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RECESSION-PROOF Business Models?

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GetShitDone

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There's a recession looming...

1) What business models do you think are recession-proof?

2) How would you suggest to adapt your business to thrive (not survive) in the coming recession?

3) What are your thoughts on starting an outsourcing company such as a call centre during a recession?
 

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Nothing is recession proof, so I'll assume you mean things that resist recession more than others.

Things funded by taxes like trash collection maybe.

"The last service people will cancel before their child starves, and maybe not even then." So, in other words, cable TV.

Crack cocaine and meth, obviously. The customers go out and steal money to keep buying. Can't recommend that one though.

Adult education can be good, like skill training. Reason being is that even if people are laid off, they'll go reskill to look for better jobs. Depends on the area of focus though.

Technology and infrastructure services, if you have a client base that doubles down on tech and automation during recession times. Some do, because it's cheaper than people.

Government pension fund manager. That job aint goin away.

Oh, I have one that's perfect....

Auction house. You don't have to buy or sell anything, just take a market-maker's fee on it. Benefit from all the fire sales when people close stuff down.
 

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tolmanmedia

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Franchising or licensing is a business that is safe(er) in a recession. I own a nation wide wedding company, but we chose to license out our systems instead of franchising (still a very similar concept). We get a 7% royalty on every dollar every area in the nation makes, forever.

I personally own 5 of the 62 "franchise" areas available in the US. My areas are all in the West Coast, which is being destroyed by panic/mass hysteria right now. Everyone is hiding their money under their pillows instead of spending it.

In my 5 areas, I've had more already booked brides begging for their non-refundable deposits (usually $700-1200) back than I've had leads this week. It's crazy. My areas are suffering greatly these last few weeks. We've dropped 90% in sales, which obviously sucks for me financially.

HOWEVER. There are a few areas in the nation that are CRUSHING it right now, and that's making me bank. The areas doing well are mostly in the midwest, where the hysteria isn't nearly as great as the West Coast. I imagine that as the virus spreads, different areas will perform better than others.

But I don't care! Because at the end of the day, these area owners (fellow entrepreneurs) will go work their asses off to make sales, and I'll cash in 7% of everything they do forever. So even if my 5 areas suck during a recession, I'll have the security of knowing that I've got multiple income streams.

Also, people will ALWAYS get married regardless of the economy. We offer a value wedding package that is usually 60% lower than most photographers charge, and we have a better portfolio.

Looking back at the data from the 2008 recession, the same amount of people got married as in all previous years. People don't time their weddings with the economy. When the economy is down, they will NEED to find our company, as we are one of the only companies that offer such high value at such a low price.
 

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Home Services businesses that deal with emergencies:

Flood Damage Restoration
If a house floods, you're F*cked if you don't fix it. Selling a house to liquidate? Buying one when the market is crashed out? Ya, the flood damage will need to be fixed.

Fire Damage Restoration
Same as above. High emergency.

Rain Gutter Cleaning and Restoration, and Installation (we do all 3)
Rain gutters broken and water destroying the landscaping and foundation of the house? Ya, gonna need to fix that.

Plumbers
While people are shitting out all their stock piled food and stuffing extra horded toilet paper down the pipes, all quarantined in one place, you'd best believe the plumber will be needed! Self explanatory!

Home Gym equipment

Home office equipment

Internet Service Providers

Cable TV

Anyone making devices or accessories for those devices

Just a few off the top of my head. No excuses here.
 

BizyDad

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1) Funeral homes?
2) Not sure how taking about my business helps you, and I'm not sure what business you're in. It sounds like it changes every two weeks.
3) Plenty of call centers started during a recession. I mean, I still get sales calls during a recession. If you can find a way to provide value and get customers to pay for it, what are you waiting for?
 
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GetShitDone

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Franchising or licensing is a business that is safe(er) in a recession. I own a nation wide wedding company, but we chose to license out our systems instead of franchising (still a very similar concept). We get a 7% royalty on every dollar every area in the nation makes, forever.

I personally own 5 of the 62 "franchise" areas available in the US. My areas are all in the West Coast, which is being destroyed by panic/mass hysteria right now. Everyone is hiding their money under their pillows instead of spending it.

In my 5 areas, I've had more already booked brides begging for their non-refundable deposits (usually $700-1200) back than I've had leads this week. It's crazy. My areas are suffering greatly these last few weeks. We've dropped 90% in sales, which obviously sucks for me financially.

HOWEVER. There are a few areas in the nation that are CRUSHING it right now, and that's making me bank. The areas doing well are mostly in the midwest, where the hysteria isn't nearly as great as the West Coast. I imagine that as the virus spreads, different areas will perform better than others.

But I don't care! Because at the end of the day, these area owners (fellow entrepreneurs) will go work their asses off to make sales, and I'll cash in 7% of everything they do forever. So even if my 5 areas suck during a recession, I'll have the security of knowing that I've got multiple income streams.

Also, people will ALWAYS get married regardless of the economy. We offer a value wedding package that is usually 60% lower than most photographers charge, and we have a better portfolio.

