Firms going bust, a credit squeeze, spiralling unemployment and a nightmare on the High Street... the economic picture is certainly bleak. But there are tactics that entrepreneurs, directors, professionals and retailers can use to emerge relatively unscathed from recession. It's time for strong leadership, good communication skills, tackling stress and a positive outlook. Director asked business experts from a range of sectors for their tips on weathering the storm and how to profit when the dust settles

Motivate for morale

Jonathan Austin, chief executive of Best Companies, which promotes workplace engagement

Bosses need to work harder at keeping staff engaged when times are tough. It's more important than ever to remember the factors that drive the involvement of employees and all too easy to let this practice fall from your agenda. But it is critical for maintaining morale and keeping performance high. So what can directors do to boost engagement levels during a downturn?

Communicate well. Everyone inside the organisation needs to know what is going on, but you need to tell it like it is. Use language that is honest and that everyone can relate to, and avoid the temptation to dress up bad news. I've even heard redundancies referred to as "synergy-related headcount adjustments", which is an appalling euphemism and a statement likely to raise levels of disengagement among the "survivors" in an organisation.

Leaders need to be visible and accessible. People will assume the worst if managers are not around so show up, walk around and reassure your people. Make sure you're on hand to answer their questions and give them information about what is going on.

Stay focused on long-term objectives. Align the workforce behind your strategic vision to make sure that everyone is pulling together and feels part of a team. Employee engagement is often linked to the effectiveness and performance of senior managers, so set an example to be followed.

And finally, don't abandon training and development initiatives. Although these budgets are often the first to get cut in a downturn, it's crucial that staff, including directors, have the right skills to help take the business forward. Additionally, let your employees know the organisation values them as individuals, and that the brakes haven't been slammed on in terms of investment in their development.

Fight stress

Dean Gardner, managing director of Employer Services,
a division of NorthgateArinso, the HR services provider

In the past four months, we've seen a 100 per cent rise in redundancy-related calls to our advice line from SMEs. Managing redundancies and making sure they're handled properly is a major concern for businesses. It's tough for people to find jobs right now, and the knock-on effect is that they are more likely to go to a tribunal after they lose their positions. Maintaining standard practice and not rushing procedure because you're under pressure is crucial. My tips on managing stress at work are:

Take time to communicate. Talk to your people each week about the business and make them feel part of it. This is crucial for alleviating stress and anxiety, and will also prevent harmful speculation. It's also about managing the expectations of those employees that are left if you have had to lose jobs.

Provide access to outplacement services. This is a good affordable option and while it helps those that have been made redundant, it is also a strong message for people still in the business. Guide people to manage workloads more effectively by creating rest areas, encourage them to take regular breaks and make sure they use their holiday entitlement.
Keep the staff handbook up to date so that people know their rights.
Manage your people carefully. Failure to develop and maintain your staff could leave you in a precarious position when conditions improve.

It's vital that SME directors think about the long-term consequences of actions they're taking now. Ensuring high standards of practice and looking after your people will pay dividends when the upturn comes.

Fix your finances

Dr Andrea Moro, finance lecturer at the Open University Business School

The downturn is not discriminating against industry sectors, making it difficult to identify areas of strength. The High Street is descending into a wasteland and major financial institutions are proving the old adage that the bigger they are, the harder they fall. But businesses can insulate themselves and minimise the effects of recession. As financial management is the key to survival, they must:

Strengthen relationships with banks. In a recession, banks are less available to provide funds, especially to new customers. As a consequence, banks prefer to strengthen existing ties, leveraging all confidential information they collect as a basis for making decisions. Banks are increasingly monitoring activity and asking for supplementary information to gain an insight into the operational value of a business.

Improve reporting. Boost your relations with a bank by responding to requests. The most effective way to do this is to sharpen your reporting procedures so that information can be collated quickly and efficiently. Anticipating what information the bank will request beforehand will allow you to act swiftly to capitalise on any opportunities. Provide bank financial statements as well as all other documents, including financial forecasts and business plans, as soon as you have them.

Expand your own knowledge. Banks employ different lending technologies so make sure you have the data to exploit all possible avenues. They are: financial statement lending, based on evaluating statements; asset-based lending, which focuses on the provision of collateral and its quality; credit scoring lending, based on statistical techniques; and, finally, relationship lending, which looks at recurrent needs such as lines of credit and overdrafts.

Plan effectively. Support your requests with strong documentation, including a detailed business plan. This will highlight robust areas of your company that could be bolstered in order to safeguard funding.

