From EdTech to Coffee Shops: Businesses to Start During a Recession

Wildly successful startups have originated in the depths of recession. 

Disney came about during the Great Depression. 

During the last economic downturn, 2007-2009, multiple behemoth brands were born — from Dropbox to WhatsApp — proving empires can rise out of desperate times. For instance:

  • Dropbox launched at the TechCrunch Disrupt conference in 2008, and 10 years later went public with a valuation of roughly $10 billion.
  • Airbnb’s founders launched their homestay-rental concept at SXSW in Austin, Texas during the Great Recession. In the second quarter of 2019, the company made more than $1 billion. 
  • Drybar debuted its first location in 2010, after offering clients at-home blowouts in California. Now the entrepreneur’s recession-birthed business touts over 100 locations in the U.S. and Canada, in addition to selling hair products online and in retail outlets such as Sephora and Nordstrom.
  • Pinterest revealed its idea-sharing site in 2010, going public in April with a $10 billion valuation.
  • Ride-hailing service Uber, originally called Ubercab, debuted in 2010. Last year, the company was valued at $72 billion. 
  • Square formed in 2009, and the mobile payment app came online in 2010. Five years late, Square went public with a $2.9 billion valuation.
  • Former Yahoo! employees debuted WhatsApp in 2009. In 2014, Facebook purchased the messenger app for $19 billion.

A pandemic-induced recession may seem like the worst time ever to launch a business, but some of the most profitable businesses were created with little financial overhead or risk, and during a time of great market instability. And right now, for many aspiring entrepreneurs, time is on your side. 

According to some recent studies by MIT and Lending Tree, and as reported by Business Insider, these industries are poised for success during and on the heels of the covid-19-fueled economic recession:

EdTech

Pandemic-spurred virtual learning has schools and universities seeking creative, seamless and innovative ways to engage students. 

A NewSchools-Gallup survey reveals 65% of teachers leverage digital learning tools to teach daily, and 87% are employing these tools at least several days per week. Meanwhile 75% of teachers predict printed textbooks will be completely replaced by digital learning by 2026, according to a survey by Deloitte

Meanwhile, economists have observed that, since March, remote workers are investing in continued online education at higher rates. There has been a marked increase in consumer spending on virtual programs. 

So edtech is potentially a lucrative arena to enter these days. Companies can range from virtual tutoring and homeschool resources to e-courses, like how to paint or garden, to guidance on increasing sales for services or products through social media. 

Fitness Subscriptions

Whereas MIT ranked gyms as an extremely poor source of revenue during the pandemic, sales for virtually guided home workouts and at-home fitness equipment are on the rise. 

Fitness trainers who can offer a premium virtual experience and accountability have a leg up on major chains, according to Business Insider’s sources, including fitness startup Cubii and Peloton. The latter, designer of high-end stationary bikes, experienced a 66% hike in sales in the second quarter of 2020. 

E-Commerce

Shopping malls are dormant, and retail traffic has stalled. But e-commerce is surging. Shopify expects online sales to double by 2023 to more than $6.5 billion. 

READ MORE: Podcast Episode 9: E-Commerce & Leveling the Playing Field in Indian Country 

That said, “what dies in the mall is being reborn online, and what was born online is increasingly crossing over to the physical world,” states a Shopify report. Brick-and-mortar retail isn’t going away forever, it’s undergoing a reinvention. Buy online, pick-up in store is a model expected to flourish even more come the holiday season. 

Shopify also notes that sustainable e-commerce is going “mainstream” — think eco-based and energy-efficient. Value-driven businesses are capturing loyal customers. 

READ MORE: Business Advice Rooted in Values From the Only Native-Owned Kombucha Producer 

Shopify’s report also notes that smart TVs and audio are the next frontiers for e-commerce advertisers. “While Facebook and Instagram will continue to be the bread and butter on which many brands rely, expect significant growth in ad dollars targeting consumers who are streaming their favorite streaming television or music services.” 

READ MORE: Facebook Shops Streamlines E-Commerce for Small Businesses 

Coffee Shops

Believe it or not, coffee shops are experiencing a resurgence. 

Cafe owners with strong community ties are performing well amid the pandemic. Essentially, regulars still wanted their fix — and some in-person connection. 

Coffee shops also innovated, beginning to sell more grocery and kitchen supplies. 

Square, in partnership with the Specialty Coffee Association, analyzed data from independent coffee shops, revealing that “3 in 4 Square coffee sellers have continued operating during shelter-in-place orders, finding ways to adapt to new circumstances.” And the average cafe-goers ticket increased by 25% from March to April. 

The pandemic also inspired an 806% increase in healthcare donation sales of coffee beverages, states Square’s report. 

Meanwhile, a study by LendingTree shows one in four Americans want more coffee shops in their neighborhoods. 

READ MORE: How a Shoshone-Bannock Entrepreneur Funded her Dream: Bison Coffeehouse 

Native American Coffee Grinds It Out 

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