Best Types of Small Businesses to Start During a Recession

Types of Small Businesses

Recession. It’s on everyone’s minds lately. And with economist projections showing that a recession is likely on the horizon*, it’s easy to understand why.

There is no official definition of a recession, but economists have described it as a period of economic decline lasting more than a few months. With inflation persisting, consumers and business owners alike are feeling the pressure. When people are spending more on necessities, their budgets might not have room for much else, which can mean that spending slows.

Not the cheeriest news. However, while it might seem like a bad time to make such a big investment, your dreams of starting a business don’t necessarily need to be put on hold.

Depending on your trade, experience, and ambitions, there may be a small business well-suited for you. Certain businesses are historically heartier than others in the face of economic issues. Let’s explore some of the better types of small businesses to start in a recession and what makes them such good choices.

Why Start a Small Business During a Recession?

Whether you’ve always wanted to start a business or if you’ve found yourself wanting a career change, starting a business can be daunting. It might never seem like it’s the right time. And with the potential of a looming economic downturn, it can feel like a big risk.

However, some professional skills and services have historically done well, even during lean times. These services are generally necessities with consistent demand. If you already possess the skills and credentials necessary to perform these professional roles, starting your own business can be a welcome career change. In a difficult economic time with the threat of layoffs and pay cuts, becoming your own boss can be refreshing.

Small Business Ideas During A Recession

So you’ve decided to take the plunge. You’re ready to start your own small business, and one that is in a better position to weather the storm. Now is the time to ask: What types of small businesses are considered a safe bet with a recession on the horizon? We’ve compiled a list of small business options known for their fortitude. Let’s dive in.

1. Bookkeeping.

If you have accounting or tax experience and credentials, a bookkeeping business could be a great option for you. During difficult economic times, companies and individuals may find their financial situations tighter or more complicated, so they may look to professionals to help manage their books.

2. Cleaning services.

The COVID-19 pandemic made one thing very clear: Workplace cleanliness and upkeep are hugely important. That’s where starting a cleaning services business comes in. By starting a commercial cleaning business, you are essential to keeping offices and business locations sanitary and safer for employees. Larger companies are more likely to have the budget consistently available for this, so commercial cleaning is a great way to go if you’re looking for a good recession-business to start.

Prefer to keep it at a smaller scale? Don’t worry. Starting a residential cleaning company is also a pretty solid bet. There always will be people who need cleaning assistance at their homes. Some people have difficulty or are unable to perform many cleaning functions. On top of that, a recession could potentially see stay-at-home parents returning to work out of necessity. They might be willing to spend a little to keep their homes ship-shape.

3. Property management.

Housing is a fundamental necessity. During a recession, it’s possible that fewer people will be able to afford to buy a home. Renting, subsequently, becomes an alternative, with more people opting for shared living arrangements. Buying and renting out homes and units may have the potential to be a lucrative business venture, despite the state of the economy.

Starting a property management business may not be for everyone. It requires a large up-front capital investment that not everyone is able to swing. However, if you do have the money to invest in a property and are willing to take the risk, this could be a great time to do so.

4. Car repair services.

Are you a car whisperer? If so, you may be sitting on a great business opportunity. Not everyone has the skills to fix their own vehicle, and auto repair is generally in consistent demand even during a recession. Even if you aren’t ready — or you don’t want to start a full-fledged business, you can start by doing repair work for friends, family, and people in your community.

The COVID-19 pandemic took a major toll on the automotive supply chain, with countries closing their borders and companies struggling to fill roles. While the auto supply chain may finally be starting to improve, the disruption provided a reality check and offered evidence that a disruption-proof supply chain likely does not exist . So even if things improve, it’s important to stay vigilant and prepare for the worst.

Auto repair services are particularly resilient for this reason. Whether people aren’t able to find the car they want due to supply chain issues, or if they simply can’t afford a new vehicle due to economic hardship, they may be more likely to have their vehicle repaired rather than buy a new one.

5. Handymen.

Much like auto repair, being handy can be particularly beneficial. During difficult economic periods, people may be less likely to buy new or buy at all, and this isn’t limited to automobiles.

Whether you’re skilled in woodwork, home repairs, or even technology, those skills have the potential to be lucrative. Even if you don’t plan to start an official handyman business, getting the word out that you’re available for handiwork as a side hustle or part-time gig can be a great option.

6. Beauty and cosmetology.

It may seem counterintuitive, but people still spend money on small luxuries during economic downturns. This is called the lipstick effect where people will treat themselves to nonessential pampering in times where money is tight, such as a recession. When forced to tighten their belts, they might find themselves wanting to indulge in a little self-care.

Cosmetology is a great outlet for that, and one that typically can weather a recession. If you have the appropriate experience and certification to become a makeup artist or hairdresser, or have a talent for making artisan skincare, this may be a great time to start a beauty business.

For products, try creating an online shop. For hair or makeup, start with friends and family. Get the word-of-mouth going. People want to feel good in their own skin — you can be the one to help them.

7. Childcare.

Working parents need all the help they can get. With inflation increasing the cost of food, energy, and housing, the recession could see more people going to work in order to help make ends meet.

