By: Siphethe Dumeko, Chief Financial Officer at Business Partners Limited
Certain business sectors hold up better than others when the South African economy slows: food and grocery, essential online services, bulk and value retail, security, funeral and life-event services, and affordable education and skills training. These sectors keep earning because demand for them does not disappear when consumers cut spending, it shifts toward the more essential and more affordable end of each category.
Why some industries are more recession-resilient
A recession does not stop people eating, needing security, arranging funerals or trying to improve their skills. What changes is how much they are willing to spend and how carefully they choose a provider. Businesses that can offer the essential version of a product or service, reliably and at a defensible price, tend to keep customers even when discretionary spending falls away.
1. Food and value retail
Fast, affordable food remains in demand in every economic cycle, and formats with lower overheads, such as food trucks and delivery-only kitchens, are more resilient than a full sit-down restaurant because rent and staffing costs are lower relative to turnover. Bulk buying and value retail also tend to grow during a downturn: consumers move toward buying staples such as maize meal, rice, tinned food and cleaning products in larger, cheaper units rather than smaller convenience packs.
2. Digital and online services
Website building, e-commerce setup, digital marketing and virtual assistance are all services businesses need regardless of the economic cycle, and they can be delivered with low overheads. Skills in social media management, basic search engine optimisation and email marketing remain in demand from small businesses that are cutting other costs but still need to find customers.
3. Security services
South Africa’s private security industry remains one of the largest in the world relative to the size of the economy, covering both physical guarding and the growing cyber security market. Demand for both tends to hold up, or increase, during periods of economic uncertainty, because businesses and households become more risk-averse rather than less.
4. Funeral and life-event services
Funeral, cremation and related financial products such as funeral cover remain among the more resilient services in any downturn, because the underlying need does not disappear. What typically shifts is which tier of service households choose, with more price-sensitive options such as cremation and simpler packages seeing increased demand.
5. Affordable education and skills training
Demand for accredited, affordable adult education and skills training tends to increase during tough economic periods, as retrenched or underemployed workers look to reskill. Online and hybrid training providers that can keep costs down have an advantage over traditional, campus-based providers.
What tends to go wrong when entrepreneurs chase a recession-era idea
The businesses that get into trouble during a downturn are often not the ones in a weak sector, but the ones that entered a genuinely resilient sector without doing the basic groundwork. A food truck business can fail just as easily as a restaurant if the owner hasn’t costed ingredients properly, secured reliable trading locations, or worked out realistic daily volumes before committing to the vehicle and equipment. A digital services freelancer can struggle to find clients even in high-demand categories like social media management if they haven’t built a portfolio or a pricing structure that reflects the value delivered. Sector resilience reduces risk, it does not remove the need for basic business discipline.
Matching the idea to your own skills and capital, not just sector trends
A sector being resilient during a downturn does not automatically make it the right choice for every entrepreneur. Security services, for example, generally require capital for equipment, vetting and insurance, and increasingly regulatory compliance through the Private Security Industry Regulatory Authority, which makes it a poor fit for someone with very limited starting capital. Digital services, by contrast, can often be started with minimal equipment and a laptop, but require an existing or quickly buildable skill set. Before choosing a sector purely because it performs well in a downturn, be honest about whether you have, or can quickly acquire, the specific skills and capital the sector actually requires.
How to test a recession-era business idea before committing capital
Before investing savings or taking on debt to start any of the above, validate demand cheaply first: run a small pilot, take pre-orders, or offer the service to a handful of paying customers before scaling. Funders such as Business Partners Limited, the National Empowerment Fund and the Small Enterprise Development and Finance Agency generally want to see evidence of real demand, not just a business plan, before extending finance to a new venture in a difficult economic climate.
Frequently asked questions
Which businesses do best during a recession in South Africa?
Food and value retail, digital services, security, funeral and life-event services, and affordable education and training tend to hold up best, because demand for them does not disappear when consumers cut discretionary spending.
Is it a good idea to start a business during a recession?
It can be, provided the idea serves a need that persists through a downturn and the founder tests demand on a small scale before committing significant capital.
How can I fund a new business during tough economic conditions?
Options include your own savings, family and friends, and development finance institutions such as Business Partners Limited or the Small Enterprise Development and Finance Agency, most of which will want evidence of validated demand before funding a new venture. Bootstrapping the first phase of the business yourself, even in a small way, also puts you in a stronger negotiating position with any outside funder later, since you can point to real trading history rather than only a plan on paper.
Do recession-proof businesses still carry risk?
Yes. No sector is risk-free, and even resilient industries such as security or funeral services face competition and require proper business planning, licensing and pricing discipline.
What is the safest way to start a low-cost business during a downturn?
Start with a pilot that requires minimal upfront investment, such as a service-based offering, and only scale once you have paying customers and a clear sense of your costs and margins.
For guidance on qualifying for small business development finance, see the Small Enterprise Development and Finance Agency (Sedfa), formed from the 2024 merger of Seda and Sefa.
Originally published in July 2020. Updated September 2026 to remove COVID-19-specific framing and refresh the guidance for general economic conditions rather than a single pandemic-era downturn. Confirm funding criteria directly with the relevant institution before applying.
