How recession proof is my industry?

Every industry faces different challenges and none is truly bulletproof, but some sectors carry more certainty with them than others. We go over some key questions you need to be asking to find out how well your business would withstand a downturn, and ways in which you can recession proof your business.
 

Are the products and services you provide essential or critical?

Some good examples of recession-proof businesses include those that provide health care and pharmaceutical products, demand for which will continue to increase as the population ages. The ABS predicts an average 3.5 per cent increase per year until 2022 in the number of Australians aged 65 to 84. Consequently, the need will grow for both aged-care facilities and medical practitioners who treat older patients.

Other examples of recession-resistant businesses include education and tuition providers, sellers of office products, motor vehicle maintenance and repair shops, and trade services such as plumbing – all of them meeting basic needs that aren’t likely to go away.

Do you have clear positioning?

In other words, do you have a strong competitive edge that makes you stand out from the crowd? Even if you aren’t offering an essential service, you can still do things that make you an irreplaceable provider within your own market niche.

Whether it’s competitive pricing, outstanding customer service or superior expertise, providing customers with offerings that competitors can’t easily match is the foundation that many recession-proof small businesses are built on.

Is your business keeping pace with technological and social trends?

As we move from desktop computers to tablets and smartphones, the ways in which we work, communicate and access services are undergoing rapid transformation. To keep pace, businesses everywhere are harnessing IT services such as on-demand software and cloud storage.

Beyond just ‘riding the wave’ and keeping up with these innovations, it’s worth noting that some of the best recession-proof business ideas come from looking for new opportunities that such trends create.

Are your customers going to buy, regardless of the economy?

Some businesses are able to happily ride out a recession because their customers will always be buying, regardless of the state of the economy, or whether they are actually providing an essential service. Examples include family restaurants, confectionery shops, liquor stores and luxury retailers. Some businesses – such as those that deal in debt collection, compliance issues and corporate insolvencies – can actually thrive during a downturn.

In business, there will always be times when you have no option but to tighten your belt, reduce your headcount or sell assets. That’s why it makes good sense to keep tabs on trends within your industry – as well as on how the economy is faring – so that when a downturn affects you, you’ll be better equipped to ride out the storm.

Maintaining a loyal customer base can help keep your business in the black even during tough times. Here’s how to make sure your customers can’t live without you.