The 7 Most Profitable Online Businesses During Economic Uncertainty

In an atmosphere of economic ambiguity, where skyrocketing prices, escalating interest rates, and constricting credit conditions dominate the landscape, succeeding as a business owner might seem like throwing spaghetti at the wall and hoping that something sticks. 

Why? These unsettling factors are poised to negatively impact business investments, consumer spending, and market transactions, casting a shadow of doubt over the strength of the economy. 

Ernst & Young, a trusted name in global professional services, forecasts a potential recession for the US economy by late summer 2023. Chief Economist at EY-Parthenon, Gregory Daco, puts it like this: “The economy is unwell. It’s not the flu, but it is a throat ache. And it’s unlikely to get better in the coming months.” 

But don’t worry, economic uncertainty is far from a dead-end for the entrepreneurial spirit. Amid this chaos, certain online businesses aren’t just surviving but thriving. Think of high profitability even when the macroeconomic cards are stacked against you. Sounds idyllic, right? 

In this guide, we’ll explore the factors that contribute to profitable online businesses during economic uncertainty and then dive deeper into these surprising havens of opportunity.

Factors Determining Business Profitability Amidst Economic Volatility

No longer can businesses simply rely on a steady market or predictable consumer behavior to safeguard their profitability. 

So, what separates ‌businesses that thrive amidst uncertainty from those that struggle to stay afloat? 

Let’s dive in and unravel the compelling factors that distinguish profitable businesses in turbulent economic times.

Resilience

Have you ever considered how well your business could withstand a financial storm? The key to weathering turbulent times lies in building resilience from day one. 

But how? You can achieve resilience by focusing on a diverse customer base, offering a broad range of products or services, or putting away a cash reserve to help ride out rough patches. 

After all, if your business could captivate a wider audience, wouldn’t it be better positioned to withstand the ups and downs of economic cycles? If one segment experiences a downturn, others help maintain your revenue, providing a buffer against sudden economic shifts.

Flexibility

As the saying goes, the only constant is change. Then why shouldn’t this principle apply to business as well? 

Your ability to quickly adapt to changing market conditions could be your ticket to lasting profitability. So ask yourself these questions: 

• Are you able to swiftly adapt to shifting market conditions, pivot your business model if needed, or find fresh markets when the old ones no longer serve your needs? 
• Can you adjust your product offerings in response to changes in consumer behavior? 
• Do you have a system in place for small business accounting in Excel to monitor and manage your finances efficiently?

If you answered yes, your business is demonstrating a high level of flexibility. And if you answered no, don’t worry.

Take inspiration from Netflix’s transition from a DVD subscription model to a behemoth streaming service. Or Amazon’s ability to turn an online bookstore into one of the largest ecommerce companies in the world. 

The world is your oyster. Stay on your toes, explore new paths, and adjust your sails to best catch the wind of changing consumer behaviors. 

Low Overhead Costs

Online businesses have an inherent advantage over brick-and-mortar stores. Your operations generally incur lower overhead costs compared to physical stores.

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These low fixed costs mean you have the flexibility to scale back operations and remain profitable even when revenues take a hit. Sounds good, doesn’t it?

In the example above, an online ecommerce store can achieve a 30% profit margin compared to 15% for a traditional brick-and-mortar retailer. 

So, in an economic downturn, online stores could reduce prices by 10–15% while still maintaining a similar profit margin. For instance, a $150 pair of shoes sold in a retail store could sell online for $130 for the same profit margin. Not too shabby. 

Strong Demand for Products or Services

Remember, even in challenging economic climates, certain goods and services are always in demand. 

Businesses providing essential goods, digital products, online learning, or entertainment often find themselves shielded from the worst impacts of economic uncertainty. Are your offerings coveted enough to ensure sustained demand and profitability?

Diversified Revenue Streams 

And last but definitely not least, is your business leveraging multiple sources of income? An online business, for instance, could blend ecommerce, affiliate marketing, and ad revenue. 

If one income stream takes a nosedive, the others could swoop in to make up for the shortfall. Smart, right?

7 Most Profitable Online Businesses During Economic Uncertainty

Economic downturns are tough, but they also create opportunities for innovation and entrepreneurship. While traditional businesses may struggle, certain online ventures thrive amidst uncertainty. 

Here are seven profitable online business models that are particularly resilient during times of economic volatility. 

1. Ecommerce Stores

Ecommerce stores sell products directly to consumers through an online platform (think Shopify, Amazon, or BigCommerce). The range of products you can sell are endless: from physical goods like clothing or electronics to digital goods like eBooks or PC games.

With the ability to operate all online, ecommerce 2021 and 2022 sales have skyrocketed thanks to the COVID pandemic when everyone sheltered in place and avoided brick-and-mortar stores with a ten-foot pole. 

Plus, there was even a ‌period when these stores were closed completely, leaving the only option to shop online. It’s safe to say that COVID helped strengthen the online shopping ecosystem.

