Recession hits everyone.. What business is most resilient in the face of economic crises?

In normal circumstances, starting a business or a small project remains a daunting task, where planning, budgeting, profit and loss margins, operation, supply, and conflict with competitors to attract customers, let alone starting a business in unusual circumstances, and times when the world is going through a deep economic recession, whose signs began since The end of 2021, and it is expected to arrive in the current year 2023, and there are no clear expectations about its end date yet.

What does economic recession mean?

In short, it means high prices due to inflation, and thus customers' reluctance to buy, which leads to severe losses in the revenues of most projects, which is negatively reflected in the rates of employment of workers and employees, and raises the unemployment rate, whether by laying off employees or freezing employment processes in companies and various projects. .

Therefore, it is obvious that owners of capital refrain from risking their money in the market in times of recession, and resort to the safest solution: put your money in the bank until the crisis passes!

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However, there is a certain group of businesses that economists call "Recession Proof Businesses", which are projects that continue to withstand the waves of inflation and rising prices in goods and services, which have proven over the years to be the most solid businesses in the face of Any global economic crises of this level.

between wants and needs

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To illustrate the principle underlying “anti-recessionary business” we must always invoke the difference between “needs” and “wants” in economic terms.

Needs are simply the goods and services needed to run people's daily lives that would be severely affected in their absence, while desires represent goods and services of a recreational or luxury nature that can be dispensed with easily or with little effort in times of crisis.

A simple example: Buying food is certainly a daily necessity, while buying an elegant painting from a store to hang in the hall of the house or updating your smartphone are leisure desires that can be dispensed with.

So, in an economic environment characterized by stagnation and people's reluctance to buy, who will hold out more: the store that provides essential consumer food products, or the store that offers elegant paintings that hang on the walls?

Certainly - and while acknowledging the fact that the recession affects all sectors - the chances of survival of sectors that are necessary for daily basic consumption are greater than that of luxury sectors that satisfy “wishes” that can be completely avoided or at least postponed.

During recessions, the first thing people usually do is cut back on non-essential goods and services, with the goal of saving money for necessities.

Therefore, businesses such as "fancy restaurants", fashion stores and other non-essential consumer services often receive a heavy blow in those circumstances more than others that depend on directing their business to the basic areas.

It can be said that the password that determines whether or not a business will survive in a period of declining economies locally and globally is to focus on “high-demand” industries, regardless of the state of recession or its severity.

In a statement to the American financial planning expert, Lawrence Boone, to The Balance newspaper, he said: "I suggest that entrepreneurs choose businesses that are always in high demand, regardless of the state of the economy."

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Health care.. the most immunized from recession

The "health care" sector is one of the most resilient sectors in the face of economic recession because it provides an essential service that is in high demand.

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Indisputably, the Healthcare sector is on top of the anti-recession industries and the least affected by it, and the reason for this is simple and logical that regardless of the economic problems, people get sick, and they do not stop seeking urgent or routine health care whatever the existing problems.

In a clearer sense, the health care sector in particular is one of the most high-demand sectors all the time, which is not severely negatively affected by economic downturns. Rather, sometimes some medical sectors witness a boom in times of crisis, such as the “mental health” sector, which is increasingly in demand. it during periods of financial and social upheaval.

In a recent study released in 2021 by a group of researchers at the University of Illinois - Chicago, that monitors the relationship between economic conditions and “employment” rates in the health care sector during periods of economic recession, it was found that employment rates in this sector face great stability, regardless of the severity of the economic crises. In some stages, it even achieved growth unlike all other sectors that were affected by economic conditions, causing high rates of unemployment.

In terms of numbers and statistics, the study says that in times of economic recession, and for every 10% rise in total unemployment rates in various sectors, the unemployment rate in the health care sector rises by only 1.27%, which is a very low rate, which indicates the continued demand for This sector is regardless of the economic reality, as evidenced by the low unemployment rate and the high employment rate of medical staff.

Although many areas of health care are witnessing stability in the face of the storm, some health services are witnessing a decline in times of economic recession, especially the cosmetics sector and some treatments that are not considered necessary and can be postponed, but the health care sector as a whole is one of the sectors that have proven historically. Overcoming any economic storms with minimal damage.

