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Recession-proof businesses

January 10, 2009

CNN this morning spoke about two businesses that have been spared (so far) by the US recession. Education and pharmaceuticals.

Education and healthcare were two hotly debated topics during the presidential election, to give you an idea of how important they are in American life. Education helps you get a job, health allows you to keep it. That’s my rationale anyway.

But what about here in Malaysia & Singapore?

I have been thinking and as usual, I would come from the standpoint of what people are looking for rather than what can I convince people to buy. This is what I see so far.

Food – Retail
Recession or not, people need to eat. While the typical American family eats at home (which is probably why food outlets doesn’t appear on their radar of recession proof businesses), the workforce of My, Sg and HK mostly eat out. As incomes climb down, expenditures fall and demand shifts from upmarket eateries / fast food to more modest ones of the local variety. So forget about swanky upmarket restaurants. I predict its a good time to be in the economy mixed rice business and other foods in that price range.

Food – Wholesale
I also believe there’s some upstream action we can no longer ignore – the agro-food business. There’s a serious shortfall in global food supply and it’s a long term crisis. Compare that to the high tech business where everyone and his brother is trying to compete and prices are falling (1 terrabyte HDD falling below Rm 400), as opposed to food prices which are increasing. If you or your family have idle land, this is the time to think about putting it to good use for high tech, high yield food production. Sure its not a ‘sexy’ business but if money’s your bottom line, why would it matter where it comes from.

As people get laid off, the demand for jobs will exceed supply. You can capitalize on it two ways, by brokering between demand and supply like what Jobstreet is doing, or by being a supplier of skilled workers to short-term projects, for example by assembling a team of retrenched but talented Java programmers. While companies are retrenching staff to cut cost, they can’t run away from routine maintenance – whether systems, machinery or premises. Its far cheaper for them to contract it out as a one-off expense than be stuck with permanent fixed overheads like salary, from which they’re trying to escape.

Second hand markets
When companies shut down during the recession, they face a problem of disposing assets that can range from office furniture to automobiles. Meanwhile ordinary people, with less money to spend, will be out looking for used items in good condition. You can capitalize by brokering demand and supply. Its also an opportunity to build connections with the recycling industry who will pay cash for your disposables.

I’ll post more as I think of more.

The way of the quick-footed entreprenuer, from my point of view, is not to create demand for new products but to spot the problems created by changing conditions, understand the new demand they create, and seeing what you can do to supply to that demand.

One Comment leave one →
  1. January 10, 2009 7:01 pm

    =_= i was about to come out with a similar post but you beat me to it. And I must say I couldn’t have agreed more. Before the recession hits, I actually told my friends before. Headhunting business will start to evolve, and to be able to outsource certain parts of a business to a group of ‘affordable’ experts for a period of few months can be a pretty good option…since headhunting candidates for permanent roles is becoming too competitive. Most of the recruitment firms are killing each other due to the competition. Maybe they should think outside the box a little. But of coz, you mst ensure that group of ‘affordable’ professionals are very good and talented people. Also the food industry is going to evolve too. Someone should really start a franchise selling fast and easy nasi lemak for breakfast and lunch ๐Ÿ˜€ Pay RM 20 a month, so that you can get RM 1.50 worth of nasi lemak every morning! ๐Ÿ˜€

    mm, outsourcing can be quite a good business to do…from marketing, HR, finance, recruitment, training, IT support, etc since outsourcing helps businesses to cut cost. Also, business which helps other businesses to survive the recession should be quite useful.

    So you’ve given it some thought too. Some think a recession is the end of the world. Others see it as a raft of new opportunities. People can actually get richer instead of poorer in a downturn, that is, if they can get their heads out of the gloom, start getting creative and muster up a little courage.

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