Great Businesses to Start in a Recession – The Top 3 Recession-Proof Businesses to Consider

What would be some great businesses to start in a recession? That seems to be the question on the minds of many individuals who have fallen victim to our current financial situation. Company downsizing, the loss of wages due to pay cuts, and the lack of good employment opportunities has left many individuals struggling to survive and looking online for an alternate source of income.

Searching for great businesses to start in a recession is definitely not an easy task and can quickly turn into a costly mistake without doing your due diligence and thoroughly researching the industry before making any big financial decisions. In this article we’ll take a closer look at a few of these recession-proof businesses to inform you and provide you with some options that you might not have considered. So let’s get started.

Online Selling

Selling products online is certainly a great place to start building a business. You can easily get started by listing some products on eBay, Amazon, or Craigslist. You could then move up to creating an online store with these sites as your reputation grows. This could then lead to creating your own website and selling your products to the masses online. Online selling is just one of the many recession-proof businesses that you may want to consider.

Online Writing

Online writing is another example of great online home businesses to start in a recession. Writing content for websites in the form of articles and placing them on ezines can be a great source of income and can all be accomplished from your home and in your spare time. Now if you really like to write, you might consider creating a blog that is focused around a particular niche. You could then find and sell products relating to that niche and get paid as an affiliate.

Online Consulting

Here is another one of the great recession-proof businesses that you can start from home. This involves becoming recognized as an expert in a particular field and then providing your services to other businesses or individuals who are willing to pay you for your expertise. This is a great recession-proof business because in a recession, businesses will be looking for alternative ways to increase their sales and if you possess that kind of knowledge, your services as a consultant would be highly desirable.

Going online to search for recession-proof businesses is definitely the way to go. With online home businesses, you can reap the same benefits that any offline business would receive only without all the headaches. Some examples of these headaches would be:

• Overhead costs

• Employee costs

• Inventory

• Distribution costs

• And there are many more…

Now here is the greatest advantage that you can give yourself before you start any of these online home businesses. That advantage is learning how to effectively market online. And here’s why.

All businesses (online or offline) is about making sales. And to make sales, you need to have customers… and lots of them. By learning how to effectively market your business online, you will be able to accurately estimate how many customers your online business will bring in based upon your marketing research. Once you have determined how many customers it takes to make a sale, you could simply adjust your marketing efforts to increase your sales volume. This now becomes a numbers game and it’s almost like being able to right your own paycheck.

Recession Marketing For Small Businesses and Independent Professionals

Over the last few months the financial news has been grim. In late 2008, while the federal government had not yet officially acknowledged that the U.S. economy is in “recession,” financial markets were screaming headlines of “panic,” “crisis,” and even “Armageddon.” When even savvy investors like Warren Buffett and T. Boone Pickens are losing billions in the stock market you know that things are getting crazy.

We don’t want to minimize the pain and suffering faced by many due to circumstances beyond their control, but we don’t want to give in to fear and panic, either. Hopefully the new administration in Washington will focus on helping the folks on Main Street rather than bailing out the super-rich on Wall Street. Meanwhile, here are some practical self-help strategies for navigating through tough economic times, maybe even getting ahead:

Are You Prepared?
Chances are you’ll experience several periods of economic contraction during your lifetime. Financial planners recommend having enough cash-on-hand to cover at least a couple months’ living expenses in case of emergency. Beyond that, they recommend paying off credit cards, having insured savings, a retirement plan, healthcare coverage, lots of equity in your home, and maybe a stash of silver or gold coins. If you’ve got all that, congratulations! You’re probably as well prepared as anybody can be, and maybe you should be advising Wall Street or running for Congress!

It helps to take a long view. Transcendental meditators tell us that if we meditate panic will subside and the stock market will recover. Warren Buffett is buying stocks now because he thinks they’re cheap. He’s betting on the future, and he’s 78 years old!

Recessions & Depressions
The federal government defines “recession” narrowly as a period of two consecutive quarters of declining gross national product, or GNP. “Depression” is a 10% decline. However, by the time the government gets around to crunching the numbers, most of us have already felt the pain for many months. Although the Bush administration hadn’t uttered the “R” word until December 2008, everyone knew that unemployment was up, home foreclosures were skyrocketing, credit was tight, and paychecks were being stretched past their limits. Undeniably, the middle and lower classes were already scared and struggling.

Recessions typically last 18 to 24 months, although they can extend much longer. The worst economic contraction in U.S. history, the Great Depression of 1929, lasted over 10 years. One in four workers was unemployed, public sector jobs were almost nonexistent, there was no Social Security safety net, and bread lines stretched for blocks. The economy never fully recovered until the early 1940’s, when the country mobilized for entry into World War II. Of course, war is one hell of a way to achieve full employment. Consider all the positive alternatives: housing, education, healthcare, green technologies, the arts and sciences, space exploration…!