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Grocery and food and beverage sector

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And if the medical care sector is necessary to treat diseases, then the grocery, food and beverages sector is no less necessary and urgent because it is linked to people's daily activities.

Regardless of your economic situation, you need food and drink to survive.

Grocery stores come as one of the most stable commercial activities in the face of the global recession, especially those that provide traded consumer goods and essential to daily life, such as canned foods and affordable food and drinks.

The same applies to many fast food chains that provide fast and economical food, which allows them to survive the storm, even if the prices of their services rise relatively during recessions.

On the other hand, it is expected that restaurants that provide luxurious meals or stores that offer high-priced food will face a decline due to the reluctance of customers and the shift of their preferences to buy what they really need.

The global financial crisis during the years 2008-2010 proved that restaurants of this type achieved huge losses.

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E-marketing services

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During the year 2022, the total spending on various e-marketing services exceeded more than $600 billion, which is a huge number indicating that digital marketing is almost overthrowing traditional marketing tools.

In fact, with the global recession in 2023, it is expected that companies will turn to digital marketing tools more, due to the high cost of traditional marketing tools such as television advertising or street advertising campaigns and posters.

As can be expected, many businesses are cutting their overall marketing budgets due to the recession and will specifically target cheaper and more effective digital marketing tools by focusing on social media marketing strategies, SEO methodologies, influencer marketing and more. All of which are services that fall under digital marketing and achieve great returns, as they target exactly the segments interested in the products.

There are other advantages that help in the recovery of digital marketing companies, including their ability to provide business solutions with different budgets, and they also provide integrated external services (Outsource) that are expected to be targeted by many companies that may accelerate the pace of dismissal of their basic employees due to economic fluctuations, and depend on On the other hand, digital marketing companies have to carry out their marketing work as cheaper alternatives to their staff, especially since digital marketing companies are paid for the completion of the project (per project basis), and they are not paid a fixed salary throughout the year.

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E-commerce, shipping and delivery

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Considering that the motto of the stage is: needs first, it is certain that many retail stores specializing in all fields, including toys, clothes, appliances, etc., will not live their best year in light of a comprehensive economic recession.

On the other hand, eCommerce platforms, although closely related, will not suffer the same degree of badness.

At a time when retail stores will be affected by the decrease in the turnout of their direct customers, and thus their revenues will decrease, and their obligations will be added to them with expenses that include salaries of workers in stores, warehouse rent, maintenance, follow-up, etc., on the opposite side, e-commerce stores that depend mainly on receiving purchase orders from customers will not be affected much. And transfer them to different stores, without expenses for storage or maintenance.

In a clearer sense, e-commerce platforms that only act as an intermediary between the customer and the seller will be less affected than direct retail stores, although they will be affected by the decrease in buying and selling traffic through them.

The same applies to the shipping, delivery and logistics sector, which will continue to be active even during the economic recession, given that transportation and delivery are the backbone of economic activities even if their pace slows down.

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digital education

The e-learning market is expected to grow to $840 billion by 2030 (Shutterstock)

When an economic recession comes, its first sign - and also the harshest one - is a rise in unemployment, whether by laying off employees from their jobs or freezing hiring operations.

And when unemployment rises, usually the first thing that the unemployed resort to is the tendency to learn new skills that enhance their resume, and thus the possibility of obtaining a job with good benefits within a short period.

According to a market study conducted by the "Allied Market research" platform, the size of the digital education industry (e-learning) is expected to grow from $197 billion in 2020 to $840 billion by 2030, making e-learning one of the largest growing sectors during the decade. Present.

The statistics do not focus on "academic education", but rather all types of digital education, including teaching dance, yoga and handicrafts, and everything that can be learned electronically, whether it is a specialized field such as theoretical physics, or a craft hobby such as the ornamental industry.

Therefore, digital education platforms are expected to witness a significant rise during the economic recession, especially platforms that offer the possibility of learning skills directly related to the most active majors in the declining labor markets around the world.

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In the end, the golden rule to withstand the storm of economic recession remains to focus on sectors that meet the necessary needs and to move away - albeit temporarily - from luxury and entertainment industries, which opens the door wide to broad necessary areas such as car maintenance, home restoration, cleaning services, and other goods and services that It aims to provide the magic equation: "Necessary Need + Good (Value) Service + Reasonable Price".

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