Businesses that are most likely to do well during a recession
26 October 2020
Small businesses are big players in the Australian economy.
In 2019, small businesses made up more than 98% of Australian business, accounted for 35% of Australia’s GDP and employed approximately 44% of the local workforce1.
Since then, the nation has faced both bushfires and the COVID pandemic, resulting in continued economic uncertainty2.
So, what can business owners do to navigate a difficult economy?
Some business types have demonstrated an ability to perform, even in a recession. Whether you’re an existing business owner looking to adapt, or you’re about to start up the business of your dreams — don’t let a down economy stop you.
Service providers are important resources, no matter the state of the economy. From healthcare providers to accounting firms, you may be able to tap into a business idea that also supports your local community — even as they’re watching their discretionary spending.
Improving your DIY skills — and getting accredited for them — could come in handy.
During a recession, people are more likely to engage repair services than buying new. For example, if someone’s car breaks down, a person might be more inclined to take it to their mechanic for repair than buying a new car.
You may even find you’re in demand post-recession, too.
Small luxury items
Though consumers may have less disposable income during a recession, they’ll still want to treat themselves — in a way that’s affordable.
Big-ticket luxury items might be off the cards, but smaller, less expensive luxuries like cosmetics and eating out tend to remain popular. Indeed, according to business commentator David Nilssen, the Global Financial Crisis saw increased sales in luxury cosmetic items in America3.
Setting up your new business
Don’t let a recession put you off your business dreams. Setting up a new business has its challenges, regardless of the economic environment. Here are a few things you’ll need to do along the way:
- Test your business idea: Before making any decisions, do your research. Think about the industry and the area you’re expecting to establish your business in, and consider your potential customers and competitors.
- Create a business plan: Abusiness plan will outline the goals and objectives you have for your new business. If you’re unsure, or you’d like a hand, reach out to a business advisor for support.
- Decide on a business structure: this is where you’ll determine if your business structure will be sole-trader, partnership, a company or trust. The fun part? You’ll also need to decide on a name.
- Understand your legal obligations: When you set up a business in Australia, you need to fulfil certain legal obligations related to licencing, contracts, insurance and tax before you start trading. If you don’t, you may be fined. Be sure to consult with a legal professional if you’re uncertain about the process or have any questions.
- Organise your finances: You’ll need to arrange business banking accounts and additional finances. Business loans are a common way of funding new businesses. In order to apply for one, you might need to provide your lender with business projections and plans.
How to seek financial difficulty support
As Australia moves into an economic recession, things have gotten tough for many business owners.
If you’re a Suncorp customer experiencing financial difficulty due to COVID-19, get in touch today. We work with our eligible small and medium-sized businesses to potentially:
- defer loan repayments
- convert principal and interest to interest-only repayments
- extend loan terms
- waive merchant rental and minimum monthly fees for up to 6 months
- defer equipment finance instalments.
- What COVID-19 means for freelancing and the gig economy
- How to start setting up a small business in Australia
- Hardship support for businesses in debt
Business Lending Products are provided by Suncorp-Metway Ltd ABN 66 010 831 722 Australian Credit Licence number 229882 (“Suncorp Bank”) to approved applicants only. Fees, charges, terms and conditions apply and are available on request. Please read the relevant Product Information Document before making any decision about a product. Contact us for a copy.
The information is intended to be of a general nature only and any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.