The recent tumultuous events in the financial markets and banking sector mean every business in the UK will be affected by the economic recession. Entrepreneurs will have to work harder than ever to survive and cannot afford to carry any dead wood.
I know a lot of people who claim to be entrepreneurs who have gone bust in the last 12 months. But I always say good businesspeople can operate in a buoyant market but also in a difficult market and this is one of those times when you see who can run a business and who can't.

Now is the time for small firms to batten down the hatches and take stock of where they are. Know who you are, what you provide and what makes your business different; whether that's costing, service or efficiency. Once you know that, you have to educate your customer about why they should continue trading with you rather than one of your competitors.

One of the first things I do when I go into a struggling business is to test the efficiency of the staff. Everyone has to be working to full capacity to make the business work right now. I aim to focus people, give them a role and accountability, and make them more productive.

If you lay people off and then have to recruit it can cost you a fortune, but if you're in a position where you have three people and you only
‘I saved one company £15,000 a quarter just on telephone bills because they weren't on the best deal for them. That kind of thing isn't done enough in small firms'
need one you will have to let the other two go. If that's the case you need to remove all names and look at who does what in each division and how they fit into the business structure. Work out what you need and then apply the people to it. When you're faced with this situation there's no room for sentiment.

When I conduct a company MOT, I sit down with whoever is in charge of the finances and go through every single expense and what it adds to the business. I saved one company £15,000 a quarter just on telephone bills because they weren't on the best deal for them. That kind of thing isn't done enough in small firms.

I split a business into two parts: operational and finance. Finance dictates what the operational part needs to produce in order to break even or turn in a profit. But a lot of small businesses don't know their breakeven point or what their average sale is, so how can they make the front end understand what it needs to do in terms of generating leads?
The other essential is to keep your staff informed. If you get someone in your office asking for bonuses, it's probably not the right business for them at the moment. It's for you as the boss to be saying "I want" right now, because otherwise you'll be putting the company into administration and handing them a redundancy notice.

There are two main things that make a business fail: when owners put unnecessary costs in and when they draw money out of it. A lot of people waste money on things such as company pens. Now's not the time to cut all marketing, but all you need is something to tell potential customers who you are, what you do and why it makes a difference.

This is also a time when small and relatively new businesses can prosper, precisely because they have very few overheads. The next two years will be tough but if you can grow a business to a point where you have sustainable revenue under the current conditions you will become a millionaire overnight when the market recovers.