A franchise provides a ready-to-implement business model that’s been tested at many locations. Because of this, experts consider franchises a safer investment than a startup. When looking for an even more sound investment, consider an industry that can endure an economic downturn. While there is no recession-proof industry out there, there are many that have the traits to help them withstand one.
Explore different traits of recession-proof industries that will survive (and potentially thrive) in tough economic times, plus how to start a business during a recession.
1. Inelastic Demand
Investopedia describes inelastic demand as when the price of a product or service changes but consumers’ spending habits don’t change. Of course, no item is perfectly inelastic, but essential items and services tend to experience minimal impact in a recession. This includes necessary items and services such as healthcare, grocery or convenience stores, and childcare services.
2. Critical Repair Service
A service performed by a professional that the average consumer can’t do is considered a critical repair service — for example, car repair shops or restoration businesses.
The average price of a new car is at record highs. In November 2022, Kelley Blue Book calculated the average new car cost at $48,681. As a result, no matter the state of the economy, people will look to keep their current cars running for as long as possible, forcing them to get help from repair shops and mechanics.
Basement floods or house fires are something a homeowner never expects or includes in their budget. But when it happens, they’ll need to call a restoration company for help. The same goes for when the heat crashes in the middle of the winter or a plumbing problem pops up.
So, any business that offers a critical repair service fares better in the economy than those that offer a luxury service like house cleaning or painting.
3. Specialized Service or Product
Like critical repair service, a specialized service or product is something people can’t live without no matter the state of the economy, like medication and health care. Businesses that provide a technical product or service include urgent cares, hair salons, in-home care, childcare, and IT services. People will continue spending money on going to a doctor’s office when they catch strep throat, getting their hair cut, having a caregiver at their parents’ house, or taking their child to daycare so they can work, no matter the cost. Plus, in today’s online world, businesses need their technology to work, which is why they will also pay for IT services.
4. Sells Discounted Products
When it comes to an economic slump, people will turn to bargain-hunting to save some change. Consignment shops and dollar stores can sometimes see an increase in customers during those times. The items they typically buy are discretionary or things they can live without, such as new to them home décor or toys.
How to Start a Business During a Recession
If the country is experiencing a recession and you’re tired of your current job and want to dive into the entrepreneurial world, franchising is a perfect way. Choose one that offers traits of a recession-proof industry. Here’s a look at those common industries with recession-proof industry traits:
- Hair salons
During a recession, you’ll want an adaptable business that targets the unserved and underserved market segments. Make your product or service necessary and worth your clients’ effort to budget it into their finances.
Consider the Urgent Care Franchise American Family Care
COVID, the flu or a broken arm won’t stop happening just because the economy is poor and consumers’ budgets are tighter. But instead of heading to an ER to rack up an expensive hospital bill, Americans will seek affordable healthcare at places like urgent care clinics. The urgent care industry is worth nearly $48 billion, and there are no signs it will slow down soon. As an American Family Care franchisee, you can provide your community with accessible healthcare that won’t break the bank.
You might ask yourself, why buy a franchise if there’s a chance for an economic downturn? Franchises provide owners with a support system to help them thrive. A franchise gives you a proven business model and the backing of an experienced brand. Franchises use group buying power to reduce product and equipment costs and have a more significant impact with combined funds for advertising.
With more than 300 locations stretching across the U.S., AFC is a leader in the urgent care industry. Get started today to learn more about our opportunities.