Its now a blatant fact that the United Kingdom Economy is in a downturn and Company Directors interested in their Companies existence must have a plan or they will most certainly go into administration

Tough trading over Christmas and the New Year period has seen an unprecedented number of high street retails go into administration or liquidation.

Stores and Companies to be effected by the economic downturn are Savvi the music retailer formerly Virgin Megastore, Adams the Independent childrens clothes retailer, USC the Fashion store and Whittard of Chelsea, the specialist tea and coffee retailer.

One of the most well know victims of the recession is Woolworths that went into liquidation just before Christmas. Its final shops closed on January the 5th, resulting in 27,000 staff loosing their jobs.

A business owner should be thinking how can I survive this economic downturn? The Turnaround Management Association says that for a business to achieve a successful turnaround it needs four things; a credible management team, a viable business core, a valid business plan and appropriate funding.

The credit crunch and lack of liquidity within the financial money markets has restricted traditional forms of lending from Banks into Businesses to very dangerous levels. This limitation of funding has implemented a Cash Flow Squeeze on British Business.

As a business owner one of the first things you should do to survive a recession is cut costs. Carefully review expenditure to identify any areas of your business where savings can be made. Look at transport costs, advertising, marketing, business location and even the smallest things such as turning off the office lights at the end of the working day. Simple measures can give rise to immediate benefits for little or no pain.

Cash is King and Company Directors looking to avoid the pain caused by an economic downturn should seek out alternative sources of funding such as invoice factoring, which is increasingly popular for small to medium businesses. While not suitable for all businesses, the huge benefit of invoice factoring is that rather than have money tied up in invoices that are yet to be paid, you can receive an initial payment up front, typically 80% – 85% of the gross value, and the remainder when the customer pays the invoices to an invoice finance provider, less the service fee which has been negotiated with them. However, if the customer defaults on payment, then the factoring company will recover the money provided to you initially from any further invoices which are factored. This can lead to unpredictable cash flow if customers are poor payers or they go into insolvency.

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