Recession-Proof Investments - Essay Example

Recession-Proof Investments Global recessions are periods that are defined by a drop in several economic factors such as inflation, investment in new projects and development projects, house hold spending, employment rates by the corporate sector and in general and capacity utilizations by firms. Whereas the general employment rates falls and bankruptcies are common in this time period, this is the time period where most consultants advice that people opt not to go for a new business venture for a variety of reasons, the one on the top of the list is that there would be immense difficulty in funding or in finding sources to fund the new venture. The very nature of entrepreneurs is thought to be that of a risk taker but this is a common misperception, entrepreneurs are risk takers but they are not people on the verge of losing their sanity, they are people who take calculated risks and believe in identifying areas that are going to do well even in such turbulent times rather than just acting on gut feeling and going for the venture (Kirby, 2010).This calculated risk taking ability has enable many people to transform their lives and today the world knows them as some of the most successful entrepreneurs of this era, this ability entails that one keenly studies the sectors that are going to do well even in such turbulent times and have a good measure of what the market is going to do in the near future and then set out on the new business venture. One such industry that has been identified is that of the health care, because this is one industry that is an absolute necessity for the masses, recession or no recession people are going to get sick and there is no way that once a person is sick he or she is going to put of the medical expenditure because it is not humanly possible to do so, the fact of the matter is that people might not go for regular checkups and annual comprehensive tests and checkups but people will get sick and they will need medical health care facilities (McNutt, 2009). This is where there is an opening for the keen entrepreneur, because it is an absolute necessity the risk of this venture failing is quite low and with a business plan based on the necessities of people it is always going to be successful provided the sector has been studies with immense care. An entrepreneurial venture does not necessary have to be a big one, it could be a very simple one for example providing medical gloves for surgery or being the distributor for the supply of such gloves to some of the remotest areas in the country, since this is linked directly to the health care industry there is never going to be a shortage of these gloves and hence the chances of this venture failing is very low, as mentioned above the most difficult thing for an entrepreneur is to raise money but with this kind of business idea even that can be done without much difficulty. Another associated industry with the health care industry is that of the pharmaceuticals, this is not as recession proof as the health care industry itself but it does have the characteristics to be recession proof as this is a need based industry as well and it would do well for an entrepreneur thinking about a new business venture to study and step into this industry as well but one of the negative things associated with this industry is the high costs of entrance as this needs research and development but that should not be a real factor for not stepping into this industry because when high costs are involved the returns usually tend to be on the higher side as well.(Thalie, 2009) Another industry which can be said to be recession free is the tobacco industry, this industry is based on addiction and once people are addicted to something they need it in an appropriate quantity so that they are not deprived of their satisfaction (Tobacco use will continue, possibly grow, during recession, expert says, 2009). With this in mind the entrepreneur can take advantage of the situation by having a business plan in an industry where addiction is the main driver and all the more it is the most suitable industry to invest in times of recession because recession causes stress in people and when people are stressed they need to get rid of the stress and tobacco and its various forms are the most widely used forms of stress relievers. With this in mind, the tobacco industry is virtually recession proof and an entrepreneurial venture in this industry is bound to be a very safe one, possible business ventures in this kind of an industry include supply chain management, where an entrepreneur through his ideas can develop a whole new supply chain and supply chain management system for an already established company. This can be done by virtue of finding locations in the world where a higher quality of tobacco leaf is grown and/or identifying new ways to get access to those markets, another possibility is to be able to find new channels of distribution for tobacco companies such as an online booking system for customers where they book their orders online and the delivery is made within a specified amount of time. Another industry that can be said to be recession proof is the farming and the grocery producing sectors of an economy, as recession settles in people tend to eat more at home rather than spending their money excessively on eating things from fast food restaurants or eating junk as this can prove to be very costly for them and in recession every penny that is saved is just like every penny being earned, hence this is another industry that can be said to be recession proof because people tend to go out less and be at home more because going out means lots of expenditures for example fuel expenses, spending money on food and drinks and much more. Therefore this is also an industry that can be a very strong candidate to invest money in times of recession. Other notable sectors and industries that have proven to be recession proof over a period of time are the education and security industry (upadhay, 2009). Education is one of the most basic needs of the people in each and every country, there is never an argument against education because of recession except for countries that are third world in nature but then again recession is not the only factors that contribute to that argument, hence education is another sector that can be invested in, a interesting business plan would be to be the middle man between teachers and schools, as there are never enough teachers, this could be done through an online portal where teachers and school human resources department can interact and a fee can be charged from the schools and the teacher that is being hired. As mentioned above security sector is another one which is very recession proof because the number of robberies and thefts do not go down when there is a recession in fact there is a high probability that these and other acts of violence would increase because of the wide spread stress and the recession itself, a possible business venture for this kind of a sector for an entrepreneur is the combining of technology to provide services where thefts and robberies and other acts of violence can be stopped or at the least minimized, this business venture could mean providing monitoring services for sites such as stores or other facilities through CCTV cameras from a remote location. CONCLUSION There are several industries that have not, or are not, affected by recession, at least not much as other industries and sectors. Apart from the ones discussed in the essay, sectors such as the power sector and the telecommunication sector are also to experience growth even in an economic recession (Upadhay, 2009). Generally, this phenomenon is observed in cases where either there is a need, or where due to technological advancements, the demand is increased and the sector experiences an overall growth. However, there are critics that argue that even these industries experience a downfall in a recession because of the low aggregate demand during a recession and people wanting to cut expenses wherever necessary. Nonetheless, these industries and sectors provide the maximum amount of opportunity for entrepreneurs to enter and aim for a prosperous business. For businesses in these sectors, it is obvious that growth might be harder in recession as compared to a state of economic boom. Even so, these are the industries and sectors that the entrepreneurs must be targeting to minimize risk and maximize profits. BIBLIOGRAPHY Books Timmons J., Spinelli S. (2009). New venture Creation: Entrepreneurship for the 21st Century. McGraw-Hill Burns P. (2007). Entrepreneurship and Small Business. Palgrave Macmillan. Kuratko D. (2008). Entrepreneurship: Theory, Process, and Practice. Cengage Learning. Kirby D. (2010). Entrepreneurship. McGraw-Hill Education. Carsrud A., Brannback M. (2007). Entrepreneurship. Greenwood Publishing Group. McNutt, B.(2009). How the Healthcare Industry is Affected by the Economic Recession. Ezine Articles [Internet]. Available from http://ezinearticles.com/?How-the-Healthcare-Industry-is-Affected-by-the-Economic-Recession&id=2068575 [Accessed on 2nd March 2010] Internet Sources Upadhyay, H.(2009). Industry / Sectors - Not Affected by Recession. TechBiz Research [Internet]. Available from http://www.techbizresearch.com/2009/07/sectors-recession-proff.html. [Accessed on 2nd March 2010] Kentent (n.d.). Recession-proof investments. Hub Pages [Internet]. Available from http://hubpages.com/hub/Recession-proof-investments [Accessed on 3rd March 2010] Tobacco use will continue, possibly grow, during recession, expert says (2009). Physorg.com[Internet]. Available from http://www.physorg.com/news156090833.html [Accessed on 3rd March 2010] Thalie, Y.(2009). The Pharmaceutical Industry in Today's Economic Recession 2009. Ezine Articles [Internet]. Available from http://ezinearticles.com/?The-Pharmaceutical-Industry-in-Todays-Economic-Recession-2009&id=1956923 [Accessed on 3rd March 2010] Read More