A recession is a critical decrease in financial activity that goes on for quite a long time, even years. When a nation’s economy experiences negative GDP, rising unemployment rates, falling retail sales, and contracting income and manufacturing measures for an extended period of time, it’s termed a recession. There are very few businesses that thrive during a recession.
What Led To The Recession In 2008?
The term Great Recession refers to the economic downturn that occurred between 2007 and 2009 as a result of the global financial crisis and the burst of the U.S. housing bubble. The near-collapse of the banking system was the result of a series of events, each with its own cause, that led to the Global Financial Crisis of 2008. It affected individuals and organizations worldwide.
The crisis was brought on by a lot of different things that cost numerous individuals their occupations, life investment funds, homes, and more.
The Great Recession in the United States was the most severe economic downturn since the 1930s’ Great Depression. However, there were still successful businesses during the great depression like how Floyd Bostwick Odlum turned $40,000 into a multimillion-dollar fortune by investing in utility companies.
Businesses That Thrived During The Great Depression:
There were a number of companies that survived the great depression due to the industry and businesses they were involved in. Some businesses thrived and continued to exist because of their growing need during the time.
- Luxury retail grocery stores
- The federal government
- Information Technology
- Vices – alcohol, cigarettes, etc.
- Healthcare
- Candy and comfort foods
- Universities
But that brings us to the questions around the kind of industries that thrive in recession or companies that thrived during the recession!
Businesses That Thrive During A Recession
Essential services like health care, senior services, grocery stores, and maintenance services like plumbing and electrical are typically recession-proof industries because of their demand. If you’ve ever wondered what businesses thrive in a recession, then there’s no guaranteed answer. But, some industries are likely to be affected less than others.
During a recession, trivial products are the main thing people discard. Basically, everything that is not considered a need, but a luxury is looked away from. So restaurants, clothing stores, and other consumer goods businesses are likely to suffer.
For people to live a normal life, certain kinds of services are necessary. Life turns out to be more troublesome without them, and certain parts of society would either crumble or disrupt without them. Therefore, companies that do well in a recession are companies that cannot be avoided.
Companies That Grew During 2008 Recession
Being a local or small-scale company is one thing, but one would expect that major giants would suffer during a recession. And while that did happen to a number of leading companies, others emerged out of it and even managed to become companies that thrive during recession.
1. Netflix
The company worked on partnerships with organizations like Xbox throughout 2008 and 2009 so that users could stream on those devices. And it was able to become one of the companies that thrive during recession with these innovations.
In fact, while other businesses struggled to maintain revenue, they were growing memberships and subscriptions during the recession of 2008.
It was during these times that the brand enhanced ways of proceeding to interest their crowd, whether that implied presenting new items or growing its items with associations and coordinated efforts.
2. Airbnb
Airbnb is not only an example of a business that thrives in recession, it also started during it. It was built to fulfill a need that the recession had a significant impact on.
Brian Chesky and Joe Gebbia, roommates, made the decision to use the sharing economy to make travel accommodations more affordable for those affected by the recession after struggling to find an affordable hotel room in San Francisco. Airbnb has grown into a publicly traded company worth many billions of dollars since its beginning.
3. GoFundMe
There are very few businesses that do well in a recession, and to start one is another story altogether. “CreateAFund” was built in 2008 by the people who started Paygr, a website that lets members sell their services to the public.
Finally, they changed the name to GoFundMe, which to date is the biggest crowdfunding spot. Gofundme is a crowdfunding platform that allows individuals to fund-raise for various life-altering situations. In under 10 years it has raised more than $5 billion and gets more than $140 million in gifts each month.
In 2015 Accel Partners and Technology Crossover Ventures purchased a larger part stake in GoFundMe. The company raised $100 million in revenue in 2016 and purchased CrowdRise in 2017.
4. Walt Disney
It operates through its Disney Parks, Experiences, and Products and Disney Media and Entertainment Distribution segments. Disney Corporation (NYSE: DIS) has broadened its business to incorporate media diversion as well as sporting amusement stops and encounters. This diversification is one of the reasons for it being among the industries that thrive during a recession.
During the 2008 recession, The Walt Disney Company shares beat the S&P 500, the stock market index by 8.8%. Disney+ streaming subscriptions also increased to 73.7 million subscribers by November 2020, compared to the company’s goal of 60 million to 90 million subscribers by 2024, during the COVID-19 pandemic in 2020.
5. Amazon
Despite the economic recession, Amazon decided to launch Amazon Prime, Amazon Kindle, and AWS between 2006 and 2008.
Multiplying down on development during a downturn has helped the organization in turning into a market chief. It even sells its cloud platform, Amazon Web Services (AWS) to Netflix and other rivals to help them sell their products and services to customers.
Amazon crossed the US$1 trillion mark at the end of 2018, becoming only the second company in American history to do so after Apple that same year, with its focus on innovation during times of crisis.
So, the next question is how to survive a recession and thrive afterward? And there’s no specific formula to do that, but a basic pattern can certainly help to not end up suffering losses.
How To Survive A Recession And Thrive Afterward?
We have control over how we prepare for difficult financial times and the choices we make during them. And while there is no best business during recession, you can always learn from businesses that thrived.
- At the point when you realize that a recession is coming, the main thing to do is take care of your loans. In this case you should attempt to be as debt free as could really be expected.
- Businesses that close down also experience layoffs during recessions. So, you need to have a different way to make money. It could be a side job as a consultant or a freelance gig, but you should have at least two sources of income.
- It’s possible that the year the market crashes is not the best time to take a vacation or buy something luxurious. When you see a recession coming, be prepared with an emergency fund and cut corners where they are necessary.
- Technology will always advance, regardless of how the world responds to a recession. Therefore, you should never be afraid to learn a new technology or invest in it.
- Set up a meeting with your advisor or accountant if you have insurance, investment, accounts, mortgage, or loan services with banks or other financial institutions.
Conclusion
There’s no proper way to plan for a recession, but it can be foreseen most times. So, you can ensure your financial security and survive a recession by making informed financial decisions and taking preventative measures. A number of businesses that thrive in recession take risks but also ensure taking informed decisions.
And if you’re wondering what companies do well in a recession, it all boils down to what people need the most. Companies like Netflix, Airbnb, Uber and others are examples of how industries can thrive during such a time. So, it’s best not to lose hope but always has a clear picture of your finances!
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