Are we heading for a recession or is it that everyone is talking themselves into one?

Whatever the answer, here is some practical advice about what you should do if you fear an economic downturn.

Plan for it by making sure you have the resources and flexibility to manage short-term fluctuations and focusing on being in a position of strength when the economy starts to pick up again.

You will need to watch your cashflow. If your margins are tight, even a slight fall in sales can lead to a cashflow crisis.

Maintain tight controls on debtors. In a recession your customers will try to delay paying you. Prepare a clear debt collection policy and apply it firmly across the board. Talk to both suppliers and customers and agree terms in advance.

Focus on profitability, not sales volume. Even in recession, you may still be able to improve your margins to compensate for any drop in sales.

Do not just consider cost-cutting exercises - you also need to improve performance. Smart businesses will survive a recession easier than the rest.

If you must cut back on investment or training, make sure you have a plan with clear priorities and flexible options.

Do not forget your customers - they are your lifeline. In a recession, it is even more important to hold on to them.

And look after your key employees. Again, short-term savings can easily turn into long-term problems.

Turn your competitors' weaknesses into your strengths.

Remember, yours is not the only business facing hard times. Your competitors are in the same boat.

Peter Meredith is a partner with Horwath Clark Whitehill in Bradford.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.