A Business That's Still Comfy in a Recession
A seatmate on a flight I took described her interesting business to me. She organizes seminars where she speaks to groups of professionals in her field.
She rents a meeting room in a hotel (her fixed cost) and incurs the variable costs of her time and travel. I asked her about her business during the recession, since I assume that the demand for her seminars has decreased. Doesn’t she have a lot of empty seats? Isn’t she losing money?
She said no, because her demand is not down much (most attendees are from the public sector, which is less cyclical). More important, her fixed costs aren’t as fixed during the recession, because the hotels are so happy to have her business in these times that she negotiates deals which allow her to use smaller meeting rooms if demand is below expected. Her story shows that it’s good to be less cyclical than other businesses when you are hiring inputs.