Some people may have a hard time figuring out what business they want to start. Should they go the traditional route, or think outside the box? During uncertain times, what is the best business to start in a recession?
I believe going towards an online business is the best choice to make.
When we think about an online business, that can be in the form of an information business (i.e. coaching or consulting services) or creating a niche website that creates passive income. Since we’re in the information age, both formats of online business are relevant today.
In this article, I’ll lay out some questions to consider that make a business recession-proof. Also, I’ll go over how to go about taking the online business route, and if it’s the right choice for you.
UPDATED: SEPTEMBER 25, 2022
What makes a business recession-proof?
For a business to succeed in any type of recession, there are some questions to consider. That can help no matter what circumstances come about around the world (i.e. market crashes, natural disasters, pandemics, etc.).
Here are some questions to look over before starting your own business.
- Does The Business Require Little To No Money To Start?
- Does It Have Low Overhead? (Minimal Customer Support)
- Is There No Need For Employees?
- Does It Ensure Mobility? (Can You Work Anywhere Around The World)
- Can The Business Scale Quickly Once It’s Profitable?
- Which Business Meets These Criteria?
- How Do I Go In This Direction?
Does the business require little to no money to start?
Oftentimes, launching a business requires capital to get up and running. Traditionally, you may need to invest your own money to start a business.
Other ways to do that would be to seek capital from angel investors or venture capitalists. Or, you can apply for business loans from a bank.
In any of those cases, it may take a while to get up and running. Not only that, but you never know how much it’ll cost to have physical space for your business.
Will you be buying or leasing out office space to conduct business? Do you need permits or licenses to operate your business?
These are extra things to consider, and they can be a hassle if you’re not sure what you’re doing. If it requires more capital, that can be a challenge if you’re insufficient on funding.
Online business is cheaper and cost-effective
When having an online business, you can have little to no money starting out. There’s no need to go through a long process, as you would if you were to open a brick-and-mortar store.
The best part is you can start as early as today at minimal costs. Having a website is important for an online presence. So buying a domain name (usually under $15/year) and web hosting is all you need to begin.
How do you build wealth in a recession?
New entrepreneurs should invest in themselves (i.e. their human capital). Therefore, acquire rare, specialized skills that will make you valuable in the future. Once you’re earning revenue, reinvest some of it back into your business to allow it to grow.
Does it have a low overhead? (Minimal customer support)
Customer support is a crucial component of any type of business. While necessary, it can be very time-consuming and result in a lot of headaches. You may not meet your customers’ expectations if you sell your own product or service.
When you’re starting out, it’s better to avoid those issues whenever possible. Otherwise, you’ll be spending a lot of time resolving support issues instead of working on growing your business.
What I don’t like about customer support
If you go the route of an online business, you can easily get caught up in these issues. If you start a dropshipping business (large eCommerce store), there’s a lot of potentials to make money selling valuable products online.
However, there’s a good chance that you may issue refunds if the products didn’t meet your customers’ needs. Sure, you can have a profitable eCommerce business. But you could end up losing a lot of money if you’re spending most of your time issuing refunds.
I’ve gone that path before, and it was really frustrating sometimes. Although I see it as a viable option, it’s not one I recommend if customer support takes up a large chunk of your time.
Is there no need for employees?
Delegation and outsourcing are necessary for growing a business in the long run. But when you’re starting out, it’s best not to hire anyone when you have little to no revenue.
Also, human resource issues (HR) can arise at any time. The HR category includes matters such as issuing payroll or dealing with legal issues. In most cases, this is the case for medium-sized to large businesses.
With an online business, it’s quite possible to make six figures a year without having a team. If you manage to have fewer administrative tasks and minimal customer support, it may not be necessary to hire anyone.
I know some people who make five figures a month on their own. They’ve managed to keep their workload low, so there is no need to hire a lot of people to keep the business operating.
Does it ensure mobility? (Can you work anywhere around the world)
In the last few years, mobility has become much more important to running a business. It’s something I’m becoming increasingly aware of and continue to explore options on where else to live.
