The COVID-19 pandemic led to a nationwide recession and lockdown that radically changed small businesses. Some industries are starting to recover after reopening while unfortunately, businesses that depend on large crowds have not yet been able to come back. Vetted Biz has researched and analyzed over 500,000 businesses to find the few industries that were able to grow even during COVID or were considered an essential business. This research also found industries that were most likely able to bounce back after the pandemic.
There are several factors when evaluating the industries, such as the business’ ability to adapt to these new restrictions, opportunities to diversify or change strategies during difficult times, and the curve model best suited for each industry’s recovery process once lockdown restrictions finish being lifted.
Three Key Findings in COVID-19 Resilient Businesses
The COVID-19 resilient industries shared three major findings that allowed them to grow even during lockdown.
- Secure Payments: these businesses either received payments through recurring revenue with long-term contracts or had a demand as an essential business.
- Market Leverage: these businesses had an existing strong brand reputation and industry performance before the lockdown. Therefore, advertising costs were not necessary.
- Efficient Budget: These businesses were able to cut major expenses like real estate and employees. This led to high margins, strong liquidity and overall profitability.
Business Industries that have grown during COVID-19
Property Management Industry
Businesses in the property management industry have remained strong during COVID-19. Property management provides essential services to homeowners who will pay for their commercial or residential real estate properties to be managed through long-term contracts. These payments are a reliable source of recurring income for the property management businesses. Additionally, property management businesses can be run in from a home office and by 1 or 2 employees only.
Restaurants that only have Takeout and Delivery
While most dine-in restaurants had to shut down during quarantine, restaurants that only provide takeout and delivery services – also known as ghost kitchens – had an uptick in sales. The increased demand, efficient budget, and market leverage are three key reasons why these restaurants have flourished during this time. As Restaurant Business Online shares, ghost kitchens incur a lower real estate cost because they take up less space to run their delivery and take-out orders, and the location of the restaurant is not a major factor to take in foot traffic.
Additionally, these kitchens have a lower employee salary cost, requiring as little as 2 or 3 individuals to run the business. Employees can practice health safety protocols of social distancing and reducing contamination risk of spreading COVID on their food. In respect to the sector’s market leverage, recent studies have shown that 31% of consumers use delivery services at least once a week, and that 59% of millennial orders every week are either for takeout or delivery.
Efficient budget, market leverage, and reduced costs shows that the takeout and delivery models are the only sector of the restaurant industry that is expected to grow and thrive as the lockdown restrictions continue any further.
Demand for Accounting and Tax Preparation Services
The recession that will come with COVID-19 leads to concerns in individuals’ and businesses’ financials. Therefore, there has been an increased demand for bookkeeping and accounting services. While it is uncertain whether the U.S. government will give another stimulus package or not, people want to be prepared and go through their financials for security.
Bookkeeping and tax preparation businesses receive monthly payments and renewals from businesses for their services. Another great component about these types of businesses is that they can be operated from a home office with as little as 2 to 3 employees. Through an efficient budget, secure payments, and strong market leverage, the bookkeeping and tax industry is able to survive despite going through COVID-induced recession.
Commercial Landscaping is Essential
Commercial landscaping provides their services to essential businesses like grocery stores, which means they are also providing an essential service. Many state and municipal laws require businesses to conform to landscaping orderliness.
Additionally, as commercial businesses open, landscaping businesses can maintain their existing relationships while building on new ones. The landscaping businesses have recurring revenues because through their long-term service contracts.
Because landscaping is customized to the client’s needs and location, this business does not have real estate expenses to worry about.
Resilient Businesses that will rise after COVID-19
Cleaning & Maintenance
When COVID-19 subsides and businesses everywhere are able to operate again, there will be an increased demand in cleaning services. This industry is expected to have the fastest recovery curve soon after the restrictions are lifted. This industry will have the strongest market leverage because businesses that reopen must follow sanitation protocol and be a safe and comfortable place for clients to go to. Even businesses that have reopened now, from retail stores to fitness centers, will close their stores earlier so their business can be fully sanitized. Businesses cannot run the risk of spreading the virus otherwise they may need to shut down again, and must also follow state and county rules of reopening post-COVID. Commercial cleaning services and businesses are also usually a low investment amount that do not require an office space to run.
Businesses in Grooming and Beauty
While beauty salons and barber shops are not “essential services” during the lockdown, they are expected to have a fast recovery after the lockdown. Former clients that would visit salons on a weekly or monthly basis have been waiting to return to their salons. Furthermore, they are able to reopen with social distancing guidelines as appointments are usually one client at a time. The beauty service industry will make a strong recovery because of the market leverage and demand for people who would like to resume their self-care routine after COVID-19 has subsided.
After School Programs
During the lockdown, many parents faced difficulty working from home while watching their children. Children’s after school and education programs are beneficial to enrich the children’s lives and needed for working parents. Children’s education is another industry that will likely experience a strong bounce back after the lockdown restrictions are lifted. Due to the shift to online education, children’s educational programs have continued to maintain business operations and their market presence.
Results and Conclusion
A business’s ability to adapt and grow under unique situations, such as the period of which the lockdown restrictions have passed, will be a motivating factor for companies to decide on investment-worthy projects. The industries discussed in this article show businesses with secured payments, efficient budgeting, and a strong market leverage, they are the best businesses to grow back from the COVID-induced recession.
Patrick Findaro is the Managing Partner of Vetted Biz, the largest platform for accessible and analytical data on U.S. franchises and businesses. Vetted Biz has reviewed thousands of Franchise Disclosure Documents and SBA Loan Data from 1991-2019.
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Small business stock photo by bleakstar/Shutterstock
