It might seem paradoxical, if not bizarre, to start a new business when the economy is plummeting. For many people who are risk averse and think of recession as the biggest tragedy an economy can experience, it's probably too hazardous to launch a company when the economy is in the dumps. But, if you think of recession as the ideal time to start a new venture, you are probably right; making it big during a recession it's not as impossible as it might seem.
The whole point in starting a successful business during a recession is to identify a market need and launch a business that can meet and satisfy this need. Consumers are ready to buy anything that is correctly marketed and can convince them that their needs will be met, regardless of the prevailing economic climate. This explains the huge success of major corporations that started their business operations during a recession and today are well-established corporations worldwide.
a) Food Industry
Some of the businesses that never lose their touch are those related to the food industry. Fine dining may be affected by the recessionary climate, but fast food chains are more likely to flourish and achieve profitable operations. People would love to have the option to eat out when everything else – rent, gas, groceries, mortgage, interest rates etc, - won't be an option for them. Besides, fast foods are always a practical solution for people who are really crunched and are looking for a quick meal.
Two prominent examples of fast food start-ups during a recession are Burger King and IHOP (International House of Pancakes – for those who are not familiar with the acronym).
Burger King Corp. is the dream-come-true of two aspiring men, David Edgerton and James McLamore, who opened their first burger restaurant in Miami, FL, in 1954. In 1953, the United States experienced a great recession as a result of a post-Korean War inflationary period, a huge transfer of funds into national security and a restrictive monetary policy that ultimately led to debt-refunding and increased interest rates. These events led the United States to a demand-driven recession until the mid-1954 with declining GDP, government spending and investment. In this climate, Burger King started operations. In 1957, during the Eisenhower recession, the company introduced the Whopper that still remains its signature burger. Today, Burger King operates more 12,000 in 73 countries.
The story of IHOP Corp. is similar to Burger King as Al and Jerry Lapin started their business in Toluca Lace, CA, in 1958 during the Eisenhower recession. In 1961, IHOP began franchising and today, there are more than 1,433 locations across the U.S.
b) Travel & Hospitality Industry
People always love to travel, particularly when their routine becomes difficult to deal with. Although the travel industry is cyclical and highly subject to seasonal demand, there are always businesses that can market their services to consumers in an affordable way. The secret is to adjust the marketing efforts in such a way as to attract more customers in times when lack of funds doesn't allow extravagant vacations.
c) Media Industry
People always read the news. Especially, during a recession period, they are more likely to be interested in reading newspapers and watching TV in order to get an idea of how long the recession is expected to last and what experts estimate about the general situation. This explains the birth of Cable Network News, known as CNN during the recession of 1980. Following the oil crisis of 1973 and the energy crisis of 1979, stagflation affected the US economy in the early 1980s leading to historically high unemployment and inflation. Under the circumstances, people were eager to get any information. CNN was there to give them information 24/7, until, from a little station it became a worldwide network watched by 1.5 billion around the globe.