Businesses That Profit Even During a Bad Economy
A business can increase profits by increasing revenues, reducing costs or both. It's easier to increase revenues in a rising economy than in a slowing or sluggish economy when there is more uncertainty. However, there are businesses in certain industries that make money even during a recession: The Bureau of Labor Statistics has found that some businesses do well enough to maintain or even increase their staffing levels through recessions.
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Food Related
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Grocery stores tend to do well in up and down economies because food is a basic necessity. Fast-food restaurants may also do well in a down economy because consumers tend to look for value when eating out.
Thrift Store
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Thrift stores may do well because consumers prefer marked-down prices and discounts to higher prices elsewhere. A big-box retailer that focuses on keeping prices low, such as Wal-Mart Stores, may also benefit from increased consumer traffic during a bad economy.
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Auto Repair
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Consumers tend to hang on to their old cars longer when they're uncertain about the direction of the economy. Normal wear and tear on brakes and exhaust systems require repairs as the car gets older. This increased demand can improve the fortunes of auto repair businesses.
Health Care and Social Services
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Health care and social services businesses tend to do well in up and down economies. Demand for health care services, including prescription drugs, may increase during an economic downturn because elevated stress levels due to prolonged periods of unemployment can lead to physical and mental health conditions that need treatment. A high level of unemployment, especially long-term unemployment, can also increase the demand for social services such as food banks and temporary housing shelters.
Private Education
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Government funding for job retraining programs tends to increase during recessions. This can mean more business for private education centers that offer diploma or certificate programs in such skills as computer maintenance, accounting or the trades.
Bankruptcy Counseling
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As the recession lingers, more people may find it difficult to make their mortgage payments or pay their credit card bills. Businesses that provide financial counseling services, debt restructuring assistance or merchandise liquidation services may profit from increased demand during an economic downturn.
Considerations
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Supply outpaces demand during a recession. This lowers the cost of raw materials and labor. Businesses may also find it easier to hire people who can serve more clients. All businesses benefit from lower costs, but those that can increase revenues at the same time are able to maintain and grow profits.
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References
- U.S. Bureau of Labor Statistics: Which Industries Are Sensitive to Business Cycles?
- U.S. Bureau of Labor Statistics: Employment in Services Industries Affected by Recessions and Expansions
- Reuters: Burger King Says Burgers "Very Counter-Cyclical"
- "The Wall Street Journal": Five Businesses to Start in a Bad Economy; Simona Covel; Sept. 25, 2008
Resources
- Photo Credit financial meltdown image by buckwheat from Fotolia.com