Profitability in uncertainty

During periods of economic instability, more consumers turn to online shopping due to its convenience and the ability to price compare. 

Ecommerce stores can operate with lower overhead costs, making it easier to offer competitive pricing and keep operations going even in a downturn.

Challenges and solutions

Inventory management and shipping logistics can be challenging, especially when disruptions in the supply chain are unavoidable. Dropshipping or partnering with a reliable fulfillment service can help alleviate these issues. 

Also, staying flexible and adapting to customer preferences is crucial for staying relevant in a rapidly changing market. For instance, offering virtual try-on options or personalizing product recommendations goes a long way. 

Example

Amazon, love it or hate it, and Etsy, a platform focusing on handmade and unique items, have thrived during recent economic uncertainties.

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2. Niche Blogs

Have you ever searched for the best brunch places in a city that you’re planning to visit? If so, you’ve probably stumbled upon a niche blog.

So what does that mean? A niche blog is a website that narrows in on a specific topic, such as travel, home repairs, pets, technology, cooking, or personal finance (to name a few). They cover a topic front to back and in granular detail.

The result? The content caters to very specific keywords. And these sites can outrank the large players by fulfilling the need for consumer search intent. It’s all about finding the low-hanging fruit within a niche (read: high volume, low keyword difficulty).

Profitability in uncertainty

During uncertain times, people turn to the internet out of boredom or to look for specialized information and guidance. 

Niche blogs offer consumers the valuable content they crave. But that’s not all. You can generate a steady income through advertising, affiliate marketing, sponsored posts, or selling products or services online.

Challenges and solutions

The main challenge is to create enough content to build a robust following and generate organic traffic to your site. 

To do this, write high-quality, SEO-friendly content and set a consistent publishing calendar. Think about at least two to three articles per week. Oh, and don’t forget to repurpose this content by promoting it on social media platforms.

Staying updated on ‌trends within your niche will also keep your content relevant.

Example

ONSAAS, a blog focusing on providing marketing insights, reviews, and news to help SaaS businesses grow. Their expert research aims to assist businesses in finding the best marketing software. The website covers s wide range of topics including: email marketing software, SEO tools, social media management tools, and CRO tools. 

This article comparing two leading email marketing tools is a great example of the affiliate content that could be published on niche blogs.

3. Digital marketing agencies

In an increasingly digital world, online marketing agencies are growing like wildfire. And for good reason. 

These agencies offer a range of online marketing services, such as search engine optimization (SEO), pay-per-click advertising, content marketing, and social media management.

Profitability in uncertainty

As mentioned earlier, online businesses often thrive in periods of economic uncertainty. With that, it often prompts businesses to invest in improving their online presence and reach, which increases demand for digital marketing services. 

Plus, with lower operational costs than traditional advertising agencies, digital providers can maintain profitability even in tough times. And don’t forget that companies tend to lay off employees to reduce expenses.

The replacement? Outsourcing of services to subject matter experts (SMEs).

Challenges and solutions

Staying up-to-date with ever-changing digital marketing trends isn’t a walk in the park. Continuous learning and adaptation, along with a focus on measurable results for clients, can help overcome this challenge. 

Also, don’t be discouraged if clients pull back on their budgets a bit. As the saying goes, this too shall pass. Double down on providing the best possible service, and you’ll reap the rewards with referrals down the line. Lastly as a digital marketing agency owner you need to prioritize email security and utilize DMARC reports to safeguard your clients’ brand reputation and prevent phishing attacks.

Example

With the pandemic forcing people to work remotely and spend more time online, ecommerce businesses have seen a significant increase in demand. However, some types of online businesses may perform better than others in the current market.

One example is the real estate industry, where the demand for finding properties online has skyrocketed. According to a recent survey by Fit Small Business, 41% of homebuyers’ initial action in the home buying process is to search for properties on the Internet rather than connect with a local real estate agent. 

With more people searching for properties online and the increasing popularity of virtual home tours, the need to outrun your competition in collecting buyer leads for realtors is more important than ever.

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This presents an opportunity for digital marketing agencies that can offer lead generation services and search engine optimization to cater to this increase in online searches.

The goal? Turn the uptick in online searches into first-time home buyers. 

4. Online Courses

Is a college education a thing of the past? It might be too early to tell. But one thing’s for sure, you can learn a ton on the internet, and demand is growing steadily. 

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And no, we don’t mean searching WebMD for your cold symptoms. There are a plethora of online courses that allow people to learn new skills or increase their knowledge in a wide array of subjects, from academic topics to hobbies or professional development.

Profitability in uncertainty

During economic recessions, many people seek to learn new skills or enhance existing ones, increasing the demand for online courses. They provide an affordable, accessible option for education that can help people pivot or advance in their careers.

