Despite recent efforts to stimulate the economy, the independent retail sector is clearly a challenging place to currently do business. Retailers will not only potentially be impacted by a reduction in consumer spending, but will also come under growing pressure on margins as suppliers strive to pass on some of the increases in costs borne recently from their Far Eastern manufacturing sources.

Whether or not your business is facing such pressure, the outlook does not necessarily have to be bleak. Many businesses which can manage through a recession, depressed demand and rising costs successfully, often emerge much stronger.

In these circumstances everyone knows that tight cash-management is vital. The old adage ‘cash is king' is never more true than when profit margins are being squeezed. A company may often sustain losses for quite a long time, but can only run out of cash once.

Planning for a down-turn in your business and knowing what action you may need to take is critical, without panicking.

Make sure you are aware of all your costs and wherever you can reduce them without damaging your business,. Looking for cheaper sources of business services is a place to start. Joining BPA Retail* could help you tap in to this as well as providing you with invaluable business support.

I know it sound obvious but wherever it is achievable, raise your prices and manage your stocks effectively, only ordering what you have to - not what you want to. Move old slow moving stock on and turn it into cash. Talk to other independent retailers to assist in the management of stock and the sharing of ideas and solutions to problems. Once again BPA Retail* membership can provide you with this opportunity.

Ensure you review your business on a very regular basis, prepare accurate cash-flow projections and update these regularly. Talk to your bank and keep them informed of cash flow trends and short and medium term business expectations.

Also keep your staff informed so they can share in your efforts to improve your business performance. Be clear about your business goals and values, keep your business under constant review and be flexible and fast on your feet.

Most of all don't panic, it's not always as bad as it seems. The business media likes nothing better than delivering bad news if there is none they will often create some. Who knows? A US stimulated recovery may be just around the corner. But even if it isn't, remember our market is an ever replenishing one, the UK has a growing population and the birth rate is on a steep incline. In fact in 2006 according to the Office for National Statistics was its highest for 26 years. 

I have spoken to some retailers and suppliers who are reporting a good start to 2008 and the outlook in the longer term for our industry has to be a positive one. So let's keep the faith and look forward to a warm and prosperous summer and an excellent autumn.