Looking back at the data from the 2008 recession, the same amount of people got married as in all previous years. People don't time their weddings with the economy. When the economy is down, they will NEED to find our company, as we are one of the only companies that offer such high value at such a low price.
I loved the last part. Sounds like providing huge value + a "Recession-Proof" (low) price = succeeding in the recession.
 

Andy Black

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Some of our clients are asking us to pause their marketing campaigns because they're in the hospitality industry. (I literally had a message to do so for one client 10 minutes ago.)

Other clients are seeing an uptick in search volumes and sales (office chairs for example).

Sadly, we'll be creating new campaigns for a law firm where they're offering to prepare wills upon remote instruction.


It's also sad looking at Google Trends for some things. We're started some lead gen projects in the mortgage space and this is what's happened in the US for "refinance" and "mortgage rates" search volumes over the past 5 years:

31247


I'm happy my business isn't dependent on just one industry and we can directly help other businesses stay afloat. Imagine if I'd followed the standard advice of focusing only on one industry and had picked hotels?


I'm in the business of generating sales for other businesses. I think this is a service businesses will pay for even (especially?) in a recession.
 
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GetShitDone

GetShitDone

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Some of our clients are asking us to pause their marketing campaigns because they're in the hospitality industry.

Other clients are seeing an uptick in search volumes and sales.


It's sad looking at Google Trends for some things. We're started some lead gen projects in the mortgage space and this is what's happened in the US for "refinance" and "mortgage rates" search volumes over the past 5 years:

View attachment 31247


I'm happy my business isn't dependent on just one industry and we can directly help other businesses stay afloat. I'm in the business of generating sales for other businesses. I think this is a service businesses will pay for even in a recession, maybe even especially in a recession.
Interesting Andy.

In that case - What's your opinion on the DIgital Marketing Agency industry as a whole during the recession?

I would think that agencies would lose $ if the businesses that they serve are losing $ due to consumers not spending.

Then again, I guess it depends on the industry that the agency is targeting?
 

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Andy Black

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What's your opinion on the DIgital Marketing Agency industry as a whole during the recession?
As with any industry, if you've only been making money because of a rising tide then you may be left stranded when the tide goes out.

Specifically for digital marketing agencies:
  • Businesses are probably under a lot of pressure to cut costs and to increase revenue.
  • Some businesses just want to survive and will be happy to run ad campaigns that can bring enough revenue to cover their ongoing costs.
  • Other businesses will be more aggressive and try to thrive rather than survive.


I guess it depends on the industry that the agency is targeting?
^^^ This, and how well the business owner navigates these troubling times. Now more than ever we need to keep our heads and step up as leaders.
 

alexkuzmov

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I`m surprised that nobody mentioned this, but one obvious 100% recession proof busines is: Food production.

Anything which has to do with fruits , grains and taking care of livestock isnt going anywhere.
Ever. EVER EVER.

Granted there are other dangers when it comes to food production but recession does not affect it.
 
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GetShitDone

GetShitDone

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As with any industry, if you've only been making money because of a rising tide then you may be left stranded when the tide goes out.

Specifically for digital marketing agencies:
  • Businesses are probably under a lot of pressure to cut costs and to increase revenue.
  • Some businesses just want to survive and will be happy to run ad campaigns that can bring enough revenue to cover their ongoing costs.
  • Other businesses will be more aggressive and try to thrive rather than survive.



^^^ This, and how well the business owner navigates these troubling times. Now more than ever we need to keep our heads and step up as leaders.
Therefore, it sounds like agencies need to target niches mentioned in this thread (ones that are "recession-proof) instead of targeting niches that only thrive during the tide as you mentioned.

I think a majority of businesses (based on your 3 bullet points) would fall into the survive, not thrive mode. Just need to map out a pitch & offer that makes them realize that they have to invest in marketing to thrive. On top of that, maybe introduce "Recession-Based Pricing" + Value.

Just like @tolmanmedia 's offer is affordable pricing with huge value.
 

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Therefore, it sounds like agencies need to target niches mentioned in this thread (ones that are "recession-proof) instead of targeting niches that only thrive during the tide as you mentioned.

I think a majority of businesses (based on your 3 bullet points) would fall into the survive, not thrive mode. Just need to map out a pitch & offer that makes them realize that they have to invest in marketing to thrive. On top of that, maybe introduce "Recession-Based Pricing" + Value.

Just like @tolmanmedia 's offer is affordable pricing with huge value.
Affordable pricing with huge value works in any economy.

But you started off by asking a misleading question, and are jumping to kind of a big conclusion.

Don't limit yourself to these mentioned. Mechanics might not be a recession proof industry, but they'll still pay a good marketer in a downtime. So will plumbers, garage door guys, any other home services, florists, etc etc.

I named a bunch of B2C companies, but B2B companies look for good marketers in recessionary times too.
 

loop101

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Plumbing.
Dentistry.
 

UnrealCreative

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Well, I had a client who invested heavily in mobile home parks.

