With the economy so slow, setting up a business now requires far more thought. You need a business that will withstand the pressures of a recession and still thrive, in order to be truly successful.

Some businesses are automatically recession proof, simply because they offer services or products that no one can do without, such as food and shelter. However, not everyone is in a business that offers the basics of life. No matter what your business, there are ways to help ensure that it will survive an economic downturn.

Keep in mind that smaller companies tend to fare much better when things go badly. This is mainly because these businesses have fewer costs and don’t need to bring in as much money in order to stay afloat, whereas a large corporation will need to earn millions just to break even. That’s why you see large companies going through dramatic downsizing during hard times and why smaller businesses usually make it through, even though they may struggle.

Just what do recession proof businesses have in common, apart from being smaller in most cases?

Leverage Free Advertising

Marketing costs can be one of the biggest expenses a business faces. Without advertising, sales will drop off, so it makes sense that this would be a priority, even in a difficult economy. However, the more resilient companies tend to focus efforts on the low cost or free advertising methods that abound online. These include:

  • Social Media
  • Blogging
  • Ebooks/reports
  • Contests
  • Word of Mouth

All of these methods are fairly simple to implement and tend to get a good return on investment if executed correctly.


Smart companies on a budget will keep overhead to a minimum by reducing the number of full time employees required. This is actually simple if you outsource many of your tasks. When you hire a freelancer, whether for design or writing purposes, you only hire them to do a job. When there is less work, they work less and you pay less, keeping costs down.

When you hire full time employees, not only do you have to pay them even when not much work is coming in, there are also bonuses and vacations to think of, as well. For many businesses, this is where things get rough, so opting for outsourcing can be a good way to ensure that work is completed, without spending more than you have to.

Protect Your Cash Flow

You need money coming in at all times if you want to succeed at business and businesses that are recession proof have this figured out. There are several ways to ensure that cash flow stays strong, no matter what the economic climate is like.

  • Expand your line to include life essentials, such as food, clothing, etc.
  • Expand into another geographical area, preferably one that wasn’t hit as hard by the depression
  • Invoice promptly and cut off client credit in cases where payment is late
  • Renegotiate your rent contract to see if you can reduce overhead

You may have to restructure your finances in order to keep a steady cash flow. This can involve cutting off client credit, asking for extended credit with suppliers and even laying off employees, if necessary.

Track Inventory

Inventory can be a big problem if you have a lot of money tied up in products that aren’t being sold quickly. In order to prevent this, stay on top of what is being ordered and what is being sold. You may be ordering too many of a particular product, which means more money is stuck in the goods that are sitting in a warehouse until they are sold. Ideally, a quick turnaround is best, so you are continuously making money. This requires careful planning and careful ordering. If your business has been around for more than a few months, you should have a very good idea of just how much of each item you need to order on a regular basis.

Offer a Discount to Clients

The smaller your business, the easier it is for you to stay afloat with just two or three large clients. While this may not be the best business practice since one client loss can set you back drastically, it can help keep your business going if you can increase the number of large clients on your client list. In order to do this, try offering a discount to potentially large clients. They will be more likely to hire you and this can ensure that there is enough money in the bank to continue, even in economically bad times.

Another use of a discount is to ensure customer loyalty. It’s far easier to keep existing clients, so make sure you offer them special deals to keep them around. With loyal customers, it’s possible to weather even bad recessions.

A recession proof business is one that has tight control over its finances and is adaptable to work with the times. Whether you sell luxury goods or the bare necessities, if your business follows the tips given here, it will be better able to withstand an economic downturn.