Will we have another Great Depression? While nobody can accurately predict the length or severity of an economic contraction, several mitigating factors are at play. Public sector jobs now account for up to a third of all employment, and Social Security provides at least a minimum safety net for the retired and disabled. Unemployment is projected to rise perhaps as high as 9%, but far less than during the Depression. Finally, the federal government is pumping vast amounts of money into the economy to mitigate the effects of the downturn. While this recession could be worse than most, it won’t be the end of the world.

Pockets Of Stability
During tough economic times look for pockets of stability and counter-cyclical trends. Some industries are continuing to expand, in spite of-or even because of-the current business cycle. People may put off major purchases such as appliances and automobiles, so they spend more on repairs. Auto repair businesses often grow during tough times. Enviros are cheering because bicycle sales are booming! Tax lawyers may handle fewer mergers but more bankruptcy cases. And plumbers always seem to have enough work. Heck, Joe the Plumber is working on a book deal!

University enrollments often grow during recessions. Students who can’t find work stay in school, and displaced workers go back to school to retrain for new jobs. As reported in Morningstar online (10/15/08), “In bad times, when individuals are losing their jobs, many people will look to education as a means to open up new opportunities. If there are fewer jobs to go around, potential students are more likely to return to school and learn a skill that provides increased, more lucrative opportunities.” If you are an education provider, this may be the perfect opportunity to grow your business!

The entertainment and travel industries often benefit because people are looking for escape and rejuvenation. Expensive restaurants may lose patrons, but fast food places and grocery stores are much less affected. People still have to eat. Similarly, people may scale down vacation travel plans. That European vacation may become a family outing closer to home, a “staycation,” actually keeping more money circulating in the local economy. Local spas may enjoy increased traffic even as the cost of travel climbs and the U.S. dollar weakens.

Healthcare spending is likely to remain constant or continue to rise owing to the aging of the Baby Boomer population. Seniors with discretionary income and good medical insurance are unlikely to postpone necessary procedures. Cosmetic and elective surgery will probably continue to grow, albeit more slowly. Fitness and prevention are growing trends that actually lower overall healthcare costs and should continue right through any economic downturn.

Where you ride out an economic storm is important, too. Northern California, with diverse economic strengths, great weather, and continuing draw as tourist destination, should experience a milder downturn than most other regions in the world. In the San Francisco Bay Area, singles and other lifestyle events and services, upscale retreats, and the youth markets should continue to show strength, even as other discretionary purchases such as new cars and home sales decline.

Negotiate With Cash
Commodity prices often drop during recessions, although this is not always the case. The term “stagflation,” first coined during the Carter presidency, refers to stagnant growth accompanied by high inflation. With prices for groceries, gasoline, and many staples at or near all-time highs, stagflation is here again. Still, “cash is king,” especially in tight credit markets, and with it you can often negotiate deep discounts, especially for major purchases such as autos, houses, and business supplies and services.

Recession Psychology
An important key to surviving a downturn is not to succumb to recession psychology. Recessions are scary and people feel uncertain about the future. Some people become literally depressed. They postpone spending, which further slows the economy. Entrepreneurs facing tough times may question their own self-worth. Try not to make important business decisions based on rumor or panic. Make measured responses instead.

Be consistent. Keep your clients happy and give them reasons to return, even at the expense of your profit margin. Avoid raising prices during a recession, even if your own costs are rising. Offer price breaks and concessions where you can-customers are looking for bargains. This creates goodwill and protects your client base. Offer clients alternative payment options. Extend credit terms. Accept smaller monthly payments, but insist on a regular payment schedule. If you are having trouble paying your own bills, re-negotiate with creditors. Make regular payments, even if you have to reduce the amount.

And be cheery! A kind word, a smile, and a good joke work wonders with friends and clients alike!

Contingency Plans
Could you stay in business if your income went down 10%? 25%? 35%? What is your “Plan B”? Most entrepreneurs find it natural to grow but difficult to deal with downsizing. Small businesses and independent professionals, especially those whose homes and savings are personally on the line, should avoid excessive borrowing, especially in times of tight credit and variable interest rates. Borrow as a last resort. Look first for ways to trim expenses:

Eliminate expense accounts
Cut salaries and wages
Postpone employee training
Defer equipment maintenance
Reduce staff
Replace salaried staff with contractors
Delay the introduction of new product lines
Extend credit from suppliers
Moving to less expensive offices
Postpone equipment upgrades
Renegotiate loans
Work harder or longer hours

Marketing In Tough Times
If you market consistently, you’re likely to survive a recession stronger than you went into it. When your competitors are slashing advertising budgets keep yours constant. At least don’t cut yours as much. You may even want to increase your outreach! Don’t abandon your market simply to save a few dollars in the short run. Instead, position your business for future growth! Businesses that continue to promote through a recession often come out with a larger market share than they started with. We’ve seen this work time and again through several boom and bust cycles!

