The definition of a recession is a period where economic growth declines for two consecutive quarters. The GDP (gross domestic product) does now for a minimum of 6 months in a row.
An economic depression generally means a severe recession that last for 3 or more years. They are generally accompanied by high unemployment and low inflation.
Those are general descriptions though. If it’s bad, it’s probably a recession. If it’s really bad and lasts for a while, it’s a depression.
Keep Your Perspective
Some businesses will prosper during economic downturns. Some will stay the same. Although we hear about the businesses that are failing now, it’s important to keep perspective that those businesses don’t represent all businesses.
Here are some businesses and professions that are most likely to prosper. Remember, though, the best business idea can be a loser when it’s run badly. And, on the contrary, the most impractical idea can still work with the right owner and approach.
Accounting
This is my world. There was a huge shortage of qualified and experienced accountants even before this economic downturn. And now, in times that are tough, it’s even more important to have good accounting. People want to make sure they’re taking advantage of all of the tax breaks and SBA programs available to them. If things get worse and they have to look at credit default and bankruptcy, they will need help pulling together all of the records.
Auto Repairs
People are more likely to keep their vehicles for longer periods of time when the economy turns down. They don’t want to spend money on a new vehicle, so they need to fix what they have. That means they need good mechanics.
Credit Repair
“Credit repair” companies often rank right up there with network marketing MLMs as far as the scam alert, but there are some legitimate companies and ethical professionals doing good work in this area. It is possible to repair credit and with a few easy-to-implement strategies increase credit scores.
When times are tough, lenders, landlords, insurance companies and more take a hard look at credit scores. The worse your score, the more you’ll have to pay. It’s in your best interest to improve your score if it takes a dip. Professionals who can help you do that will be in demand.
Discount Stores
People still want luxuries, it’s just that now they are looking for affordable luxury items. People still buy things; they just may change where they buy them.
If the 2008-2010 recession showed us anything, it’s that the ultra rich scale back their conspicuous consumption and go for minimalism and the “we’re all in this together” type of viewpoint.
That could all mean great deals on used items.
Financial Advisors
Financial advisors were swamped with work when the stock market started dropping with the pandemic. People with assets, especially if they are older, want to make sure that their investments are safe. They want security and they want to make sure they will be taken care of in the future.
Home Maintenance
Both home maintenance stores and repairmen are in demand when people decide to repair and upgrade rather than selling and moving during a recession. There are often credit restrictions, so it might not even be possible to buy a new home. All of that means that people are more interested in fixing up their existing home.
Medical Professionals
It probably goes without saying that we’ve seen a huge need for healthcare providers with the coronavirus pandemic. All of the same medical issues still exist, plus a the very scary medical issues of a pandemic and the secondary health issues that show up in a stressful environment.
Property Management Companies
Even though most homeowners want to hang on to their homes and not move up, there is still a lot of movement in recessions. People have to sell and look for rentals. People have to move in with roommates. People move to cheaper areas.
Already there is a movement out of the city to more suburban areas, single family homes with a little bit of room. And as people are able to telework, they get to choose where they live.
All of that means that more people are looking for rental properties. And that means they need ethical rental agencies and property managers.
What’s Next?
In times of economic downturn and especially when you don’t know what’s going to happen next, it’s easy to do nothing. And sometimes that’s the best plan for your business. But often, if you want something to happen, you need to take charge and make it happen. Market more. Raise your prices. Lower your prices. Add products. Add services. Change your niche. Do something. And just keep moving.
We know that we’re likely in for an extended recovery period. It’s likely not going to go back to normal overnight. Get moving now so you don’t get left behind!
