Recession Free Business sounds quite interesting. With the fortunes of economy dwindling everyone would love to startup a Recession Free Business. Here by Recession Free Business i mean that businesses not impacted by the cut down in the spending by the customers. Secondly, there is no recession in the business as such i.e. consistent demand throughout the year. Some of the businesses that are hit hardest by the recession are linked to sectors like Automobile, Tourism, Consumer Durable, etc. People will cut their spending on holidays, eating out, buying a new vehicle or appliances etc. These are more to do with the luxury or want/demand in terms of marketing.
On the other hand, the basic requirement or need in terms of marketing are least impacted. For example, i can cut down on eating out or fast food but will not stop eating food for survival. The global turmoil impacts the Indian Economy and starting a new business at this juncture may be risky depending on the nature of the business. A Recession free business is a good bet at this time to hedge the risk. Here i would like to add that you should not start something just because it is Recession Free Business. You need to identify critical success factors for a startup. A basic skill set or understanding is required. For example, if i start something linked to dairy sector then i should have basic knowledge of the same. This point is more critical for labor-intensive businesses.
Just to clarify that there are two different types of recession free business (a) Not impacted by Recession and (b) Never hit by recession i.e. evergreen/consistent demand. In short, recession free business means a mix of both types.
Recession Free Business for Startup- A list of Top 5
1. Healthcare:
Healthcare is one of the best Recession Free Business. Rather it is the biggest beneficiary of the recession. There were studies done to prove that people fell sick frequently during the recession. A recession takes it toll on the physical and mental health of the individual. Secondly, with the changing lifestyle and eating habits, the people are more likely to fall sick. The lifestyle-related diseases are increasing.
One of the successful startup in this domain is Practo. To be very honest, i have not observed too much action in this space. One of the most visible domain is an online pharmacy. There are not too many startups in this domain may be due to statutory/regulatory hurdles. The biggest dilemma is what to start. In my opinion, wellness related products or services may see a lot of traction in coming years. Secondly, fitness related products and service will be another promising area for startups. Therefore, startups can focus on fitness and wellness. These two areas will be a good opportunity for the startups during the recession. By the way, one of the wellness classes in our society charges Rs 2500 for just 4 days program.
2. Training:
In the corporate world, the best advice of HR Manager is to upgrade your skills i.e. learning and development. It also depends on your job profile. Though organizations have cut down their spending on this domain but training is essential in crucial functions like sales and finance.
I have observed that during recession, lot of professionals join training programs to upgrade their skill sets. A startup may adopt either B2B or B2C model. There is not too much innovation in this domain. Most of the startups focus only on IT training. The important point is that upcoming startups can identify the weak areas in this domain and create a business model around the same.
3. Astrology:
Here i am not referring to only astrologers. Under fear or during bad times, people take shelter of astrology. I was surprised to see stock recommendations based on astrology. This field is not organized as such. Recently, i suggested to one of my clients to provide pan-India astrology service through video conference. He hired astrologers and started white label Astrologer on-demand service. Vastu consultancy is another area that is not organized and people find difficult to find a good consultant. Therefore, there are a lot of opportunities in this domain. It is Recession Free Business and gets benefited during the recession.
4. Relationship/Career Counseling:
The biggest pitfall of consumerism and recession is that it takes its toll on relationship and career. It is a western concept but not so popular in India. In Indian colleges, for namesake, we can have a career counselor. I met with few of them and trust me they themselves need counseling. A professional counseling is totally different from what is being perceived in India.
The biggest problem is that in India, the perceived value of counseling is low and it is not organized. For a relationship, people prefer elders/parents and for a career, students turn to teachers. The big question is are these people qualified to counsel. Recently, i can’t stop laughing for few days when one of my friends told that his father is counseling him on his strained relation with the wife. The best part is that his parents took divorce 15 years back :). I am sorry but can’t stop laughing. The point i am trying to make is that there is a lot of scope for professional counseling service.
5. Utility Services:
Any business linked to utility services is a recession free business. For example, home services like a plumber, electrician, carpenter, etc. Other services like home delivery, beautician etc are also promising. One of the startups recently tied up with small restaurants near to my apartment. These restaurants provide economical food options but due to cost, they don’t deliver beyond the radius of 1-3 Km. This new startup provides delivery service anywhere within 10 Km at fixed service fees of Rs 25 per order. It is beneficial for both restaurant and customer. A restaurant gain more customers and cut down delivery boys. As a customer, i will not mind paying Rs 25 for delivery but saving on the huge food bill.
Therefore, customers see a lot of value in utility based services and don’t mind paying for it. Utility services will never hit a recession and is one of the promising recession free business. Only negative is that it is low margin business and needs a scale for success.
Words of Wisdom: The success of a business also depends on geography. The choice of business is predominantly decided by the scope of the same. As i mentioned in my earlier posts that startups prefer to launch a business at small scale to test waters or scope of the business. Therefore, the scope of business and geography are interdependent on each other. For example, utility services is a recession free business in big cities and metro but not in small towns. At first place, it may not take off in small cities and towns. The diameter of a small city is hardly 5 Km. If i test the business model in the wrong market then a great business idea might also fail. Therefore, it is important to consider all the factors before you start a startup.
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Nitin sir can you advise on Organic farming and it’s future..?? One should concentrate on producing the food from own land or only sell it in big cities?? What is you opinion..??
Ramesh
2 key considerations are scale of business and prior experience. If you fulfill these 2 criterion’s then please go ahead. It is always advisable to tie up with some big distributor or retail chain rather direct selling.