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Silver Lining for Small Business Startups – Investing in a proven recession-resistant business

Economic cycles are a fact of life that we all must live with. Since the Great Depression, we’ve had at least 13 legitimate recessions in the US. -That works out to about one ever six to eight years or so.

Unfortunately, it’s just a matter of time before the economy throws us for a loop.  But did you know that through it all, there’s always a few types of businesses thrive when things turn down?  Businesses that do great when economies are booming, but also hold up very well when things are rough. 

Custom Products Businesses Do Good During Recessions

Don’t let a downturned economy have you running scared.  You don’t want to be hiding your money in a mattress or setting aside your dreams of owning your own t-shirt or custom products business.

These types of businesses do well when economies shift.  And that’s really what we’re talking about when we say a recession.  We’re talking about a SHIFTING of monies from one thing to another. 

It’s not like 20% of our money just suddenly disappeared, it’s been shifted into other goods and services.

Warren Buffet is one of the richest and most successful investors in history.  Investing just $1,000 in his Berkshire Hathaway shares when it became an IPO back in 1964 would have you retiring today with a cool $26.7 Million Dollars.

And, can you guess what one of his most famous sayings is?  “Be Greedy when Others are Fearful”. While others were taking their investment dollars off the table during tough economic cycles, Buffet was fiercely shopping for great values and opportunities to grow.  You should be doing that too.

Invest in Yourself and Your OWN Ambitions

Putting faith in yourself and those around you is one of the best investments you can make.  People often think huge corporations are these mystical entities that somehow exist independently of people.

But that’s not the case.

A Corporation in its most basic form is merely a document registered with the Government that describes ownership.  -And, that ownership ALWAYS points back to a person, or group of people that BELIEVED IN THEMSELVES. 

Every big brand name started out first with someone or many someones who were ready to invest in themselves rather than working for someone else.  Especially during a downturn. Now is a perfect time to let your money flow through your own hands.

There are certain types of businesses out there that have a track record of making money, even in a down economy. And since you’ll be in this for the long haul, why not choose an industry that can succeed during the bad times, too?

Examples of Recession Proof Businesses

Here’s some examples of types of businesses that normally do well during down economies:

Movies / Home Movies & TV

Companies Like Netflix and other entertainment content creators typically do great during downturns. People are especially in need of distractions and things to keep their mind of the day to day struggles. Movies offer a chance for that escape at a relatively low price. The film industry had is biggest rush of content and profits ever (percentage basis) during the Great Depression.

Beer, Wine and Liquor

People tend to skip the more expensive dinners, and they often skip the high-priced bottles, but that doesn’t mean they quit drinking. Wine by the bottle fell sharply during the last recession, but Wholesalers of Beer and Wine and Liquor did great.

Tattoo Parlors

All types of custom products businesses do great during downturns. Americans didn’t pass up the chance to identify with body ink during the last recession. Tattoos are a relatively inexpensive form of self-expression which can be a bright spot during otherwise bleak times. People with first time tattoos increased from 14% to 21% in the four years from 2008 to 2012.

Candy

Did you know that brands like Tootsie Pops, Snickers, and Three Musketeers bars were all invented during the Great Depression? Like alcohol and movies, candy is a go-to for people wanting something to make them feel better. Candy makers Push their biggest brands during market corrections. Sugar Soothes.

Custom T-Shirts & Custom Products

The T-shirt, Embroidery, Printing, and Custom Products business models also do great during recessions. They are growth businesses that outpace the overall economy. Economic struggles tend to cause people to focus more on friends, family, and groups. Church attendance goes up, and more people go to little league, soccer, football, and other kids’ sports events. During hard financial times, the average person doesn’t have enough money for that $30,000 boat they were wanting. But they will REDIRECT that money into lower-cost luxury items such as high end personal identity and group identity products.

Partner with the Right Vendors

The Custom T-shirt and Embroidery business indeed do very well, even during downtimes. There are lots of opportunities, and the markets are large enough to absorb many new players in the field.  Some Examples:

  • Developing your own Brand
  • Bling Garments
  • Working with Schools
  • Sports Teams
  • Corporate Identification
  • Custom T-shirt Printing
  • Embroidery
  • Specialty Printing

It turns out that custom apparel items will profit somewhere between $12 and $20 per shirt.  And very often you’re selling dozens of shirts or hats per Job.

And as a side-hustle, beginning your own embroidery or printing shop will do a few key things.  It will let you to make EXTRA money in the short term. You’ll be able to stash away some cash in that emergency fund.

