Businesses that flourish during a recession

A president of a real estate company once told me that business is a cycle, she said that there are times you are up and there are times you are down.

During an up cycle one must invest wisely and store up for the next down turn because bad times always follow good times. Having survived the Asian financial crisis of 1998, where real estate companies floundered when the markets corrected themselves, there is indeed gold in her words. Of course one reason they survived was because they had other investments not related to real estate.

During a recession money is tight. Economics 101 states that it is the governments job to pump prime the economy into starting up again because they have the money and the responsibility to do so. The most common way of doing this is by investing in infrastructure projects that generate jobs and in turn stimulate the downstream industries to get up and running again.

Despite a recession, the wonderful thing about the economy is that it is always moving, money is always changing hands and goods are always needed. CNN had a report which showed which businesses were doing well and I added in some others that I had picked up from other reports.

Businesses that do well during a Recession:

1. Shoe Repair Shops - your local cobbler starts getting brisk business because of the imposed belt tightening. People would rather have their shoes repaired than buy a new pair. Of course the local shoe repair shop doesn’t just specialize in fixing shoes, they also repair belts and leather bags.
2. Discount Stores - Those $1 stores where everything in it can be bought for the price of $1 is starting to pick up again. Of course when shopping in those stores, one must always take into consideration the quality of the stuff that they are buying. Case in point, UK’s Poundland is hiring 1000 workers to service its store openings.
3. Second Hand Stores - There was a report of increased patronage in second hand stores that sell used stuff, like clothes, home appliances and jewelry. I’m also assuming that people will start frequenting garage sales all over again. The saying is indeed true that one man’s trash is another man’s treasure.
4. Cheap food joints - in the United States, fast food joints like McDonald’s are experiencing increased sales because people can’t afford fancy restaurants anymore. Of course in a recession, one should really consider bringing a lunch box from home and eating the left overs from last night’s dinner for lunch.
5. TV dinner businesses - they say that the demand for microwaveable food in first world countries have gone up because people can’t afford anymore to eat out. This phenomenon of just staying in the house instead of going out is known as “cocooning”
6. Religious stores - most faith based shops that sell religious paraphernalia also experience an increase in sales because people turn to God to help them in this time of financial difficulty. One item in particular is religious music.

In hard times people tend to scrutinize more what they are buying and foregoing buying things that aren’t a necessity. If you hear of other businesses that are doing well in these times, kindly share them by posting on the comments below.