Want to Launch a Recession-Proof Business? Here Are 5 Ideas

The economy was supposed to improve after the pandemic, and it did for a while. But due to unforseen circumstances, we’re dealing with global inflation and the possibility of a recession.

Starting a business is likely the last thing on most people's minds now. If you’re among the few who want to start one now, most people will think you’re nuts. But fortunately, business in many niches will thrive in a recession and continue to grow when conditions return to normal.

We’re sharing some of the best recession-proof business ideas to ensure you are successful in the challenging years ahead.

1. SaaS companies

Businesses are always looking to automate more tasks—but even more so during a recession when they’ve cut funding for new hires. Automation software makes it easier to completely or partially execute a job.

Consider email marketing, for example. In the past, when a lead signed up on a contact form, a salesperson had to follow up manually. You had to pay a full-time wage to this employee. But now with affordable email service providers like SendFox (available for a one-time fee) or Mailchimp (available for a subscription fee) this process can be automated.

So, think about what you can do to improve the lives of your potential customers and create a product they want. If you can immediately solve a big pain point during this current recession, your business will see quick growth.

Take Zoom, for instance. Its revenue increased by 169% to $328.2 million in the first quarter of 2020. This was because, during the lockdown, businesses needed a tool to communicate remotely with their employees and customers, and Zoom was the ideal solution.

Pros and cons of starting a SaaS company

Pros

• High-profit margins as it is a web-based solution
• Employees can work remotely, as it isn’t always necessary to interact in person
• Highly scalable as the product is digital

Cons

• Takes time to be profitable
• Requires technical skills such as coding and design
• Need to constantly come up with new features to stay ahead of the competition

How to launch a successful SaaS company

1. Do your research

The key to launching a successful SaaS product is to make something to solve a specific problem that will save a company money or time. The only way to figure this out is by researching your target audience. Make a list of all your product ideas and validate them by conducting surveys with tools like SurveySparrow and interviewing some participants. This research will also give you ideas on how to market and position your product.

2. Set up your product and website

Setting up yout  product and website will likely require coding and web design experience. If you don’t have either, you’llll need to figure it out with a course or hire someone. This doesn’t need to cost a lot. AppSumo, for example, outsourced the creation of its product’s first version to a team from Pakistan for just $60.

3. Share a free version

You can get people to test the first version for free. This will help you gather some feedback, which you can build on.

4. Launch the paid version

Once you feel confident about your software, it’s time to launch the paid version. You can start by sharing it with the people who helped test it—perhaps for free or at a significant discount. You could also launch it on AppSumo with a lifetime deal. This will not only help you get several customers and make some startup capital quickly, but will also help you gain feedback.

You can put this money into developing the product and implementing marketing techniques like ads, content marketing, and SEO.

2. Marketing agencies

Businesses won’t just be on the hunt for SaaS products, but also for agencies, especially creative agencies, where they can outsource work to experts for a fraction of full-time hiring costs.

Take media buying. If a company wanted to hire a media buyer full-time, they would need to pay around $60,000 a year and provide additional benefits. They could try using a SaaS product like Smartly to automate ads, but there’s only so much you can automate, and you’ll need some knowledge about ads and conversion rate optimization to use tools like this.

But for about $2,500 a month, you can hire a freelance media buyer or agency. Many businesses will prefer this option. So if you run a marketing agency or a consultancy, you have a high chance of scoring many clients.

It is one of the reasons why Klientboost, a marketing agency, doubled its revenue from $10 to $20 million during the Covid pandemic.

The advantage service businesses have over SaaS products is that you can be profitable from day one, as you deliver a service by using a skill you already have. You don’t need to spend months or years developing a product and fortifying it.

Pros and cons of setting up a marketing agency

Pros

• Easy to start and reach profitability quickly with high ticket offers
• Requires minimal investment to start
• Can be run as a solopreneur or with a remote team

Cons

• Scalability is limited as you need to hire more people
• High competition as the barrier to entry is low
• Harder to convince people to invest in a high-ticket product

How to launch a successful marketing agency

1. Reach out to potential clients

One of the best things about service-based businesses is that you only need one or two clients paying you $2,000 to $5,000 per month to sustain your business. If you already have an engaged email list or social media following, it’s easier to promote your services and get clients quickly.

Alternatively, you can use other techniques like cold outreach if you’re starting from scratch. In this book, the Ultimate Sales Machine, Chet Holmes recommends the 100 strategy method.

This is where you make a list of 100 ideal clients you want to work with and reach out to them with the right sales message. For a shortcut, you can use our services pitch email template and inform them about the problem your service will solve.

