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4 Secrets of Recession-Proof Businesses


What's the key to their success? It seems like every time there's an economic downturn, a few businesses always come out on top. For example, Netflix was created during the dot-com bust and did really well during the 2008 recession by partnering with Microsoft.

With this collection of businesses that grew despite the odds, it's up to you to decide whether it was dumb luck or smart strategy that got them where they are today.

1. Big successes come from enjoying small pleasures.

In times of economic hardship, people are more likely to forego extravagant purchases in favor of more affordable indulgences. This can mean anything from cutting back on lavish vacations to opting for a less expensive car.

It may be beneficial to pursue a strategy of smaller, more affordable products and bundles. This approach capitalizes on consumers who are looking for low-cost ways to enjoy themselves by placing inexpensive luxuries at the forefront. By making up for volume that is lacking in price, this strategy could be successful.

2. In these uncertain times, it's more important than ever to have a solid customer base that you can rely on

If you want your business to be recession-proof, it's helpful to have clients who are also recession-proof. And there's no one more recession-proof than the wealthy. Businesses that cater to the upper class are usually more resistant to economic downturns.

If you're looking to invest in a luxury brand, know that they tend to hold their value better than other sectors during tough economic times. This is because luxury brands cater to high-income consumers who are less likely to be affected by a recession. However, this doesn't mean that luxury brands are immune to economic downturns. Just be mindful of how the brand is positioning itself and whether its products and services are still up to par.

3. Subscribe, lather, rinse, repeat 

Costco is known for being able to weather economic downturns well. Some attribute this to their low prices of $1.50 hot dogs. However, the true reason may be their business model of recurring revenue through memberships.

Although shoppers may reduce what and how much they buy from Costco during a recession, they are unlikely to cancel their annual memberships. This keeps Costco's revenue stream steady, which makes them more capable of weathering a recession.

Keep in mind: If we do enter a recession, businesses that already have a subscription model or offer similar monthly purchase programs may have an easier time. By the way, retail and tech aren't the only industries that can use subscriptions; annual air duct cleaning services can, too!

4. Cheaper is not always better—sometimes you need to be more creative.

We're not saying that cutting costs and dropping prices aren't sound strategies to explore during an economic downturn when you want to maintain your current base of customers. But unless your business is selling Bugattis and NFTs, there's a point where you'll hit rock bottom if you keep slashing prices. That may be

Mailchimp's response to the 2008 recession was to provide a freemium option that gave free access to the product to users with a small number of contacts and helped them migrate to a paid service as their contact lists grew. Prior to 2009, Mailchimp had no free options. By adding a free option, they helped many people during difficult times.

When it comes to price, businesses that focus on value rather than just price points differentiate themselves from the competition. This is thanks to their more holistic view. As Marketer Deric San Juan wrote in Forbes in 2019, "Value-based customers, who are looking for the best product or service at the best price, are the ones who keep businesses afloat."

This approach is effective during economic downturns as it allows businesses to focus on what people need, rather than just on single items that they want. This helps to create a loyal customer base.