Lindokuhle Mkhize
29 August 2023 • 4 min read
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Building a business that survives the next recession is challenging but possible. Small and medium-sized enterprises (SMEs) contribute 39% to South Africa's economy. That's why we've come up with a guide on how to build a recession-proof business in South Africa.
Read on to equip yourself with different business ideas and tools.
Did you know? Burger King and Microsoft are both successful companies that braved horrible recession hits.
During economic downturns, consumers tend to focus on essential products and services. Small business owners should sell food staples, utilities, and personal care. Services such as healthcare, automotive, and education also remain in demand.
Consider offering goods or services that customers say are necessary for everyday life. Reports on recession-resistant sectors to invest in include:
Assessing your business situation, market dynamics, and customer needs is essential. Some of the ways to ensure business stability include:
Building a recession-proof business in any country requires careful planning and adaptability. Some of the ways to do this include:
Finance experts predict South Africa to already be in a technical recession. Load shedding affects small and medium businesses the most. Weakening exchange rates force financial downsizing. Yet, economic research indicates that business ideas for start-ups are at an all-time high.
Recession-proof industries continue to thrive, with new customers even during economic downturns. Some sectors that show potential for the future include:
Applying some of these strategies can improve your business's resilience during an economic downturn. Yet, it's impossible to completely cut out all risks during a recession. Stay vigilant and check your business's performance. And prepare to make the necessary adjustments to ensure long-term sustainability.
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Businesses that provide necessities like food, information technology (IT) services, or plumbing and electrical services are likely to have stable demand during a recession.
One of the few sectors immune to recessions is healthcare. Whether it's for urgent care, inpatient services, dentistry, or optometry, people will always require medical care. Every type of small medical clinic is a wise investment when the economy starts to deteriorate.
Some companies are more resilient to economic downturns than others. The following five industries should not be launched during a recession: high-end retail, hospitality, manufacturing, construction, and home services.
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