Share This Info:  

Buying A Business? Top 5 Recession Proof Small Businesses To Consider


Buying A Business Top 5 Recession Proof Small Businesses

The economy has started to repair itself since the recession. While things may never be what they were in the past, the economy and small businesses have started to gain some form of momentum again.  If you are considering buying a small to mid-size business, you should always take into consideration how changes to the economy may impact is success. A recession proof business is typically defined as a business that either thrives or is not impacted by a struggling economy. There is no telling what the future holds for our economy so while I can't say that there is any business that is truly immune to the effects of a recession, there are some that handle the impact better than others.

In this post, I'm going to cover several businesses that I have seen fare well in troubled economic times. Keep in mind that it's not just the type of business you should consider but also how you manage it that will help your company succeed should things get tough again.  So just because you buy a business that is said to be "recession proof" doesn't mean it's untouchable.  You have to manage it well, be prepared for challenges and know how to react when you see things changing.  With that, here's my top 5 list of recession proof businesses.   
   
Laundromats

Even when the economy is struggling, people still need to keep their clothes clean!  In fact, during a recession when consumers have less discretionary income to buy new clothes, they are likely to try and take better care of the clothes they have by washing them regularly so they can keep the same clothing for a while. One of the first services people cut back on when things start to get tight is dry cleaning. They will actually start buying clothing that is washable so they can avoid paying to go to the dry cleaner. On top of that, more and more work places are shifting to casual dress so Laundromats seem to have consistent sales regardless of the economy.

Another great thing about owning a Laundromat is that if your revenue is impacted by a recession, it is likely that you have very little overhead to worry about meeting. Most Laundromats have 1-3 employees at most.  Unless it offers wash and fold services, the employees are typically responsible for collecting money from the machines and for cleaning the facility. If you are functioning as an absentee owner and having someone else do these tasks for you, they are easy and not too timing consuming so you could take them over should you ever need to cut payroll costs.    

Auto Repair Shops

As long as there are cars on the road, there will be a need for auto repair shops to maintain them.  Because of this, I feel that auto repair shops are somewhat recession proof.  Regardless of how good or bad the economy is auto repair is a "need", not a "want." People will always need their cars fixed.  Plus, when the economy is bad, people are more likely to hang on to an old car and repair it then invest in a new one.

Be careful though, the auto repair business is one that really needs to be managed properly in order for it to do well in a recession.  There is a lot of competition in this industry from auto dealers and large franchises.  The key to being successful in any economic condition is to have a good reputation and a base of loyal customers that trust your work.  To create these things, you need skilled workers that know what they are doing and provide high quality services.

Liquor and Candy Stores

This may sound like two businesses that don't belong in the same category, however, they are actually similar when comes to being recession proof.  Both liquor and candy stores are said to be somewhat recession proof because when the economy is down people will still indulge in certain vices as a means of feeling better about what's going on.  When it comes to liquor stores, consumers may change the quality of the product they are drinking but they will still continuing consuming alcohol in some capacity. Also, as consumers cut costs by going out to dinner less, they opt to stay in for dinner and mimic the dining out experience by accompanying their in-home meal with something from the liquor store.

As far as candy stores are concerned, some of the major candy retailers reported record profits following the recession. While some may think that candy consumption would be negatively impacted by a recession the opposite is true. Consumers turn to candy as an inexpensive treat to help them feel better during tough times. It is also an affordable luxury that consumers can give as gifts when higher priced items are unattainable.

Repossession And Collection Companies

This one is a no brainer! During a recession small businesses that specialize on collecting payments owed to lenders, flourish. While some people may see this industry as one that capitalizes on other's misfortune, in my opinion, it's simply the law of supply and demand. When times get tough and people start defaulting on their loans, the lenders need someone to get the money back that they are owed.

Because of the negativity that often comes with a career in this industry, buying a small business that specializes in repossessions or collections may not be for everyone.  For the right entrepreneur it could be a really good fit that turns out to be very profitable. Before buying a business in this industry, you really need to understand what you are getting into and decide if you're cut out for it.

Elder Care Facilities And Funeral Homes

Some people may be taken back by the fact that I'd also mention these two businesses together but the fact is you can't stop the life cycle. No matter what is going on with the economy, the Baby Boomer population is continuing to age and creating a demand for both of these businesses. They are starting to need assistance with day to day tasks and some are to a place where they need regular assistance on a daily basis in the form of an assisted living facility.