That’s where childcare comes in. Depending on the child’s age, parents may need childcare before and after school or even the entire day. If you possess the necessary experience and you enjoy caring for children, you might consider becoming an after-school babysitter, starting a nannying role, or even opening a daycare.

8. Home repair shops.

When money is tight, consumers try various methods to reduce their spending. Whether it’s cooking at home rather than eating out or learning to flip old furniture instead of buying new pieces, recessions and DIY activities go hand-in-hand.

Homeowners may find themselves wanting to spruce up their abodes rather than trying to move. While a recession may not be the ideal time for overhauling your entire house, it may be a good time to consider minor remodels. Things like painting cabinets, swapping out furniture hardware, and even updating flooring are projects that someone may be able to tackle without having to hire a contractor.

That’s where home repair shops come in. Consumers trying to renovate but avoiding the added cost of hiring contractors will need places to go and look at their options for materials, or even asking the shop owner for opinions and suggestions. If you have experience as a contractor, remodeler, or even as an advanced hobby builder, you can provide that much-needed input, as well as materials.

9. Online teaching.

A lot of services have moved online in recent years. One of the most notable has been learning. The e-learning market is projected to grow exponentially in the coming years. Launching an online course could be a perfect fit for someone hoping to start a business or side gig during the recession.

While tutoring and offering other academic services are great options, you’re certainly not limited to them. Think about your greatest skills. Do you have photography experience? How about crafting, yoga, or art?

These are all well-suited for online teaching, and people may be seeking to improve their skills or learn new ones. People may avoid going out for financial or health reasons. You can give the experience of a personalized class without anyone having to leave their home.

10. Seamstress and tailoring.

Pinching pennies isn’t just reserved for big-ticket items. Whether it’s a nice-quality garment or one with sentimental value, there are some pieces of clothing that people can’t or don’t want to replace. If a favorite coat has a torn seam, or a pair of off-the-rack pants need hemming, a seamstress is an invaluable resource.

As with auto repair and handiwork, mending clothes is a great way to preserve an existing piece of clothing rather than having to buy something new. In a recession, every cent matters. If you’re good with a sewing machine, make quick work of darning socks, or have a knack for alterations, starting a seamstress business or starting a tailoring business is a viable option during tough economic times.

The Simply Business® Team Can Help

Starting a small business from scratch takes a lot of courage. Not only does it take time and capital, it also involves research and admin. For many, it’s a new frontier. Staying organized can be tricky when you’re navigating everything your business needs. You’ve got a lot on your plate. We can help.

Simply Business helps small business owners find insurance options that fit their unique needs. We offer policies through leading carriers, giving you the power of choice. Start your free quote online today. Tell us about your small business. We’ll take it from there.

We’ve got you covered.

Get Insured in Under 10 Minutes

Get an affordable & customized policy in just minutes. So you can get back to what matters: Your business.

Small Business Recession FAQs

Still not sure if you should start a small business during a difficult economic time? Having reservations is perfectly natural. You’re probably asking yourself a bunch of questions when weighing the pros and cons. Here are some common questions that are probably popping up for you.

Is a recession a good time to start a business?

This is a tricky question. There’s never a perfect time to start a small business, but at the same time, there’s no time like the present.

Ultimately, the more important factors aren’t as much about timing as it is about your professional background and the type of business you want to start. One of the most important considerations should be whether or not you already have the required training and experience to start the business. It also may not be wise to try to start a business if you don’t already have the necessary credentials. The industry may require certifications or schooling that can be costly. It’s typically better to stick to what you know.

What’s the best way to start a business?

You don’t have to commit to expensive, flashy ads. A great way to start, instead, is through networking. Keep an eye out for industry gatherings and community events that fit your business type and get involved. This helps put a face to the brand and helps generate positive word-of-mouth marketing.

Are there benefits to starting a business during a recession?

There are always risks involved in starting a small business, and many people will be quick to remind you of that. However, there are some benefits to breaking ground during an economic downturn.

The first is that it offers flexibility. Recessions can often lead to mass layoffs and downsizing. If this happens, setting up your own business, being your own boss, and setting your own hours can be a relief.

The second is that your competition may be at a disadvantage. Established businesses aren’t always able to withstand financial issues, and they may find themselves struggling or cutting costs on marketing.

Starting your own business amid the chaos allows room for innovation. You can try new strategies and set yourself apart from competitors. A business started during a recession may possess resilience that other businesses do not and are trying to figure out. You could have a head start on them.

Taking the Leap

Times are tight. Prices are going up, and people are already feeling the pressure. But it’s important to not let that get in the way of pursuing your passion. There’s never a perfect time to start a business. Even during the best of times, it can be a bumpy road.

But why not now? If you have the skills and experience, start looking into how to turn that into a business. Start getting your ducks in a row, and make sure you have a plan. You don’t have to start big. You just have to start.


Kristin Vegh

After several years of working in insurance while also freelance writing, I’ve finally found where the two interests intersect. I’m a writer with Simply Business with an insurance processing background and a love of research.

Kristin writes on a number of topics such as small business trends, license reciprocity, and BOP insurance.