In any recession the first things directors want to know are how long will it last and how will it affect my business? Sectors such as essential foods and healthcare will do well, regardless. But the majority of businesses will have to slim down. Some may become healthier as a result. But others will go under or be acquired. All the while, price competition will add to the pressure. 

As you consider the likely cost and length of a downturn, think what it will do to demand, revenue and costs. Will you lose customers, market share, or even staff? Look beyond the next quarter and consider several economic scenarios and formulate a suitable plan of action for each.
Indications suggest that the current economic climate will be gloomy for at least three years, perhaps longer. Whatever happens, keeping customers and suppliers happy is essential. So cutbacks in marketing or customer service are not advisable.

The starting point should not be panic, but an assessment of the impact on customers. Talk to them, determine why they are happy with you and find out what will keep them loyal for the longest period. You must assume your competitors will cut prices and costs. Can you offer discounts to major customers for longer-term contracts to ensure cashflow?

Success depends on operational efficiency and employee morale. Employees worried about being fired will find it hard to concentrate on keeping customers happy. Now is the time to stimulate creativity both inside the firm and externally.

Strategic focus is also important. Look hard at the market. Is the total market shrinking? If so, it might make sense to cosy up to a competitor or supplier to look for an alliance, merger or acquisition. You need to focus on what might be called "business health planning". This results in better management, tighter controls, and long-term durability.

Governments, regulators and the banks are struggling with the impact of their decisions. You can't control the economy but you can ask yourself the key question, "how do I stay in shape?" and make the right decisions to ensure your business remains healthy.

Dick Stewart is managing partner of Strategic Insights International