During the COVID-19 recession, implementing lockdowns impacted a lot of brick-and-mortar businesses. Putting aside the efficacy of lockdowns (if they stopped or slowed the spread of disease), they did a lot of harm to businesses around the world.
In a lot of cases, these businesses had to follow certain protocols, temporarily close for a while, or worse, permanently went out of business.
My point comes down to the following: Ordinances, regulations, and mandates limit your organization’s ability to grow (or shut down completely).
With an online business, you’re not subject to those types of limitations. If you don’t need office space for your business, you can do your work from anywhere.
As long as you have a computer and an internet connection, you can work from home, at a cafe, or somewhere else if you need to move to another country. Traveling around the world is another benefit of having mobility.
Can the business scale quickly once it’s profitable?
If you run a brick-and-mortar business, it may be more challenging to scale. I say that because you’re limited to customers who live in your local community.
With an online business, you have the ability to reach more people globally. Not only are you limited to your local area, but you can reach potential customers in other countries.
Once your business is profitable, you can delegate or outsource a lot of tasks. In some cases, you can automate repetitive tasks that can be boring and don’t provide much value to you.
By reaching a global audience, there’s an emphasis on marketing and getting more customers. If you know how to market effectively, you can make a lot more money in the long run.
As I mentioned before, there are people I know who are making five figures a day. Or in some cases, they built six-seven-figure businesses over time. A large part of that can be attributed to the ability to scale at some point.
Which business meets these criteria?
If the answer is yes to all of the above questions, I believe an online business is the best route to go. The idea that it’s easier and cheaper to go the online route attracts a lot of new entrepreneurs. But also, it’s the best way to get started at any time, even during difficult economic times.
More specifically, my preference is to make a niche website that earns you passive income over time. Passive income is a term that’s been thrown out a lot, and some people believe it’s easy to achieve.
But believe me, it’s not quite that easy. It takes a lot of time and effort to see the dividends pay off, and enjoy the rewards in the long run.
How do I go in this direction?
When I go about making a niche website that earns income, I like doing affiliate marketing. In essence, you write content related to the niche, along with promoting other companies’ products or services.
So when you write a review on a product or service, you can earn a small percentage of that sale. That happens when a visitor purchases the product through your review.
A lot of times, you can make between 5-75% in commissions by promoting a particular product.
This method has been around for more than 20 years, and it’ll continue to evolve and get better. I believe it’s the best starting point for anyone to get their foot in the door.
But as I mentioned, it takes time and effort to see results. It will take time to learn how to write effectively, get organic traffic, and share your content that’s helpful to others.
Do you want to learn more? Are you ready to get started now?
If you’re someone who has no idea where to start, I recommend taking the route I went over recently. It’s the best way to get started, especially if you’re a beginner in starting a business.
If you’re interested in learning more, feel free to send me a message via the contact page. I look forward to being in touch with you soon.
Overall, starting a recession-proof business is not that difficult. Depending on which route you take, it will take a lot of time and effort on your part.
If you want to take advantage of difficult economic times, it might be a good idea to answer those questions I mentioned earlier. Whatever you choose to do, it’s well worth going in that direction.
Your Turn: What recession-proof business would you like to start?
I would like to get your thoughts on this topic. Have you thought about starting a business?
If so, are you willing to start one that can do well in a recession? If not, what’s preventing you from going in that direction?
If you have already done so, have you overcome any challenges along the way? What can you do differently about it?
Feel free to share your thoughts by leaving a comment below. I look forward to reading your responses, and I’ll gladly respond promptly.
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Eric is the owner and chief editor of notimekillers.com. He takes great pride in helping people manage their time and grow their businesses. Eric is a firm believer in financial and time freedom, as he believes in financial independence and taking ownership of your time. “Time is your most important asset. It can be your best friend or worst enemy. How you use your time can shape the future you desire to have.” In his leisure time, Eric loves to write and read whenever possible. He enjoys going for long walks outdoors while doing in-home workout videos every week. You can also connect with Eric via LinkedIn.