Recession Proof Businesses During the Covid-19 Pandemic

By Jesse Posnansky

Posted : June 9, 2020

Category : Franchise News

Recession Proof Businesses During the Covid-19 Pandemic
recession proof during covid

Most people would agree that there are winners and losers in every economy. The trouble is figuring out what businesses or industries will thrive in a down economy. If you’d been considering investing recently, or are considering it now, this matter is more pressing than ever. But how do you ensure that you make the right choice in these unprecedented times?

History is always a good place to start. And while we may be in uncharted territory, this isn’t the first economic downturn or the first pandemic we’ve faced. So, can we glean any insights from the winners of the great recession, the great depression, or the Spanish flu? The answer is, undoubtably so. Food, household products, healthcare, communications, alcohol, tobacco, and coffee have all fared well in the past.  However, we did say that these were unprecedented times so we cannot stop there. In fact, companies that have survived all the aforementioned crises are facing trouble today. Take Russ & Daughters for example. Having never laid off an employee in their 106-year history, they’ve had to let go nearly half of their staff since the beginning of the Coronavirus.  So where can we go next for guidance?

The next step is to apply a little inductive reasoning. Let’s take Russ & Daughters for example. While they are in the food industry, a large portion of their business is dine-in. It stands to reason, given the nature of the virus, that any dine-in food business is a bad one currently. Dine-in is only a portion of the food industry though. And if that portion of the industry is down, others must be up. Grocery stores would seem like a safe investment. Restaurants that specialize in take-out and delivery may also warrant further investigation. An outside the box concept would be vending machines. Not only is a well-placed vending machine perfect for social distancing, it could also be a more sought-after option when safety measures are lifted. After all, no one knows what this will do to the long-term psyche of the consumer.  But can we use big data to get a glimpse of what their psyche may be, or just give us insights as to what a winner might be?

I would say, yes, data can give us insights into the future and what a good business to pursue may be. One business that the data suggests is about to spike is mobile pet grooming. Traditional brick and mortar pet grooming facilities, much like dine-in restaurants, inhibit social distancing. In comes mobile groomers like HYDRODOG. By coming to you, they’ve limited social contact and kept the clippers out of your hands. But what does the data say about that notion? One tool that can be used to glean data about a business you’re interested in is the Keyword Planning Tool from Google. Using it, it was simple to spot a trend in the search demand for terms related to mobile grooming.

recession proof during covid

The graph above shows us that terms related to mobile pet grooming are searched for 100’s of thousands of times a month. It also shows us that the volume of searches started trending up massively in April. Since the volume of searches more than doubled in April compared with the 11 previous months, it would suggest that getting into this business could pay out big. And while this business may gain market share due to necessity, its practicality may lead to its staying power. So, what other businesses are prepared to weather this crisis and stay the course when things normalize?

Unfortunately, unless you’re psychic, that cannot be said with certainty. All we can do is look to the past, look at the data, think critically, and do our due diligence. If we do this, we’ll know that our decisions were informed. That is, perhaps, the best that we can do since we are living with such uncertainty. Doing nothing though, will certainly put us at risk of losing. Losing our jobs, our way of life, our businesses, or our savings. And why risk that when, with some focused research and gumption, we can find a recession proof business that will vault us to the winner’s circle?

Other Concepts: Mobile Oil Change and Cleaning Franchises are some other possible recession-resistant concepts.

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