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Are There Recession-Proof Industries for Small Businesses?

Recently, a lot of reporters have been asking me if there are particular industries that are good for small businesses during recessions. I didn’t really know so I took a look at the data.

I examined the performance of different industries during the last two recessions (1990-1991 and 2001-2003) using data from the Census Bureau’s County Business Patterns.

My definition of “doing well” during a recession was pretty strict. All of the following measures had to have increased by 20 percent or more: the number of establishments; the number of employees; the dollar amount of payroll; the number of establishments with 20 or fewer employees; the number of employees at establishments with 20 or fewer employees; and the dollar amount of payroll at establishments of 20 or fewer employees.

I also looked at whether businesses in the same industries grew during the previous recession (1990-1991). There are many fewer industries that did well during both of the last two recessions, but there are some:

I think it is pretty obvious that the current recession is different than previous recessions and we aren’t going to see a lot of growth in mortgage and non-mortgage loan brokers and direct title insurance; and we may not see much growth related to other functions closely related to banking. But we might see growth in other areas. I suspect that the accident and health insurance industries; offices of health practitioners; and business consulting will show growth through the current recession.

To me, there are three interesting takeaways from these data.



    1. Even in a recession, some industries grow at a gazelle-like pace across a variety of different dimensions.
    2. Relatively few industries that do well during one recession tend to do well during other recessions.
    3. Insurance, health care, and consulting tend to be recession-resistant industries for people running small businesses.

 

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