They say that starting a business during a recession is, contrary to what many would say is common sense, the best time to do so. But some businesses do better during recessions than others - it's hardly a great time to start an auto dealership or real estate company. Making your entry into the right kind of business is one of those important factors that will determine whether a recession is really the best time to start up for you.

Here are 10 Startup Business Models that Thrive During a Downturn - there may be one with your name on it here!

#1 - Group Buying

Companies like Groupon, AppSumo and their myriad of clones have thrived during the last few years as the economy bore down on household budgets. Group buying or daily deals websites coordinate very deep discounts with businesses. The idea is that everyone wins: the business gets heavy promotion, the group buying company makes a cut of the sales, and the consumer can save, often, almost all of the purchase price.

While there are some concerns that the retailer gets a raw deal in this arrangement (after cutting the cost of their product so deeply, they still need to share the remaining revenue with the group buying site), there's no doubt that group buying sites make out well in poor economies (Groupon was launched on November 2008 - in the eye of the Global-Financial-Crisis-storm).

#2 - Online Outsourcing / Crowdsourcing

During recessions, more businesses turn to outsourcing - it's simply cheaper and less risky (it doesn't require the commitment and responsibilities that full-time staff bring which businesses seek to avoid during times of uncertainty). As a result outsourcing services like DesignCrowd's go 'boom' as businesses seek to save.

#3 - Online Retailing

When the economy is bullish, choosing between an online retailer and a brick-and-mortar store is about choosing between two kinds of convenience: do I want to go out and get this today, or order it from my home but wait for the item? In wounded economies, it's all about the cost savings that online retailers can pass on to consumers thanks to the significantly smaller expense sheet incurred when you don't have to worry about a storefront and salesmen.

Group buying is great, but most of the time a consumer needs something it won't happen to be the deal of the day. If you're happy to manage inventory this path may be more profitable for you.

#4 - Accounting or Law

People love getting a tax return. The self-employed just like to make sure they owe as little as possible. When money is hard to come by, though, people are more motivated than ever to reduce that debt or to get more of the money the government sucked out of them back. Accountants do well in any climate, but a recession is a great time to set up shop and advertise your tax return talents.

During difficult economic times, deals go bad, businesses wind-up, people get fired.  And it's widely known in the legal industry that a downturn is good for business for a simple reason: litigation.  With so many problems (particularly in business) people are pointing the finger and looking to recoup losses via the courts.  This is good if you're a bailiff, stenographer or lawyer starting your own business.

#5 - Online Gambling

Sadly, there are people who turn to gambling when the going gets tough. While it is morally wrong to prey on the weak, some people are simply looking for an 'escape' and the fact is gambling businsesses are legal businesses and they do well during a downturn.  In saying that, you'll probably be happier (and help other people be happier) if you start an entertainment, self-improvement or education focused business instead (see #6, #9 and #10 below).

#6 - Entertainment

Entertainment is one of those industries where 100% of revenue comes from people's discretionary spending - but doesn't die during a recession. The Walt Disney Company, Blizzard Entertainment and the WWE were all started during recessions, and weathered several more. People need entertainment more than ever when the pressure of finding or keeping employment and feeding the family is high. It's essential escapism, pure and simple, and a necessity for most humans to hang onto their sanity.

#7 - Discount Alcohol

It's not that people drink more when recessions hit: it's that they downgrade their tastes until things look up again. People who might have previously gone for a mid-range bottle of red wine would rather spend the same amount of money on 12 bottles of bottom shelf stuff. You can make a fair bit of cash selling cleanskin wine and cheaper beers and spirits at close-to-wholesale prices online. And if you spend the time looking for just the right suppliers, you'll find that the right selection of bargain barrel booze is sometimes just as good.

#8 - Consulting / Freelancing

Thanks to layoffs, recessions put consultants and freelancers in hot demand. Companies still need the assistance of experts - they just can't afford to have them around all the time. There are many competitors in any consulting niche, but it's a great time to start a business of this nature. If you can make good relationships with staff-strapped employers now, your firm can thrive when the economy recovers, too.

#9 - Self-improvement

People tend to have more problems during a recession and they tend to need help.  They might be run down, stressed or confused, and may be looking for emotional, psychological or motivational assistance anywhere they can find it.  If you've got the qualifications and real advice or assistance to offer, it's a great time to get into the business of helping people get their lives back on track (while getting paid for it).

#10 - Education

Companies that sell online courses, educational books and the like tend to do quite well when people are getting laid off. There's a growing trend that when people lose their jobs, they'll jump online and learn a skill and join the ranks of the freelancers until they can get employed again (unless they find the freelance lifestyle is up their alley and stay). If you've got a strong skillset and a way with teaching, this type of business costs very little to start up and mostly just requires your time.

This list isn't comprehensive by any stretch. There are a great deal of business types that have good prospects during a recession - just do your research and think it through. Are you trying to convince yourself your model will work, or is it actually going to be attractive to people who are watching their wallets?

In summary

Written by DesignCrowd on Monday, August 29, 2011

DesignCrowd is an online marketplace providing logo, website, print and graphic design services by providing access to freelance graphic designers and design studios around the world.