Be transparent. Try to be crystal clear when explaining your business, including the evolution of the relationship with your customers and suppliers; the market evolution; the strategy to address recession; and the behaviour of competitors. Don't hide bad elements, but on the other hand don't over-inflate good areas.

Lead from the front

Bill McCabe and Tony Turnbull of the McLane Group,
a consultancy specialising in leadership

Customer and consumer focus have become the distinguishing factors between successful and failing companies. Ethical, environmental and economic factors determine where customers will go to buy goods and services and companies must respond accordingly. This requires organisations to be flexible, responsive and in a state of change themselves. And here lies the real problem. Change is seen as threatening. So how does an organisation improve employee motivation when some of the traditional tools of working towards a fixed vision seem to be vanishing? It's about managing energy effectively. Follow these four tips and you'll be on the right track:

Keep your staff informed on the state of play within your business and what you are thinking; if times are tough, make sure your team feels supported; offer acknowledgement and appreciation when required; and motivate staff to get the job done.

But it's not just employees that have to adapt in a downturn; good leaders must demonstrate three key behaviour patterns. First, in difficult times it becomes imperative that leaders offer high-quality coaching and mentoring. This is essential where change is to be regarded as desirable rather than a threat. Second, they must ensure that their teams have the equipment, training and empowerment needed to work in a changing environment. Teams will feel valued and valuable. Third, leaders should practise respect, appreciation and encouragement. This will support the long-term development of relationships. Organisations wishing to steer their way out of recession need to show strong leadership skills and create a sense of purpose for staff.

Know the law

Rowena Herdman-Smith, a partner at commercial law firm Mishcon de Reya

Unless you are relying on luck, only those who really know their business and the market are going to be around to see much of 2010. My top tips for managing customers and suppliers fall into two categories. They are:

Understand your agreements
• What agreements do you have in place? Are they in writing? You don't need a written contract to have a binding agreement, but it certainly helps regulate a business relationship and can avoid unnecessary
legal disputes.
• What do those contracts actually say? We meet clients all the time who haven't read agreements that may be key to their business. Alternatively, they know the bits which work day to day, but have never considered what happens if something goes wrong.
• Deal with any issue that arises, such as non-payment, using the contract terms. If you want to do something differently, get professional advice first. You may compromise your company's rights if you don't.
• If you need (or are asked) to change contract terms, consider how best this can be achieved and whether this is to be permanent or temporary (such as a change to payment terms).
• Don't allow your company to be in default under
a contract unless it is a calculated decision. Seek professional advice first.
• Many contracts are automatically renewed if no action is taken. But this may not be the time to allow such renewals. You may be missing an opportunity to renegotiate or put work back out to tender.

Know your customers and suppliers
• Keep in touch with them on a regular basis. Manage your exposure to them but understand their issues.
• Do what you can to find out how their businesses are faring. That includes checking annual returns.
• Manage the information about your business that they receive.
• Monitor your competitors-you may be able to pick off their key suppliers and/or customers.

Stay afloat

Alan Tomlinson, partner at Tomlinsons, the business recovery and insolvency specialist

Almost every day we read about yet another company going into administration or more people becoming personally insolvent. But how, as a director of an SME, can you prevent this happening to you?
In many cases, if you can stop the business getting into trouble, your personal finances will remain in order, too. So it's more important than ever you are vigilant and keep a close eye on key symptoms that may spell trouble ahead.

For example, having to make time-to-pay arrangements with suppliers, finding yourself with insufficient funds to pay the monthly PAYE or quarterly VAT, or constantly having to juggle funds so there are sufficient monies in the bank to enable cheques to be paid, all indicate potentially serious problems that are not going to be solved simply through the injection of further funds. In these circumstances, you should not remortgage your house to inject funds into the business or raise your overdraft facility without taking advice. But you must:

Understand the signs that you are getting into financial difficulty early on. This will give you a head start in dealing with the situation constructively. Acting early could mean you avoid liquidation and turn your business around. If keeping your business in its current state is no longer possible, acting early can at least mean a more satisfactory outcome such as a pre-pack administration that preserves the goodwill of your business and maximises the value of assets for the benefit of creditors. Alternatively, it could mean you can arrange a Company Voluntary Arrangement (CVA), which is a deal between your business and its creditors, overseen by an insolvency practitioner, to give it time to sort out its affairs while the creditors take a back seat.

In some cases, the company may be doing well, but you yourself are struggling financially. Once again, taking advice early increases your options. Don't, whatever you do, stick your head in the sand.