Again, as I mentioned before, these two industries are not for everyone. So while both elder care and funeral homes can be lucrative, it takes a very compassionate individual to own and operate both of these types of businesses. To be successful, you have to be passionate about working in these industries and understand that you are dealing with people's loved ones during a very stressful time.

Closing Thoughts

While I've pointed out my top 5 businesses that are typically not as impacted by a recession, there are definitely others that could have appeared on this list such as high end retailers and other services that cater to the higher income population which are often not affected by recessions. Regardless of the economy, people with a lot of money will continue to spend it.

Also, if you are looking for other ideas for recession proof businesses to invest in, think about businesses such as accounting firms, taxes don't stop when we're in a recession. Think about businesses that provide services that a consumer has to have.  Businesses that are impacted the most are those that offer goods or services that are considered to be unnecessary items.

As I said earlier, the businesses I've mentioned here have a better chance of being recession proof verses some others, however, regardless of the industry, no business can be recession proof if you don't manage it well. As a small business owner, there are several things you can do to help recession proof your business no matter what industry you are in. This includes:

Continue to network and implement a marketing plan - When things get tight, don't cut your marketing budget to save a few bucks. Getting your name in front of potential customers is more important during a recession than any other time.

Watch your business closely - Track expenses closely and determine if there are any unnecessary items you can cut. Watch your cash flow and stay on top of money that is owed to you. Start the collections process as soon as it is over 30 days past due.

Try to add value to your products or services before increasing your prices - If things get tough for your company your knee jerk reaction may be to increase your costs to compensate.  Well chances are if you're feeling the pinch of tough economic times, your customers are too.  If you increase their prices, you're likely to push them right out your door and into your lower priced competitor's business, so add value instead of cost and make your business indispensable to customers.

Peter Siegel, MBAAbout: Peter Siegel, MBA is the Founder & Advisor (ProBuy & ProSell Programs) at BizBen.com (established 1994, 8000+ California businesses for sale, 500 new & refreshed postings/posts daily) working with potential business buyers, business sellers, brokers, agents, investors, & advisors). Reach him direct at 925-785-3118 to discuss strategies regarding buying, selling, (or financing a puchase of) a California businesses.


Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business


Comments Regarding This Blog Post


The salon and beauty industry is another recession proof business, because in hard times for the consumer it is often the last thing they will let go. According to Professional Beauty Association "Not only did the salon and spa industry provide much needed job growth during the sluggish last decade, it is poised to post steady growth well into the future. According to the Bureau of Labor Statistics, the number of personal appearance jobs is projected to increase 15 percent between 2010 and 2020, slightly above the rate of growth of total U.S. employment (14 percent) during the same period." People will always have to get their haircut, it's like having clean clothes, and many people will move their finances around to keep their hair dyed.


  Helpful Resources To Assist In Selling And Buying California Businesses
Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Brad Steinberg, Broker - Laundromat Specialists

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Joe Sandbank, Esq. - Legal Services

I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Elizabeth McGovern: Escrow Services - SF Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Top 100 List: This Week's Top Motivated Business Buyers & Their Requests!

If you're trying to sell a business - check out this week's top 100 business buyers - one of these buyers may be looking to buy your type and location of business! This list is updated weekly - make sure you check it frequently! Are you searching to buy - get on this list and reach seller direct!

How Many Months Should I List My Business With A Business Broker?

It's important to remember that selling a business takes time. Unlike selling a house, which can be sold relatively fast, a business can take up to six months to a year to sell. Joe Ranieri (Orange County Business Broker) at 714-292-5448 explores this topic from a Business Brokers perspective.

4 Reasons Why Business Brokers Do Not Cooperate With Other Brokers & Agents

Despite challenges in the business for sale marketplace, some of the business brokers who make a living by facilitating a deal between buyer and seller are known to stand in the way of a completed transaction because of some outdated ideas. Too bad they put greed ahead of the needs of their clients.

How To Determine Whether The Buyer For Your Business For Sale Is Sincere

A problem owners encounter when offering a CA business for sale is that not all so-called business buyers are qualified to make the purchase. It's frustrating and costly to waste time showing non-qualified buyers the business. Here are ways to identify time wasters so the focus is on real buyers.

