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recession-proof

Is recession in the horizon?

Is a recession on the horizon? U.S. stocks slumped lower Thursday, giving back all of yesterday’s post-Fed decision gains and pulling the Dow below the 30,000 point mark for the first time since early last year, as investors re-set prices on risk assets around the world in anticipation of faster near-term rate hikes and relentlessly high inflation.

The Federal Reserve delivered its biggest rate hike since 1994 yesterday, boosted its Fed Funds rate by 75 basis points to a range of between 1.25% and 1.5%.

What to do in a Recession?

Adaptability Charles Darwin - Your Startup Guru

As Charles Darwin observed, the most adaptable wins. We’ve been here before, a looming recession and people are worried about losing their jobs. Now is the time to think of the strategy that will help break one free of the whims of cost-cutting management.

Recession-proof / recession-resistant businesses

In a previous post, some recession-proof / resistant businesses were listed. Adding to that list are several more businesses that deserve consideration:

  • Gym / Fitness: Although fitness centers took a massive hit during COVID-19, it wasn’t for the lack of demand. According to the IHRSA, a global health & fitness association, the industry has been long thought to be, if not recession-proof, at least recession-resilient. Revenue from North American fitness clubs in 2009 (during the Great Recession) rose nearly 4 percent in 2008 from the year before, and membership grew by more than 10 percent, according to the IHRSA.
  • Independent contracting / Freelance services: When a recession hits employers turn to independent contractors as an alternative to hiring full-time employees. So, freelancing is a viable alternative to the traditional career path. The great thing is you can diversify your services so you can create multiple revenue streams. Most workers have a diverse set of skills that they can leverage. Also, there are many platforms such as Fiverr where you can easily share your skills.
  • Health and senior services: According to the Bureau of Labor Statistics, healthcare and other services for seniors are expected to grow by 23% by 2024. This service sector has already been expanding rapidly over the last decade. In fact, in 2019, there were 71.6 million Boomers making them the second-largest demographic behind Millennials with 72.1 million. As life expectancy continues to increase, the wide range of needs this market demands is large and profitable.

Sell Shovels in a Gold Rush

If you’re saying to yourself, “but I don’t have any experience in these fields.” Keep in mind the saying, “Sell shovels in a gold rush.” What this means is don’t be one of the thousands or millions of competitors jockeying for one goal. The thousands or millions of competitors can now be your customers. Find a product/service that meets their needs. Look to your transferable skill sets and network for inspiration on how to pivot into a career.

Feasibility Study

Once you have an idea of some pivot options you have to do a feasibility study to see which one is the best option for you. A feasibility study is a curtailed business plan-like document where you outline your product/service, the business model, your competitors & your customers, and expected revenues/expenses/startup costs. A well-done feasibility study can save hundreds of hours and thousands of dollars in sunk costs.

Contact us today to create a feasibility study for you.

Lipstick on a pig and recession-proof businesses

Lipstick on a pig and recession-proof businesses - Your Startup Guru
Lipstick on a pig and recession-proof businesses – Your Startup Guru

Welp, there’s no need to put lipstick on a pig. Today’s GDP data released by the US Bureau of Economic Analysis showed that real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

Chart showing Real GDP: Percent change from preceding quarter

This is really bad news which means figuring out how to mitigate damage and making all adjustments by bootstrapping. Many businesses such as bookstores, farms, and clothing manufacturers pivoted their business models to adapt to the impact of COVID-19.

One thing I learned while working with my client KiloNiner several years ago is that pet products were largely recession-proof during the 2007-2009 recession. This is because people view their pets as family members so cutting back was avoided. There are many other businesses are that recession-proof as long as adjustments are made to accommodate social-distancing requirements:

  • Repair/maintenance services: People will still need their plumbing to work, their lights to turn on, and their car engines to run
  • Dry cleaning/laundry: Laundered clothing and materials will always be needed as long as people wear clothes and don’t have in-house machines. Dry cleaning for clothing might decline as formal wear is reduced but will not go away as people still wear jackets, etc. on occasion.
  • Professional services: Accountants, lawyers, and other administrative professionals are still needed for the economy to run.
  • Funeral/Memorial services: A natural consequence of life is death. Particularly with the unsettlingly high mortality numbers associated with COVID-19, demand will likely be high for a very long time.

There are many more industries and even sectors/value-chain-links within floundering industries that are somewhat insulated from recessions. Your Startup Guru provides industry/market research as well as a wide range of other services for businesses to help navigate this turbulent economic climate.

Contact us and let’s figure out a plan for you.

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