While journalists and economists quibble over whether we’ve formally entered a recessionary period or not, most people agree that belt-tightening times loom ahead. If you run a digital agency, this means you need to plan for how your business will be affected. How industries are affected by economic downturns varies dramatically. That’s why we’re zeroing in on the resilient recession-proof industries you should start working with if you want your digital agency to be positioned for success even through difficult financial periods like the one we’re in the midst of.
Why you should pay attention to recession resiliency
Even if your agency is heavily specialized in a certain niche and you don’t want to veer too far from your field, it’s important to consider the impact that a drawn-out recession might have on the clients you serve. In fact, the more specialized you are, the more significantly you could be impacted if your clients’ industry sees a major downturn.
If you already work with clients in a largely recession-proof industry, you likely won’t have to readjust too much. But if your clients all work in industries that are likely to suffer, such as fine dining, luxury goods, and travel and tourism, you face the possibility of losing a large number of them over a relatively short period. It will also be difficult to acquire new clients in these niches as they watch their pocketbooks more closely or even close up shop.
That’s why now is the perfect time to delve into consumer mindsets and diversify the types of clients you work with and ensure you pad your roster with lots of businesses in recession-proof industries that are highly likely to survive, and even thrive, in tough economic times.
Best recession-proof industries
Recession-proof industries are verticals that people still rely on even as they cut back on other non-essentials. Working with clients in these industries will ensure you stay busy even as the economy shrinks. Serving a mix of industries can be a good hedge against the unpleasant effects of a recession.
Working parents require child care services whether times are rosy or tough. Particularly in a recessionary period that is coupled with inflation, households with two parents will likely need both partners to work in order to stay on top of rising expenses. In North America, families tend to rely less on extended family members to help with child care, making this an enduring in-demand industry.
Look for childcare businesses that have the capacity to take on more clients. Those will be most poised to grow in the years ahead. These will usually be multi-location child care centers since they have the capacity to handle more demand in a way that small, independent child care providers might not.
Businesses that specialize in home improvement and repair, such as plumbing, electrical, painting, and gutter cleaning tend to do well during a recession. Even if you’re watching your budget, you’re not likely to neglect that clogged toilet. Fewer people are handy and knowledgeable about home maintenance than in the past, so plenty of homeowners rely on these types of businesses for general home maintenance.
Since recessions prompt many people to sell their homes in order to ease a difficult financial situation, repairs related to improving the value of a house can also see an uptick.
E-learning has upended the way people learn today. Courses and skills that were formerly accessible primarily through expensive institutions can now be accessed online at a fraction of the price. E-learning ranges from low-cost short courses to pricier, more robust offerings that are sometimes even accredited. There are also popular platforms, such as Coursera, that offer free courses from top universities. There are learning options available for everyone from little kids to adults, and plenty of new startups making their mark in the space.
Since a recession can encourage people to postpone making huge financial commitments such as signing up for expensive degree programs, e-learning is positioned to become even more popular in an economic downturn. Parents who want to keep their kids learning and engaged but don’t have the budget for costly camps and programs may also explore more e-learning options.
Car mechanics have nothing to worry about when it comes to staying busy during a recession. A car is frequently one of the most expensive purchases a person makes in their lifetime, so people are far less likely to spring for a new one when they’re watching every dollar. Since there’s also a shortage of new cars that likely won’t fully ease up for several years, maintaining and repairing older vehicles will become increasingly important. From local auto body shops to larger chains, the looming recession likely just means more business.
Often cited as one of the classic recession-proof industries, funeral services are, for obvious reasons, required regularly no matter what is happening with the economy. They aren’t positively or negatively impacted by economic circumstances. However, a downturn can impact the types of funeral services that are sought out: during the previous recession, there was an uptick in cremation as opposed to burials since it’s a much lower-cost service.
Economists sometimes talk about the Lipstick Effect: the seemingly unexpected resiliency of little luxury items during times when people have to tighten their belts and spend less. In a recession, big luxuries are off the table for most people. They may not be able to take their annual family trip or splurge on monthly dinners at high-end restaurants. However, beauty products constitute a comparatively affordable small luxury that has a high feel-good factor and can cheer people up. Despite many of them not being necessities beyond some basic toiletries, beauty products tend to be resilient in a recession for this reason.
Lots of retail sectors do suffer during an economic downturn, but this doesn’t necessarily hold true for discount retailers. As consumers shop less at more expensive department stores and big-box retailers, dollar stores become a more popular destination for budget finds. If the current overperformance in the stock market of dollar store giants Dollar General, Dollar Tree, and Ollie’s Bargain Outlet is any indication, discount retail is currently in a fantastic position to grow in the years ahead.
These large corporations indicate that even smaller, regional discount retailers in both brick-and-mortar and ecommerce can expect healthy growth in the midst of a recession.
Food and beverage
People have to eat and feed their families no matter what’s happening with the economy. What’s worth considering from your perspective as an agency is what kind of food and beverage businesses you work with. The hospitality industry suffers during economic downturns, so high-end restaurants, hotel restaurants, and other upscale or travel-related food businesses likely have some hard years ahead. However, food manufacturers that sell their products in grocery stores, especially budget brands, should do well as people cook more of their meals at home. Fast food also tends to perform well during recessions, since it’s relatively affordable compared to other options.
Another example that frequently comes up as a classic recession-proof industry is the candy business. Like the lipstick effect that compels people to treat themselves to small luxuries, candy seems to be a welcome treat in a shrinking economy.
Industries related to pet care, such as pet food, pet grooming, and general pet supplies are fairly recession-proof. People love their furry friends and consider them part of the family, so even when times are tough, sales of pet essentials and treats carry on unscathed. Some more luxurious or boutique pet services, such as doggy daycares, may not be quite as resilient since people traveling less will reduce the need for these services. However, working with clients offering core products and services in the pet care space is a safe bet.
Unfortunately, the need to stay on top of accounting and bookkeeping responsibilities doesn’t wait for us just because times are tough. Individuals and businesses still need to keep up with their bookkeeping and accounting responsibilities. This means that accountants and accounting firms are very much recession-proof, and worth having on your list of clients. Since they’re unlikely to go out of business, you can count on them to help maintain your bottom line even when other clients are reducing their budgets.
This is another one of those industries that doesn’t tend to be too impacted by the ebbs and flows of the economy. People have babies even in difficult economic times, and having a baby comes with a long list of necessities. These include things like cribs, diapers, toys, baby monitors, bottles, bottle sterilizers, strollers, and a long list of other products that most families find important and will budget for even if they have to mind their dollars elsewhere. While it is possible for some of these things to be purchased second-hand, and the resale market can see a boost during a period of recession, there should still be plenty of business for those serving the baby products market.
Are there other recession-proof industries you’ve worked with that will help you weather the storm in tough economic times? Leave your feedback in the comments below!