No business is truly immune to a downturn, but some are built to survive one and others are not, and the difference usually comes down to a handful of deliberate choices made well before the downturn arrives. Diversified revenue, low fixed costs relative to income, and a cash reserve are what separate a business that treats a recession as a temporary headwind from one that treats it as an existential threat.
Brian Joffe, who built the Bidvest Group from a single company started during South Africa’s difficult trading conditions of 1978 into a multi-billion-rand conglomerate spanning industries from catering to pharmaceuticals, is often cited as an example of a business built to keep growing regardless of the economic cycle. The specific lessons behind that kind of resilience are learnable rather than accidental.
Diversify revenue rather than depending on one client or sector
A business earning most of its revenue from one client, or exposed entirely to one economic sector, is vulnerable in a way a more diversified business is not. Diversifying does not mean abandoning a core focus; it means ensuring no single customer or sector failing would be fatal to the business.
Keep fixed costs low relative to revenue
A business with high fixed costs, long leases, large permanent staff complements, expensive long-term contracts, has less room to adjust when revenue drops. Variable costs that scale up and down with actual demand give a business the flexibility to shrink temporarily without breaking, which matters far more during a downturn than during a boom.
Hold a genuine cash reserve
A reserve covering several months of fixed costs is what allows a business to make decisions from a position of strength during a downturn rather than from panic. Businesses without this reserve are often forced into costly short-term borrowing or firesale pricing exactly when they have the least negotiating power to do either well.
Look for the opportunity a downturn creates
A recession also reduces competition, since under-capitalised competitors often fail first, and it can lower costs for advertising, commercial rent and even acquisitions as asset prices soften. A well-capitalised business with reserves in place is often positioned to gain market share precisely when weaker competitors are retreating.
Frequently asked questions
What makes a business genuinely recession-resistant?
Diversified revenue across clients or sectors, low fixed costs relative to income, and a cash reserve sufficient to cover several months of expenses. These three factors, built in advance, matter more than any reactive measure taken once a downturn has already started.
Should a business cut costs immediately when a downturn begins?
Selectively, and ideally the fixed-cost reduction should already be built into the business model before the downturn arrives. Cutting the wrong costs reactively, particularly anything that damages customer relationships or core capability, can do more harm than the downturn itself.
Can a downturn actually benefit a well-prepared business?
Yes. Reduced competition, lower advertising and commercial rent costs, and softer acquisition prices can all favour a business with reserves and low fixed costs, allowing it to gain ground while less prepared competitors retreat.
How large should a cash reserve be?
Several months of fixed operating costs is a common benchmark, though a business in a more cyclical or volatile sector should hold more. The right figure depends on how quickly and how far the business’s revenue could realistically fall.
Is diversification always the right strategy?
It reduces risk from over-dependence on one client or sector, but it should not come at the cost of the business’s core focus. The goal is ensuring no single failure is fatal, not spreading the business so thin that nothing is done well.
Further reading
Originally published in January 2017. Updated September 2026 to set out the specific, learnable practices behind recession resilience rather than only the illustrative example.