Be specific about the solution you offer, as these potential clients are busy and don’t want to spend too much time thinking about how you can help them. If you get your messaging right, you’ll convince your target audience to hire you.

You can also try looking for clients on freelance websites. But remember that there is a lot of competition on these sites, and you might struggle to get clients who pay a good rate.

2. Work your butt off

After they hire you, do an amazing job to get them the result you promised. Always aim to overdeliver. This will help you build a strong reputation from the start. You’llattract more clients through referrals, and you can use the result as a case study.

3. Create a case study and leverage it

The main barrier that prevents clients from outsourcing consultants is the cost. Many people are hesitant to risk spending money on a consultant or agency that might fail. One way to show that you can get results is by sharing a case study. As soon as you get a positive result for your first client, create a case study and leverage it in your outreach strategy. This will help you convert more people.

4. Hire people

There’s a finite number of people you can work with directly. So to grow your agency, you need to constantly hire new people to service your clients. The new hires can just follow the system you already set to service clients. As your company grows, you may need to transition to a more managerial role while your employees service the clients.

3. Online and physical stores selling essential products

Do you remember the frenzy around toilet paper during the pandemic? People will always need products like this, so you can be sure to generate sales if you sell essential products.

Essential products include food, utensils, clothes, cleaning supplies, and pet products. They will never go out of season, and there’s always huge demand.

The main issue with this type of business is that profit margins are slim, around 5-15%. To mitigate this, it’s crucial to get your average order value (AOV) and customer lifetime value (CLV) up.

The key to success with a physical or online store is to stick to essential products that everyone can afford, as purchases of luxury itemss dwindle during a recession. People mainly want essential products that will help them survive.

Pros and cons of selling essential products

Pros

• Easy to set up an online store
• Can resell products from other manufacturers
• Lot of demand for essential products

Cons

• Low-profit margins
• Lots of competition
• Requires a place to store inventory

How to launch a successful e-commerce store

Running an e-commerce store is better than a physical store as you require more capital to run a physical store. Expenses go up when you rent a store and hire employees. You will need to reimburse these costs by increasing the price of your products, which can negatively affect sales. So, it’s often better to keep costs low with an e-commerce store during a recession and later build a physical presence if you’d like to.

How to launch an e-commerce store

1. Choose a niche

E-commerce is a massive industry where many stores like Amazon, Walmart, and Target have already built a beachhead. If you try to sell everything like them, you’ll need a lot of capital. Instead, we recommend choosing a niche you’re passionate about or something in high demand and establishing yourself as an authority in it.

For example, at the start of the pandemic, sales of vitamins went up as some studies showed that Vitamin D might protect against covid. So, there was a huge demand for them. Some people took advantage of this and launched e-commerce stores that sold vitamins and other health supplements.

This way, you, too, should use tools like Google Trends to figure out what people want, then directly interact with this audience and develop products that will solve an immediate pain.

2. Launch the store

You can build the store by using an e-commerce platform like Shopify or Dukaan.

These tools offer themes, templates, and integrations that make it easy for even non-designers to create beautiful online stores.

3. Promote with ads

There are many techniques to promote your store, but for quick results, you can try ads. Ads are perfect for e-commerce stores as you need to sell huge volumes of products to make a decent profit because of the low-profit margins.

Also, not all e-commerce stores will make a profit from selling that one product. Many will need to sell multiple products from the first sale itself and increase their average order value (AOV). Through ads, you can send a lot of traffic to different funnels and figure out which one generates the highest AOV.

4. Invest in other marketing methods

Once you have a funnel that generates a good amount of profit, you can accompany ads with other techniques like content marketing and SEO.

4. Online entertainment

Britons have canceled over 1 million music subscriptions in the first quarter from sites like Spotify and Apple to save money. People are also canceling subscriptions to other online entertainment services like Netflix and Disney+ as inflation rises, and things get more expensive.

These people will look elsewhere for a free entertainment source. If you can provide it, you will attract a ton of traffic that you can monetize with ads or a very affordable subscription package.

This could range from a music subscription service like Spotify, where people can listen to free music, to social networks like YouTube, where people can watch videos, and online game sites such as Wordle.

Wordle is a perfect example of an online entertainment site that established itself during the recession. Millions of people liked playing it as it was free, creative, entertaining, and provided a mental workout. It got so popular that the New York Times acquired it for a figure estimated to be in the “low-seven figures” within four months after its launch.