Why Deals Fall Out: Unrealistic High Asking Prices Are Usually The Reason

The unfortunate truth is that approximately 50% of all small business sales transactions fall out. While failed transactions can happen for a many reasons, Peter Siegel, MBA (BizBen Director & Business Purchase Financing Expert) discusses the main reason deals fall through; steep asking prices.

Buyer Beware: Does A Company's Culture Effect The Sale Of A Small Business?

When purchasing a small to mid-szied CA business, there are a many items to evaluate. One area that is often overlooked is the business's office culture. Peter Siegel, MBA with BizBen discusses with business buyers the importance of understanding how the business "feels" on a day-to-day basis.

Selling Your Business To One Of Your Employees - A Good Idea? Pros And Con

After investing years of time and talent into a company, many small business owners want to feel like they are leaving their business in good hands and for that reason, some sellers opt to sell their business to an employee. Peter Siegel, MBA talks about the pros and cons to taking this route.

Uncover Hidden Problems In Due Diligence When You Buy A Small Business

Most everyone who's decided to buy a small business in California knows the importance of due diligence. That involves close examination of a business prior to removing contingencies. But not everyone knows how to uncover problems that are not obvious. Here are five of the most common hidden issues.

See All News, Tips And Events


Business Purchase Financing SBA Loans
Chuck Post Laundromat Industry Expert
Joe Ranieri Orange County Business Broker
Michael Brewer, ABC License Consultant
Facebook
Twitter
Linkedin
Google Plus You Tube
Vlogs and Podcasts


Auto Related
Business Services
Children Related
Communication Related
Computer, Internet Related
Construction Related
Entertainment Related
Financial Services
Health, Beauty Related
Home Improvement Related
Maintenance Related
Manufacturing Related
Media, Publishing Related
Pet Related
Photography/Video Related
Real Estate Services
Restaurant, Food Related
Retail Related
Service Related
Sports Related
Transportation Related
Travel Related
Wholesale Related

Auto Body Shops
Auto Repair Shops
Bakeries
Bars, Sports Bars
Cafe Restaurants
Car Washes
Cleaning Services
Clothing, Apparel Stores
Coffee Shops
Convenience Stores
Deli Restaurants
Discount, Dollar Stores
Dry Cleaners
eCommerce Websites
Fast Food Restaurants
Florists, Flower Shops
Full Service Restaurants
Gas Stations
Gift Shops
Gyms, Fitness Facilities
Home Health Agencies
Hotels/Motels
Ice Cream Shops
Juice, Smoothie Shops
Laundromats
Liquor Stores
Markets, Marts
Nightclubs
Pizza Restaurants
Postal, Shipping Stores
Preschools, Day Care
Print Shops
Salons, Beauty Shops
Sandwich Shops
Smog Test Only Shops
Smoke Shops
Spas, Med Spas
Sushi Restaurants
Tire Shops
Towing Services
Vending Routes
Wireless, Cellular Shops
Yogurt Shops

Alameda
Alpine
Amador
Butte
Calaveras
Colusa
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern
Kings
Lake
Lassen
Los Angeles
Madera
Marin
Mariposa
Mendocino
Merced
Modoc
Mono
Monterey
Napa
Nevada
Orange
Placer
Plumas
Riverside
Sacramento
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obis
San Mateo
Santa Barbara
Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Trinity
Tulare
Tuolumne
Ventura
Yolo
Yuba

0 to $99,999
$100,000 to $249,999
$250,000 to $499,999
$500,000 to $999,999
$1 million to $2 million
over $2 million



BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2019, All Rights Reserved

               Vlogs and Podcasts  
Join Us On Social Media - Content Updated Daily
Sign Up Today - For Our FREE BizBen Weekly Email Newsletter
Includes The Best Info On Buying, Selling, Valuing, Financing California Businesses:
Articles, Blog Posts, Podcasts, Videos/Vlogs, Discussions, Q&A, Workshops, Webinars,
Resources. Watch For An Email Confirmation After Signing Up Above. Thank you.
Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 
Search BizBen.com

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Should I Buy A Business That is Losing Money? Feedback From Top Advisors...
Read More News
What Should I Do If Other Buyers Are Trying To Buy The Same Business As ...
Read More News