How can business make sure they're in the best shape to make the most of an eventual upturn in economic conditions?

One of the most striking features of the ‘credit crunch’ has been the impetus it has provided in making businesses look at key areas of their operation and address often painful issues.  By putting appropriate HR systems in place, tightening up terms and conditions and other contractual relationships as well as examining profitability in different areas of their business (and restructuring accordingly) they are far more robust in terms of risk management, credit control and cash flow management than ever before.  It is vital that such painfully-won gains are not squandered at the first sign of an upturn.  The sustainability of any recovery, the availability of credit and the attendant cash flow dangers pose a real threat.  Businesses and their advisors need to be more innovative in their approach in order to deal with these issues.  Joint ventures, as well as taking direct stakes in other businesses are some of the ways of spreading risk and avoiding the need for external funding.  Changes under the new Companies Act can facilitate the release of reserves from capital enabling some innovative approaches to funding issues.  Well-structured employee incentive schemes allow businesses to secure and motivate the best talent without immediately impacting on the cost base.  Whatever the future holds, the key to success for businesses will depend on flexibility and innovation.

Simon Morris is a partner and head of the Corporate Unit at Raworths LLP, Solicitors, Harrogate.