The main reason being that it was "recession proof,"
In the sense that tenants living in A-Class will move to B, B to C, C to D and so on.

People always need a place to live.
 

Tourmaline

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What is the driving sentiment behind wanting a 'recession proof' business?
 
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GetShitDone

GetShitDone

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Affordable pricing with huge value works in any economy.

But you started off by asking a misleading question, and are jumping to kind of a big conclusion.

Don't limit yourself to these mentioned. Mechanics might not be a recession proof industry, but they'll still pay a good marketer in a downtime. So will plumbers, garage door guys, any other home services, florists, etc etc.

I named a bunch of B2C companies, but B2B companies look for good marketers in recessionary times too.
I get the feeling that most biz owners go into survival mode during a recession (My marketing agency clients have told me their clients are pausing campaigns eg. local biz owners especially due to COVID-19). I suppose that's a COVID issue & not a recession issue.

Sounds like it just depends on the niche (as you said mechanics might have the money to pay a marketer despite having lower sales... due to them having a higher ticket value per client, therefore they can spend more on marketing than the average Italian restaurant down the road)

Nonetheless - Surely it's ideal to do marketing (during a recession) for a niche/business model that thrives during a recession?

What is the driving sentiment behind wanting a 'recession proof' business?
To not be hit hard by a recession and instead do well?

I'm asking from more of a "marketing to niches that do well in a recession as they can spend more" point of view though.
 

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After the storm clears, I think "who" you are marketing to is going to be far more important than "what" you are marketing. The upper 20 percent will still control 80 percent of the wealth. That is the audience who can and will continue to spend the most. The bottom 80 percent, on the other hand. will be in financial shambles, will little in the way of discretionary income. So now, more than ever, I believe you need to target your products and services to the affluent.

With that said, I am by no means discounting the importance of "what" you are marketing. Dan Kennedy would tell you that the affluent spend the most amount of money on wealth management, their kids, self-image and experiences. I would still use that as a benchmark.

The new economy will provide a golden opportunity for ambitious entrepreneurs. As Robert Kiyosaki said, problems are opportunities, and problems multiply in a recession. Plenty of fortunes await for those who can rise to the occasion and solve them.

The gloom and doom projections concerning the economy does not phase me. Many of my competitors will succumb to the downturn in the economy. But I will not. Nothing but good times ahead.

Cheers
 
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mon_fi

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- food production
- real estate rentals
- toilet papers
- communication network companies (at&t and alike)

Whatever happens in this world, people will have to eat, sh*t what they ate, sleep somewhere and communicate/consume content.
 

GIlman

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Some of our clients are asking us to pause their marketing campaigns because they're in the hospitality industry. (I literally had a message to do so for one client 10 minutes ago.)

Other clients are seeing an uptick in search volumes and sales (office chairs for example).

Sadly, we'll be creating new campaigns for a law firm where they're offering to prepare wills upon remote instruction.


It's also sad looking at Google Trends for some things. We're started some lead gen projects in the mortgage space and this is what's happened in the US for "refinance" and "mortgage rates" search volumes over the past 5 years:

View attachment 31247


I'm happy my business isn't dependent on just one industry and we can directly help other businesses stay afloat. Imagine if I'd followed the standard advice of focusing only on one industry and had picked hotels?


I'm in the business of generating sales for other businesses. I think this is a service businesses will pay for even (especially?) in a recession.
Refinancing may not all be because of need, but quite a bit for opportunity. I started looking at refi rates because the fed was lowering the funds rate. Ironically refi rates have gone up as the fed has reduced rates, I’m not in lending so this is pure speculation, but I’m wondering if it’s because of increased perceived risk of default.
 

Boychamp

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Kind of surprised this one hasn't been mentioned but bars. They typically will survive a recession - as long as they aren't the expensive, trendy, cocktail-y bars they typically do pretty well. Of course they'll take a bit of a dip but overall, they tend to survive. Granted the Covid thing is absolutely crushing them so that's been interesting - really puts the "you never know what might happen" into perspective.
 

Agni

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In my 5 areas, I've had more already booked brides begging for their non-refundable deposits (usually $700-1200) back than I've had leads this week. It's crazy. My areas are suffering greatly these last few weeks. We've dropped 90% in sales, which obviously sucks for me financially.
Hey Tolman: Question: do you keep the deposits or, due the Extenuating Circumstances, refund them? I read an article on an investor offering vacation rentals who is working with airBnB and Booking.com, however, they have just changed their policy and are refunding all payments including 'non-refundable' bookings; this has devastated his business.
To recession proof my business I want to look at either subscription based business or one where the deposit is used to fund the business is not refundable.
 

tolmanmedia

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Great question, they are non refundable deposits. That's clear in the contract. If they have to reschedule (since they will still get married 99% of the time regardless if recession) we say the deposit is non refundable but they can change their date without penalty.
 

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Any government services and contracts are good recession proof businesses....at least up until the government decides that it can no longer afford them. You will need to figure out what those services are.
 

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