A Test Of Character
Tough times can be a test of resourcefulness and character, separating those who really love their work and care about their community from those who are only in it for the money. In the end, those who stay committed to their mission often pick up market share from competitors who quit and emerge from recession stronger than ever.

Write a Great Business Plan Now

You need to write a great business plan because a mediocre one just will not do. Not any more. Not in this turbulent financial time.

Banks are stingy. Venture capitalists are stingier. And angel investors are probably the stingiest of all. Approaching any one of these entities without having a great business plan in hand is absurd. It just won’t fly.

So what makes a business plan great?

Well, starting at the beginning, the basics need to be covered. These are the items you will find outlined on every business plan site in existence. These items include:

  • Biographical information
  • Financial information
  • History of the company
  • Identifying your market
  • Credit reports

But if your business plan included all of these things, it still has less than a 10% chance of being funded.

What are you missing? Pizazz.

Pizazz means more than filling out an outline and handing it in. Pizazz means presenting yourself and your company as the absolutely best choices on the market. It means you have the ability to navigate through tough times. It means you have marketing skills beyond the ordinary. It means you can use the tools of the web world to capture more business than other businesses in your field.

More than anything else, you need the ability to take the tools that are available and make them your own, much like a great actor makes a role his own. Everybody sees the same words, but some people have the ability to see beyond the words.

And it means that you can present all of this with style and grace.

Well, we never said that writing a great business plan would be easy. It is not.

But all the work is definitely worth it. A strong business plan opens doors than would otherwise remain slammed shut. Even if a particular bank or venture capitalist or angel investor is unable to fund your project, with a strong business plan in hand you are far more likely to get the referrals that you need to succeed.

Going through the process is half the battle. Researching, writing, re-writing, honing your message… all of these are essential to really examining yourself as an entrepreneur, and your vision for your company. A “vision statement” just doesn’t cut it. Your vision will be presented throughout your whole business plan. The style, the outlook, the growth pattern, the people involved all contribute to defining your vision.

And once you have gone through the process, having the skill to put it all into a concise, persuasive sales tool called a business plan is the other half of the process. And, yes, it is a sales tool, not a declaratory statement.

The payoff? You can stand proud when you stand in front of your banker or your angel investor, knowing that you have indeed done your homework. And you are the best.

Great Businesses to Start in a Recession – The Top 4 Most Recession-Proof Businesses

Now that most people seem to have come to terms with the fact that we are in the middle of a recession, many people are now starting to look for a business that can really do well despite the financial situations that are affecting so many business industries today. If you are one of the many who are feeling motivated to start a business that can really overcome this sort of financial strain, then you will need to know about the great businesses to start in a recession. Which industries are the most recession-proof, so to speak, and which will be the best for you and your family?

The Top 4 Great Businesses to Start in a Recession:

1- Writing: Article marketing is quickly becoming a very common way to make money online. If you enjoy writing, this is a fantastic way to utilize your skills to drive traffic to websites or blogs for either yourself and your online business or for others as a freelance writer or ghost writer. You can write articles, e-books, or auto-responder emails and sell them independently as well.

2- Blogging: Another of the great businesses to start in a recession is within the world of blogging. Thousands of people have managed to earn a substantial living through the successful use of writing in a blog that has developed a large following. And the key here is to write content that will attract a large audience through the use of keyword research.

3- Coaching and Mentoring: If you have been a part of the business world for quite some time, then you may also want to consider using the skills you have learned to coach and mentor others to follow in your footsteps. One of the greatest selling services these days is in the area of Internet marketing and mentoring. So, any business that can stand apart in this area is sure to do well, especially when considering this recession.

4- Online Advertising and Marketing: Probably the number one recession-proof industry I have observed in the past few years would be in the Online or Internet Marketing Industry. A strategically-positioned, online home business provides the ability for a person to earn a substantial living that is not dependent on the current economic conditions, while also providing a flexible business to allow time with family. Out of all the businesses to start in a recession, finding one that is done primarily online absolutely makes the most sense. The internet is used every day to access information, purchase products and communicate with friends and family. If your business is done online where you have access to this huge, world-wide audience, the potential for growth is absolutely astronomical!