Pros and cons of an online entertainment business

Pros

• Easy to set up
• Monetize with ads or by selling subscriptions

Cons

• Lot of competition because of the low barrier to entry

How to set up an online entertainment site

1. Brainstorm ideas

Creating an entertainment website such as Wordle requires some risk-taking. It might be innovative, but you can never be sure people will like it. This is why it is better to create a gaming or entertainment website that’s built around something popular.

For example, if you want to create an online games website, building something around a game like Solitaire would work well as it is a popular game.

There are many online game websites where people can play this game. But if you offer something unique that differentiates you from others—like a better interface, for example—you will stand out and attract more people.

Decide on whether to take the trodden path where the chance of success is higher or do something unique that will help you stand out better, but put you at a bigger risk. Then brainstorm ideas for your entertainment website.

2. Set up the website

The next step is to set up the website. If you have coding and design experience, you can do this by yourself. Otherwise, it might be better to outsource help. You can also buy themes and templates that make it easy for you to set up the website.

Don’t just create a simple website where people can access the entertainment. Instead, make it into a membership website where they can get an incentive for signing up. This will help you keep them coming back for more.

3. Beta-test it

After you set it up, you can invite people to beta-test it. Use the feedback to improve the game and eliminate bugs.

4. Promote with outreach

Once it is ready, you can start promoting it to more people by sharing it on social media and reaching out to influencers and major publications. Put more effort into reaching out to top publications, as it will also improve credibility.

5. Make it easy to share results

One of the reasons Wordle got so popular was that it made it easy for people to share results on social media. People liked that they could use the results emoji.

Those who were proud of their results shared it extensively, and this drove more people to the platform.

So think of creative ways you, too, can encourage users to promote your platform to their followers and friends.

5. Digital products and online courses

A recession is usually accompanied by job losses as businesses cut expenses. New job opportunities also become fewer. To compete better for these limited jobs and keep themselves occupied, many people look to upskill themselves.

This is why a recession is an excellent time to launch an info product business. Your products can range from video courses, ebooks, and templates. You can create products both for people who want to learn some skills that will get them a new job and those who want to launch a new business. Lot of people will want to give freelancing or starting a new business a go.

Pros and cons of a digital products business

Pros

• High-profit margins as all the products are digital
• Easy to set up

Cons

• Need to create new products all the time to earn recurring revenue
• Very competitive

How to start an info product business

1. Build thought authority

People will only buy a course from you if they see you as a thought authority on the subject. You can always create a course, a landing page to promote it, and generate sales by attracting cold traffic with ads. But this will cost you more money.

An easier alternative is to post social media updates, publish blog posts, participate in podcasts, and show your expertise. This will help you build authority organically and attract an audience that wants to buy your products.

2. Grown an email list

The quickest way to generate sales for your info product is to share it with your email list. If you have an email list that you constantly nurture with content, they will be more likely to buy your products as you will form a close bond. So, create a newsletter or lead magnet and promote it in your social media updates and on your blog.

Many people won’t just consume the content, but will also engage by replying to your emails. This will help you understand their problems and the content they want to consume. You can use this information to create a course they will buy.

Another great place to build an audience is Facebook groups. They might not be as effective as email lists, but they usually generate more engagement than pages and profiles.

3. Create the course or digital product

By communicating with your subscribers via email, Facebook groups, and interviews, you can figure out your course topic(s). Once you know this, create a course on the subject with the best content.

Courses could range from simple email courses, ebooks series, to detailed video courses with hours of content. You could also simply just sell templates that people can implement instantly.

The type of course you create should depend on what your audience likes to consume, the amount of time you have, and how much you will charge them. Making the content is the longest part. The setup is easier because of course platforms like Teachable and Kajabi.

Along with the course, create an entire funnel with landing pages, thank you pages, and emails.

4. Launch

Once the course is ready, launch it by sharing the link to the landing page with your email list, Facebook group, and social media followers. If the course has a good conversion rate, you can invest in paid methods like ads and renting email lists. You could also launch an affiliate program.

Another option is to list your course or template on the AppSumo marketplace. You will find dozens of people selling ebooks, courses, templates, and other types of digital products.

Which recession-proof business idea suits you best?

A recession might not be the ideal time to launch most businesses. But there are several businesses that thrive during a recession. Depending on your skill and passion, you can try one of the above ideas.

If you’re looking for something mostly digital, you can start a marketing agency or create some digital products. But if you are in the mood for a challenge, you can launch a SaaS product or e-commerce store.

Before you kick start your business, you might want to check out the AppSumo store. We have several SaaS products, courses, and templates that will help you kick start and run a successful business.