Top Tips to protect your business during an economic downturn

Some experts believe that the UK economy is already nearing a recession, whereas others believe the “credit crunch” has been overblown by the media. Either way, many small business people have already started to look at how they can survive a downturn. Here are some tips from the Bytestart team.


Small businesses notoriously suffer at the hands of larger clients when it comes to late payment. During boom times, late payers may be tolerated, but when things aren’t as rosy, not only can late payment lead to worrying cash flow positions, but larger clients themselves may start to pay even later as they aim to hang on to funds longer. This is the time to put into place a sensible late payment strategy. Why not take a look at our late payment guides.


Traditionally, advertising is one of the first services to be hit by an impending downturn. Many companies feel that this is an easy expense to trim down on when times are bad. On the flip side, you could use the opportunity to gain market share if your rivals decide to pull back on marketing spend. This is a good time to work harder on your marketing to compensate for any shrinkage in your potential client base. We have over 100 sales guides which could be handy.

Tax Cash Flow

One thing you cannot cut down on is settling your tax liabilities on time. However, there may be ways to ease your tax cash flow position. An example of this is the VAT cash accounting scheme which allows businesses to pay collected VAT to the taxman once they have been paid themselves. Otherwise, you will be paying out VAT on invoices which have yet to be settled. You can read more in our dedicated VAT Cash Accounting guide.

Keep Customers Sweet

You may have taken some customers for granted during boom times, but now more than ever is the time to keep them happy. Ensure that you keep in touch with your key clients and if necessary. Suggest ways of adding value to your current deals – either using discounting or providing other benefits. This is also a good time to get to know your key client’s accounts department to avert any late payment issues as mentioned above.


Just as you need to keep your own customer base happy, this is also a good time to get the best out of your own suppliers. Your bargaining power will increase during rocky times and you may well be able to secure discounts on products and services. Take a view on the medium term state of the economy and try to lock in discounted deals for longer periods, so you benefit not only now but also when the economy improves.


This is a good time to review your business expenses policy. Spend time using comparison sites and viewing multiple vendors before buying anything from a new PC to a business trip to Brussels. Small expenses can mount up too – using public transport rather than cabs between meetings could be a good start, if practical. Shop around for services such as telephony (VoIP calls are far cheaper than standard landline calls), broadband and utilities.

New Ideas

Although a recession can provide opportunities for smaller companies to overtake larger competition (due to a lower cost base and other reasons), think carefully before launching new ideas onto the marketplace. People are more likely to seek out bargains rather than top-end products and services during a downturn. Concentrate on your core business and put off any risky ventures until the economy picks up.


It is easy to make a lot of changes to your business practices when half the stories we are fed by the media relate to the credit crisis. Last Friday’s headline in the Evening Standard was “Queen Hit By Credit Crunch”. A recession is good for newspaper sales, but we need to keep some kind of perspective. Try to carry on running you business as normal. By taking action now, rather than delaying, your business will be in a better shape regardless of the economic situation.

Bytestart Limited

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