Recession Busting Businesses

30/03/2009 by info.

Buyers often ask me what is a good business to buy? The answer is, a good business to buy is the business that suits you in the long term. A business is for life not just for Christmas, a play on a now famous slogan.

The question they really wanted to ask is “What is a good business to buy in a recession?” as they don’t want to have the risk of failure.

Ok so here are a few ideas after 30 minutes thought on a Monday morning:

There is a saying that there are only two certainties in life, death and taxes, so the first category would be to buy a business that regardless of the economic climate people will always need. On the basis that if someone has to eat sure as hell someone has to sell.

Next is to look at the way a person changes their behaviour when they are afraid, so buyers will be more driven by fear than pleasure. So look for the business that reduces peoples fear and loss.

People reduce discretionary spending and substitute that spending. So they may not buy a new car but use a proportion of that money in the maintenance of their existing car.

People may not be able to carry out their preferred plans so look for alternatives, so if they can’t sell their houses they will look to rent them.

Certain people will be in distressed financial situations - due to debt for example, so look for a business that helps or is associated with this distress.

I often look back 20 years ago at Films and TV programmes at the technology that was in use then, how they have changed in such a short period of time. So you should be looking at existing businesses and seeing how new applications or technology can improve that business.

You should always be looking for products that are on the upward slope of their Product Life Cycle, there is still growth in that market. And if you are really just looking for something to do before the economic boom starts, perhaps you can look for products with short life cycles, in other words a fad - to make a quick killing.

Of course some people will never start in business due to fear, the pure fact that you have taken that step means that you have a much greater chance of being successful in a recession. “We only have one thing to fear and that’s fear itself” as FDR said in his inaugural address.

So what are you waiting for there’s plenty of opportunities out there!

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