The 0.2% decline in the UK’s GDP in Q3 2022 may sound like a minor hiccup in an otherwise healthy economy, but the reality is much worse. It effectively ended the growth streak of the previous five quarters, signaling a looming recession in the UK and the rest of Europe.
The spiraling cost-of-living crisis and worrying geopolitical news are only exacerbating the situation. Naturally, starting a new business in this economic climate may feel daunting.
While counterintuitive, tough economic times have historically given birth to some of the most successful and resilient companies in the history of global business.
In the UK, the household essentials giant Wilko started during the Great Depression. The panic of 1907 is considered the worst economic crisis in the US, next only to the Great Depression. The following year, the industrial output fell by 17%, but the same year, General Motors was founded.
Poundland opened its doors in 1990 when the UK was reeling through one of its worst economic slumps. JD Sports has its roots in the economic turmoil of the 1980s. All these examples paint a clear picture.
While recessions are bad for the economy on a macro level, they affect some sectors more than others. Tenacious entrepreneurs find businesses to start in a recession that can help them turn the downturn into an opportunity and beat their competitors to succeed.
So, what business to start in a recession? We asked a freelance researcher and writer, who themselves have their own business to bring together a list of 10 recommendations for businesses to start in harder economic times. And here is that list…
1. Cleaning Services
It is a perfect business to start during a recession because it requires little to no investment. All you need are brushes, gloves, brooms, mops, and detergents. You can get started by offering your house cleaning services in your local area.
With more people working from home than ever, home cleaning becomes essential for maintaining a good working environment.
Not only that, an increase in both the elderly wanting help and young professionals wanting to spend more of their free time out and about, people will be happy to pay you to help them maintain a clean, pleasant working/living environment.
2. Event Management
Economic recessions offer an excellent opportunity for entrepreneurs to launch an event management business. Customer-focused corporate events will increase as companies try to woo customers away from their competitors, especially in the B2B segment.
More importantly, rain or shine, economic boom or bust, people will continue to celebrate weddings, first birthdays, and bar mitzvahs and will need the services of a planner to get the best deals.
Of course, you’ll have to build strong relationships in the local communities to become the go-to person or business for event management. But these bonds will keep your business alive for a long time. Eventually, when the economy picks up, it will have a multifold impact on your business.
3. Fast Food Franchise
On account of their streamlined operations, fast food chains offer their patrons the cheapest food and beverage options. These meals are hot and filling and go a long way in stretching the weekly meal budgets of families.
While fancy restaurants may see their customer footfalls dropping, fast-food businesses are resilient to recessions. As people become wary of spending, fast-food franchises and restaurants emerge as the best businesses to start in a recession, in UK.
A logistics business is one of the front-runners in our list of businesses to start in a recession. Even during a global pandemic, when the world came to a grinding halt, logistics companies kept functioning to deliver products to people’s doorsteps and keep businesses running around the globe.
You can offer your delivery services to restaurants or other logistics companies. Suppose you want to operate on a bigger scale. In that case, you can enter into contracts with medium and large businesses in your region to help them deliver different types of products, ranging from small packages to heavy-duty machinery.
5. Photobooth Hire Business
With relatively low start-up costs, it’s not hard to see why this is one of the best businesses to start in a recession. Photobooths bring people happiness when everything around them is gloomy.
In starting and running a photobooth business, you are helping them create memories of the much-needed happy times. Even in times of austerity, when people opt for smaller weddings or frugal events, they will still want to have fun.
In any case, recessions are a time to get creative with expenses. So, while events may not feature gourmet food or fine wine, people still choose photobooths that offer both functional and entertainment value.
Best of all, people will create wonderful memories they’ll fondly remember for decades.
6. Repairing Electronics
During a recession, people do not have the budget to buy new high-value electronics. They prefer getting their devices repaired over purchasing a new one. If they can’t fix them, they prefer to sell them for cash and downgrade to an affordable device.
They are also more likely to buy a used device that will stretch their money. Setting up a refurbishing business will cater to all these needs. Interestingly, you can set up an electronic refurbishment business for low seed capital, making it one of the best business to start in a recession in UK.
7. Security Services
Security services are a part of every civil society. People believe that crime rates go up during a recession, which increases the demand for security services.
It does not matter whether that belief is based on facts; demand for security services increases during economic turmoil.
For this reason, getting into the security services industry during a recession could be immensely lucrative. You may offer manned security or sell security systems.
People will pay to protect their families and prized assets. In times of crisis, security businesses provide them with peace of mind.
8. Childcare Services
Working parents forced to spend more time at the office to safeguard their jobs require childcare services. Parents who have lost their jobs during the recession may also need these services to find time to hunt for a new job.
In particular, single-income households will suddenly require both parents to start working to make ends meet.
With each scenario playing out during a recession, the demand for childcare services will be high. Parents will still need childcare services when the recession passes to enjoy their much-needed downtime, making it an evergreen business.
9. Home Improvement Services
For home improvement services, recessions offer an excellent opportunity to expand their customer base. Property owners, who want to sell, are trying to add more value to their properties by renovating kitchens, bathrooms, and other areas.
On the other hand, patrons who had to move to smaller homes would want to improve their new, smaller living space.
Most people respond to recessions by spending only on essentials, which usually means little to no travel. It also automatically shifts their attention to home improvement because they will now spend most of their time at home.
10. Bookkeeping or Financial Planning
Companies are always trying to bootstrap their expenses. However, recessions push them to become even more vigilant of their costs. During economic turmoil, small businesses grow increasingly stringent with their finances.
During this time, they look for skilled bookkeepers and financial planners to reduce their tax burden, highlight avoidable expenses, and tighten their budgets.
In fact, as people and businesses become more conscious of their money than ever, this may be one of the best businesses to start in a recession.
Find Your Business to Start in a Recession
The UK is the only G7 economy to contract in the June-September quarter compared to 2019. It’s widely accepted that a recession is coming. But, with the knowledge of the best businesses to start in a recession, you can turn this downturn into a solid first step to your future success.