The Top 3 Recession-Proof Businesses We Love

When evaluating good franchise businesses to invest in, there are a lot of things to consider. One is the economic environment in which you're going to be growing your business. As you're weighing your options and creating your short list of brands to research, we'd like to share some perspective on how to factor market conditions into your analysis and provide you with a list of the top recession-proof businesses that we love right now.

What is the Economy Going to Do?

When I attended my first stock trading class years ago, the instructor said something profound that I had never thought about before. It has always stuck with me.

He said that a stock's price can only do one of three things: It can go up, it can go down, or it can go sideways.

That's it.

And here's the most important thing about that, he said: You might think you know which direction it's going to go. But ultimately, the price is going to do what it's going to do. You just need to adapt to it.

The same holds true for the economy.

There has been a lot of talk about a looming recession. Might we be headed that direction? It's possible. But it's equally possible that the economy will grow in the coming months. It's also possible that it will stagnate. Up, down, or sideways. Those are the possibilities.

While we would all love a crystal ball to know exactly what the economy is going to look like a year from now, unfortunately, that's not possible. But we don't need absolute clarity to make wise business and investment decisions. We can make decisions that have the best possible chance of success regardless of what the economy does.

A Note About Market Timing

What does this mean for you as you're looking to invest in a franchise business?

First and foremost, it means that it's prudent to take a long view toward business ownership. Solid, foundationally-strong businesses in high-demand industries are able to weather the inevitable ups and downs of market cycles. In any given 10-year period, there are times when the economy is strong and times when it's soft. You want a business that is positioned for long-term success.

While it's understandable to be wary of starting a business during a recession, the reality is that down economies present opportunity and can offer fertile ground for new businesses in certain industries. For one, lay-offs free up skilled workers to help you grow your new business, potentially at discounted wages. Further, things like office space, advertising, and raw materials often cost less. And as consumers seek cost-saving or energy-boosting offerings, your business may be able to run promotions to meet those needs, especially if your products or services are already aligned in that direction.

Numerous well-known companies were founded during a recession (think: Airbnb, Groupon, Uber, and Square), showing that market timing alone doesn't dictate success; execution, product-market fit, and perseverance do. 

In other words: When you're ready, you're ready! 

The Top 3 Recession-Proof Businesses

All of that to say, while you shouldn't choose a recession-proof business just because you think the economy is heading toward a cliff, having the downside protection of a business that does well even in rocky market conditions certainly can't hurt. And remember that recession-proof businesses do great during boom times, too!

Here are the top 3 recession-proof businesses for you to consider when compiling your list of franchises to evaluate.

1. HVAC

Home services in general tend to do well even in down economies, but we particularly like Heating & Air because it's the one thing that people will find a way to pay for no matter what — and it's not really something you can try to figure out on your own by watching a YouTube video. If your faucet starts leaking and money is tight, you'll probably run to the local hardware store and try to fix it yourself. But if your air conditioner goes out on the hottest day of the summer? You'll do whatever it takes to get it fixed ASAP. Likewise in the middle of winter if your heat goes out. When I called my HVAC guy in a pinch this summer, he was booked solid. We had to rely on fans until he was able to come fix our unit. It was hot, humid, miserable week. The point is, the demand is there — and that doesn't change during a recession.

Two of our favorite HVAC franchises with appealing average annual revenues are AireServ (a Neighborly Company) and One Hour Heating & Air Conditioning. Note: You don't need any prior HVAC experience to be a successful business owner with these brands.

2. Senior Care

The most appealing thing about senior care businesses, aside from the ability to make a positive impact in people's lives, is the demographic tail winds. As Baby Boomers continue to age, an average of 10,000 people per day will turn 65, and only 5% of them will reside in nursing homes. The other 95% will need home care services of various kinds. And here's the beautiful thing about that from a business standpoint. In many cases, those services are covered by insurance. Insurance pays out regardless of what the economy is doing. In other cases, the services are paid for by the Senior. By the time someone is 65 and retired, most of their money is in bonds or pensions or other stable assets that aren't impacted by a recession. As the aging population in the U.S. continues to grow, the demand for services that enable individuals to age gracefully at home is paramount. And the money is there to pay for those services.

One of our favorite senior care franchises is Heart to Home Meals, which provides companionship to seniors through in-home meal delivery. There are also a lot of good non-medical senior care brands we like that enable seniors to age in place. Two that we love are Assisting Hands Home Care and Right at Home. Finally, we like Daycation for Seniors, a senior social activity center for people who may have dementia/Alzheimer’s, Parkinson’s or stroke characteristics and are in need of daytime supervision, assistance, and social stimulation.

3. Restoration

Restoration businesses deal with unplanned life events. Think kitchen fires or basement floods. And here's the thing: unplanned life events don't stop during recessions. Here's the other thing: the cleanup of most unplanned life events is almost always covered by insurance. The homeowner just needs someone reliable and empathetic (you and your team!) to do the work. The demand is consistent. Payment is reliable. It's a great business.

Two of our favorite restoration franchises are PuroClean and Rainbow Restoration (a Neighborly Company).

Conclusion: "Fit" First

If you're worried about a recession, it can be tempting to choose a business simply because it's recession-proof. If that's your inclination, you can't go wrong with any of the brands highlighted above. They're all great businesses.

But I would advise you the same way I advise my clients: Think about "fit" first. As great as Senior Care is in terms of the revenue numbers, demographics, community impact, etc., it simply might not be a good fit for you because it doesn't align with your skill set, desired work environment, values, etc. Your first criteria when researching franchise opportunities, then, should be fit. You're more likely to succeed in a business you love and are passionate about, even in a recession. Then, if your list of good-fit franchises contains several concepts that also happen to be recession-proof, so much the better!

To help you determine fit, take our free Zorakle business assessment, a short 10-minute survey that will deliver personalized results across seven proven sciences. We think you'll find the results to be spot-in and point you in the direction of businesses where you will thrive.