The Coming Recession Won’t Derail These 4 Startup Sectors
Although many entrepreneurs shy away from launching new ventures during recessions, they don't necessarily have to. All they need to do is to target specific markets that thrive during downturns — and they just may benefit from the otherwise adverse economic conditions
By | Chris Porteous | www.entrepreneur.com
Right now, the global economy is on the brink of its biggest recession since the financial crisis of 2008. Conventional wisdom holds that recessions aren’t the best time for entrepreneurs to launch new ventures, and there’s some solid logic behind that notion.
After all, rising interest rates are going to make funding a business more of a challenge, and potential customers won’t be as eager to part with their cash for anything but the most essential products. And neither of those conditions bode well for most types of businesses. But that doesn’t mean that entrepreneurs are going to have to sit on the sidelines and wait for the recession to run its course.
Instead, they’ll need to be a little more careful in the kinds of ventures they choose to pursue. For those willing to have some flexibility in their plans, some sectors should provide fertile ground for startups during the coming recession. Here’s a look at four of them and why they’re where entrepreneurs should begin to turn their attention.
1. Technology reconditioning
One of the easiest ways for an entrepreneur to find a worthwhile recession-proof business idea is to look for a sector where consumers spend heavily in good times and create a way to satisfy the same need at a lower cost. It’s the same approach that causes dollar stores and other discount retailers to do so well when consumer budgets tighten.
But this isn’t a new idea, so it’s getting harder and harder to find niches that work in the same way. Harder, but not impossible. One sector where entrepreneurs can still apply this idea is consumer electronics. Today, people have gotten used to a smartphone replacement cycle of between two and three years. But with those devices retailing for upward of $1,000 when new, a recession will encourage more people to seek cheaper alternatives.
