Recession or not, the demand for home repairs and the skilled professionals who perform the work continues unabated. While new home construction and high-end home renovations may lag during an economic slump, fixing a leaky pipe will always be a priority for homeowners. Along with home repair and maintenance contracting businesses, do-it-yourself products that help homeowners make their own repairs may prove to be smart recession-proof businesses ideas to consider.

3. IT and Technical Services

Regardless the size of business you may be focused on serving, most can’t operate efficiently without some hardware, software, or technical service providers. Online sales and customer management platforms, remote networks, and cybersecurity issues are only a few essential aspects of business technology. Business-to-business services that support and maintain technical operations or innovate for new efficiencies tend to do well when economic waters get rough.

4. Accounting and Financial Services

For consumers and businesses alike, taxes and finances are always top of mind and a constant concern. When the economy is in flux, that concern may intensify. In fact, a growing number of new businesses and self-employed workers may translate into an increased need for more accountants and bookkeepers. Economic changes may also create demand for more accessible financial and investment advice as people work harder to keep their businesses and personal retirement savings on track.

5. Auto Repair and Maintenance

Car maintenance and repair are in consistent demand, making this a recession-resistant market—and largely a recession-proof business. While new vehicle sales slow down and people hold onto their vehicles longer during a recession, the need for services such as maintenance, repairs, and mobile auto-detailing often expands. Because a slow economy could mean less money to spend on upgrades, recession-savvy entrepreneurs may want to focus on offering the essentials over luxuries.

6. Food, Beverages, and Groceries

People must eat. And while some food-related businesses are not startup-friendly in a down economy (supermarkets and swanky restaurants are good examples), affordable restaurants, food trucks, bars, coffee and tea houses, and food delivery businesses feed a hungry populace. Bonus points for businesses that address immediate needs: good food at budget prices, small indulgences that don’t break the bank, or comfortable places to gather with friends, for example.

7. Professional Consulting Services

Generally, most large businesses look for ways to reduce overhead during a recession, sometimes by reducing headcount. Freelance workers that can quickly flex their schedules to pick up the slack may find themselves in high demand. Consultants who can help navigate a difficult economy may also find a niche. However, starting or running a professional consulting-oriented venture in an economic downturn can be tricky: Since spending is down, these types of business services must deliver significant, measurable value to attract and retain clients.

Businesses That Work in a Recession

The seven types of businesses highlighted above aren’t the only potentially recession-proof businesses out there. Small businesses that can quickly offer products and services in response to recessionary pain points can often find a market of ready and willing buyers.

For example, during the pandemic (which included a brief recession surrounded by major economic disruption), in-person fine dining establishments were hit hard. In response, online ghost kitchens offering a variety of delivered foods from a single location and restaurants that quickly pivoted to take-out found their moment.

Generally, recession-proof businesses often have one or more of the following characteristics:

Adaptability

Small, nimble startups that can quickly lean into new opportunities brought about by recession have an edge. Laid off workers freelancing from home may need childcare that’s flexible instead of full time. Consumers who feel anxious about their finances may seek out the help of a financial advisor. Adaptability is also an asset when the economy picks up and needs change again.

Recession-proof market

Consumers with ultra-high incomes may not feel the pinch in a recession. Additionally, people who work in recession-neutral fields like healthcare and the government may have stable employment and steady incomes despite the economy. Some needs are essential: food, housing, clothing, and health.

Access to capital

Lean and mean is a mantra for recession-proof businesses, but access to business loans and credit may be what gets your business off the ground or helps you through a rough patch. Finding a business loan that will work for you can give you options you wouldn’t otherwise have.

Unique delivery

Online streaming services got their start during the Great Recession of 2007/08. Why? New technology made it possible for people to consume a lot of entertainment at a low cost without leaving the comfort of home—a perfect fit for a tight economy. Putting a new twist on an already established basic business model may help you meet a need that didn’t exist before.

Affordable luxury

Specialty lattes have survived many an economic downturn because they’re a small indulgence most people like to treat themselves to and can reasonably afford, even when money is tight. Consumers may be hungry for small splurges and low-cost “luxury alternatives” as budgets tighten.

Financial fitness

Minding your margins, managing cash flow, building and maintaining credit, and tending to your business’ overall financial health is critical during a down economy. Businesses that survive and thrive during a recession don’t just find demand—they meet that demand profitably and efficiently.

The Bottom Line

Starting a business in any economy means looking for opportunities that are responsive to the market and address the pain points of the times you’re in. Checking out recession-proof businesses is a starting point. You'll also need to consider whether a business suits your talents and expertise, whether it’s conducive to running as a small business, and if there are niche opportunities worth exploring.

Creating a detailed business plan is also critical. It's important you fully understand the opportunity you’re considering and the operational challenges of making your business a success. If you need information and help getting started, the Small Business Administration’s SCORE (Service Corps of Retired Executives) program connects up-and-coming entrepreneurs with business mentors and a library of information on starting your own business.