Challenges and solutions

The main challenge lies in creating engaging, high-quality content that attracts students. So make sure your course content is well-structured, interactive, and adds value.

Pro-tip: Promote your courses on multiple platforms and provide testimonials or reviews for credibility.

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Example 

Coursera offers a wide range of online courses, helping people upskill during economic downturns.

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P.S. As an entrepreneur with a specific skill set, creating and selling your own online course is an excellent way to generate passive income or generate an additional revenue skill to offset any losses. 

5. Health and Wellness Apps

There’s no doubt that an impending recession is a stressful situation. Stress and anxiety are at all-time highs as your brain goes into survival mode. 

With that comes the important need to find ways to relax and destress. That’s where health and wellness apps thrive in offering services related to fitness, diet, mental health, meditation, and more.

Profitability in uncertainty

Choppy economic seas lead to increased stress, prompting more people to seek resources for physical and mental health support. This increase in demand makes health and wellness apps particularly profitable during these periods.

Challenges and solutions

But it’s not all sunshine and rainbows. Building an engaging and user-friendly app requires a significant upfront investment. If you don’t have the experience yourself, you’ll need to hire a skilled developer (‌which isn’t a cheap endeavor).  Nowadays, all-in-one investing is the most popular and profitable for everyone. 

Don’t lose focus on the user experience. Differentiate yourself in a crowded market by finding a niche within the health and wellness space to effectively serve that market.

Example

Headspace, a meditation app, saw increased usage during recent periods of economic uncertainty as more people turned to mindfulness practices to manage stress.

And the US mental health app market will grow at a compound annual growth rate (CAGR) of 13.9% into 2030.

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There’s still plenty of steam left in this sector. We could all benefit from a better state of mind. 

6. Software as a Service (SaaS) Businesses

What do tools like ClickUp, Connecteam, Canva, Nifty and Salesforce have in common? They’re all uber-successful SaaS businesses. The poster children, if you will. 

As a SaaS business, you provide access to software applications over the internet via a subscription pricing model. It’s an incredibly lucrative model because you’re able to lock in monthly recurring revenue. 

Or better yet, customers commit for a year to score a small discount. Sounds idyllic, right? 

Profitability in uncertainty

During economic downturns, companies are always on the lookout for cost-effective solutions. SaaS products, with their flexible pricing and scalability, offer an appealing alternative to traditional software. 

This resilience to economic instability makes SaaS a highly profitable online business model and can sell at a multiple anywhere between 3x to 15x of annual revenue. 

But be warned. SaaS is a competitive market. And the last thing you want is for someone to steal your million-dollar idea.

So when selling a business for maximum profit, you’ll want ‌to protect your intellectual property and your secrets to success. Make sure that you have a process in place to vet potential buyers. For instance, you might require them to sign a non-disclosure agreement (NDA) before sharing sensitive information about your business. It never hurts to measure twice and cut once. 

Challenges and solutions

The competitive nature of the SaaS market may require the constant need for software updates, new features, and keeping up with changing consumer demands. 

The easiest way to pull ahead in this space is to:

• Offer a unique solution to a specific problem and solves customer pain points
• Double down on providing the best possible customer service
• Regularly update and improve your product with new features based on customer feedback

Example

Connecteam, a communications and time-tracking app designed to streamline daily operations, has grown to serve over half a million daily users and companies in 79 countries around the globe.

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7. Freelance Services (design, writing, AI consulting)

Do you love writing? Have a knack for graphic design? Or a passion for the artificial intelligence craze? 

If you answered yes to any of these questions, freelancing could be a lucrative online business for you — especially as the global economy braces for a looming recession.

Profitability in uncertainty

As a freelancer, you offer your skills and services on a per-project basis. And in an uncertain economy, many companies opt for hiring freelancers over full-time employees to reduce costs and increase flexibility. 

The result? Higher demand for freelancers as companies pull in the reins on their budgets. 

Challenges and solutions

As a freelancer, you may face the challenge of finding consistent work in an incredibly competitive market. 

Building a robust portfolio, networking, and using platforms like Upwork or LinkedIn can help secure more opportunities. And of course, specializing in a niche skill can also increase your marketability.

Example

If you read CNBC or LinkedIn news, you’ve probably come across a few stories about freelancers making more than finance professionals. 

Here’s an example headline for reference:

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It almost sounds too good to be true. But freelancing is here to stay, especially in the rough seas ahead. So don’t underestimate freelancing as a successful business endeavor. It might surprise you. And the cash will start flowing in. 

Wrapping Up

While economic uncertainty can pose challenges, it also opens the door to new opportunities. These seven online business models demonstrate that with the right strategies and adaptability, success is possible even in the face of adversity.

So don’t let the “recession” talk prevent you ‌from starting the business of your dreams or buying one that you’ve had your eye on for months. 

Check out Flippa, the #1 marketplace to buy or sell profitable online businesses. The risk is low, and the opportunities are high. Here’s to your success!