Diversify Your Assets

Owning your own business will diversify your personal financial risk by having multiple streams of income.  If all your eggs are in one basket (the salary your day job provides) your more at risk than if you have extra income. 

How nice will it feel to know you have another way to cover your mortgage payment if the need arises. 

Having more than one way you make money means that if one is reduced or goes away, you have another source of income to pick up the slack.

Another Silver Lining? -Tax breaks

There are some people that learned the secret when they were young and have owned a business of some kind their entire life.  They learned that they can legitimately write off enough unique business expenses to easily reduce the overall cost of their business.

This is what big companies do.  They invest their profits and take huge tax breaks for capital investments.

Here are just a few expenses that many side hustlers take as a tax deduction [we are not accountants, and this is not tax advice –you should speak to a professional about the following ideas]:

  • Mileage for delivering product and prospecting for new business.
  • Office and Workspace – in home offices and dedicated production spaces. If run your embroidery machine in a bedroom or home office for your business, you may be able to deduct part of your mortgage or rent.
  • Entertainment expenses for clients
  • Health Insurance for yourself and your spouse (assuming you don’t have a better plan)
  • Business Related Trips
  • Education Expenses and Trade / Craft Shows

Basically, anything that helps you advertise or goes into the cost of doing business can be deducted. 

There are some hidden gems in the tax code that may make starting a t-shirt business a winner even before you sell your first shirt.   Especially if you were going to have a big bill this year and can instead use that tax break to invest in your future.

Equipment Financing

Interested in Financing Custom Apparel Equipment?

Call: 866-757-0244
ColDesi has worked with Adia Capital as a trusted partner to both provide financing opportunities for our customers, but also to deliver sound advice about starting and operating a small business.

Finance Rates During A Slow Economy

Any Series 7 broker could tell you that there’s only two ways to earn money ON your money.

Lenders make money by trading their hard-earned capital for an agreed upon interest rate.  When you put money in the bank.  Guess what.  The bank is giving you a low interest rate (if at all) and they are using your money to re-lend to someone else.  -Who is probably re-lending to someone else, and on and on it goes.

For every physical dollar in the US money supply, as much as 7 other “virtual” dollars are created simply by the re-lending of those dollars.  That means, there’s roughly 6 or 7 opportunities for people to make money on those dollars.  That’s the lending world.  And, If you have a bank account, you’re already doing it.

Borrowers make money by making a promise to use the Lender’s capital to earn more money above and beyond the interest rate that they borrowed the money for.  That’s investing.

It can be done by buying low and selling high.  Or it can be done by borrowing NOW and investing in your own business or your own trade skill.  Your using someone else’s money instead of your own, and for successful custom t-shirt shops.  Getting good equipment is a no-brainer. 

There are endless ways to use someone else’s money to earn an income for yourself.

Custom T-Shirt Business – An Example

Finance rates right now are about as low as they ever have been in the history of side hustling.

What that means for you is that your monthly budget for equipment goes a LOT farther than it did 5 or 10 years ago.

That makes a bigger and bigger difference depending on how much you are thinking of investing, but consider this:

Right now, you can use .021 to .023 as a “factor”. That’s how you might estimate a finance payment for a piece of equipment. 

A $10,000 DigitalHeat FX T-Shirt Transfer printer bundle is about $210-$230/month

The DigitalHeat FX 9541 system would be about $308/month

And the G4 DTG Printer would about $100 more than that.

Since most t-shirt printers like we’re talking about here make $10-$20 per shirt in profit you are break even at between 20 and 50 shirts per month depending.

The other way people are taking advantage of the super low financing rates are by adding capabilities to their custom t-shirt business right off the bat.

When it was more expensive to finance equipment, startups used to just get the minimum they needed to start. Like JUST the Avancé 1501C embroidery machine, or just the G4 t-shirt printer.

Now more people are giving themselves twice the chance for success by bundling 2 or more systems TOGETHER.

Like the Stitch-N-Print system that combines embroidery and t-shirt transfers.

Or the super popular combination of the OKI 8432WT transfer printer and the SpangleElite bling machine.

The idea is that not all your customers are going to want just embroidery. Or just printed tees.

People and businesses that buy custom apparel often buy multiple items of different styles.  Being able to cater to whatever your customers may need is key to being able to take advantage of all your opportunities.  Invest in yourself today.  Make the Call.