As you continue your search for a recession-proof business, keep in mind that as traditional businesses continue to experience the increased onslaught of rising taxes and forced layoffs, more and more people will come to the Internet to find alternative answers to their financial problems, which will only feed and improve the industry and success of online businesses. It will be in your best interests to keep this in mind as you search for a company that has been aware of these economic situations and positioned themselves to support those in financial need while providing the best online support and mentoring available.

Writing Your Business Plan – What Goes in a Great Business Plan?

Writing “The” Business Plan

What goes in it? No one business plan is truly better than another, although there is general agreement in the industry about what makes a business plan easier to read, therefore easier to defend. Here are my thoughts on an effective business plan.

1. A Business Plan includes these – list each section in your table of contents

1a. A Description of your business – Please use your words effectively. There is nothing worse than 150 pages of fluff and 5 pages of real content. The method of if you can’t dazzle them with brilliance, baffle them with B/S does not work here. You are not talking to stupid people when it comes to business plans. Never assume they can be fooled. You aren’t that smart. Nobody is.

1b. Marketing – The methods you intend to use or already are using and what has worked well in the past (proven results are ALWAYS a win-win). Online research is perfect for this!

1c. Competition – Who is YOUR competition and how are you going to manage to take a significant portion of the market share of your niche? Grandstanding is not allowed. Don’t boast about anything here other than PROVEN results. If you do then you risk losing respect and end up looking like an… dummy opportunist.

1d. Operating procedures – What type of an office do you intend to operate, and how will you operate it? Do you have office space or are you looking for something to rent/buy?. If you are looking then when you go out take your camera and have 3-4 sites documented – with address and map information (PowerPoint presentations have excellent formats to create this type of document-with eye appeal). Will you use an answering service or a receptionist?…

1e. Personnel – You don’t need a list of everyone down to the janitor (unless you are creating a business plan for a janitorial service), but you will need a list and resume of the main corporate structure beginning with the president down to the secretary, a listing of a board of directors if you have one (3-5 is a good amount to begin with). List your advisors here too, like your CPA, Business Advisor, attorney, and other professionals that you use regularly – they may be your Board of Directors.

1f. Business insurance – As a bookkeeper I carry a 2 million insurance bond on myself. That is a lot, but I would include my insurance paperwork in this section to prove my integrity.

2. All of your financial Data – also listed in your table of contents

2a. Loan applications – any paperwork that you prepared for a loan and if you are asking a partner or friend, stop by a bank and get a copy of their loan request documents and use those for yourself. You’ll look like a pro if you do!

2b. Capital equipment and supply list – from the supplies on the desk to the desk itself – get an office supply catalog if you aren’t sure so that you do not leave things out that might add up to unexpected costs down the road.

2c. Balance sheet – If you don’t know how to make one, ask a professional or create one from the numerous examples online, or go to your small business administration and ask them. They have mentors there who will sit down with you and review your business plan with you to see how it can be more effective – usually retired professionals with a lot of business savvy.

2d. Breakeven analysis – See ‘Balance Sheet.’

2e. Pro-forma income projections (profit & loss statements) – See ‘Balance Sheet’

2f. Three-year summary – Do each year separately and do a summary of years 1-3 combined also, so that you have year by year comparisons and a total column too.

2g. A first year detail by the month (day 1 through 30)

2h. Detail by quarters, Quarter 1, 2, 3, 4 for your first year, second and third year.

2i. List the assumptions that your projections are based on – example: additional staff decisions are based on growth projections of 20% per month for the first 8 months in year one…

2j. Pro-forma cash flow – See ‘Balance Sheet’

3. Any and All remaining Supporting Documents – List in your table of contents

3a. Tax returns of principals for last three years Personal financial
statement (you can pick these form up at most all banks). Even though it seems like it is none of anyone’s business these are relevant to a bank or loaning institution so that they can see your history and how you operate (or don’t operate).

3b. For any franchised businesses, a copy of your franchise contract and all the supporting documents provided by the franchise operator.

3c. A copy of your proposed lease or purchase agreement for building or rental space.

3d. A copy of any licenses you may have acquired for your business and any other legal documents you may have.

3e. A copy of the resumes of all the principals – people you consider to be your main people you are putting in the top company positions.

3f. Copies of letters of intent from suppliers, etc. – those that will buy from you if you go into business (can also be considered a list of potential customers who signed a document to do business with you.

3g. A well executed exit strategy is worth its weight in gold for paying back a loan, or money to an investor (if you are asking for private funds). Don’t forget to write this out and include it in your business plan as well (also in your table of contents).