In recent months we have witnessed a period of unprecedented economic turbulence and instability. In this short article, I will describe some courses of action that may help to reduce the sense of helplessness businesses are currently experiencing.

1. Stay abreast of economic indicators
The global credit crunch and the increased uncertainty affect almost everyone. Very few UK businesses are immune to the effects of reduced credit, devalued housing stock and the greater perceived risk we all feel. Hence, it is important to stay abreast of developments to ensure that management decisions are made in the context of the most up-to-date economic indicators and forecasts.

2. Revisit your business plan
It is perfectly acceptable to revise your business plan more frequently than once a year. If your business plan is over six months old, then it is likely that you will need to revise revenue figures downwards and costs upwards. Do this as soon as you can, and revisit key indicators such as current cash burn rates (cash spend per month, debtor days etc)

3. Review current projects and plans
Most businesses have a number of projects and initiatives on the go at any one time. These projects will consume resources over a number of months and years, and will typically involve investment of time, people and money. Projects that have been planned over six months ago, and that take a number of months to complete, should be reappraised. It may be more appropriate to defer projects until the economic conditions are more favourable or until the level of perceived risk and uncertainty declines.

4. Communicate effectively
It is not just management that feels the pinch when economic conditions deteriorate. It is likely some employees may be saddled with credit card debt or may be sitting on properties with negative equity and worried about their futures. Management needs to ensure their employees are aware of issues with implications for them.

5. Consider outsourcing some activities
In most industries, it is possible to outsource non-core activities. There are many pros and cons for outsourcing; however, if cashflows are under pressure, the inherent flexibility of outsourcing may be more appropriate until economic conditions improve.

6. Assess exposure to known risks and dependencies
In times of uncertainty it is important to step back and identify risks and to appraise key relationships. Is the company over-reliant on one particular company or industry? While this reliance may have been fine during periods of economic growth, it is important to recognise that a dependency on one supplier or customer dramatically increases the risk.

7. Consider different scenarios
The importance of scenario planning grows when uncertainty increases. The aim of scenario planning is to think through the implications for the company if certain scenarios came into effect. For example, what would happen if sales decline by 20% or if oil doubles in price in 2009? By thinking through a number of plausible scenarios, and designing strategies to deal with such eventualities, companies will be better prepared if one of the scenarios does, in fact, occur.

8. Continue to innovate
While it may be tempting to ‘tighten up', it is important to recognise that increased uncertainty also brings opportunity. If competitive brands reduce marketing spend, it may be an opportunity for you to grow brand awareness. Similarly, as companies advertise less, rate cards typically drop so it becomes cheaper to communicate with potential customers.

9. Don't assume cost-cutting is a panacea
Another common reaction to a downturn is to reduce costs through trimming wage bills by making employees redundant and cutting back on marketing activities. While reducing these costs may have a short-term effect on the profit and loss, such cuts are not without their risks. Redundancies typically have a negative effect on the remaining employees, who now feel less secure about their jobs, and are not happy with the extra burden placed on them with a reduced headcount performing the same activities.

10. Keep an eye on the cash
Given the ubiquitous impact of the credit crunch, it is likely that the cash positions of some customers will have deteriorated. If a majority of sales are on credit, it will be necessary to manage invoices and accounts receivables (debtors) to ensure that your cash position does not suffer also.  Keep an eye to ensure your debtors' days figure (the number of days on average it takes to get paid for a credit sale) does not creep up.

The increased uncertainty in our environment means that planning for the future has become more difficult. However, it is how we deal with this extra risk that will determine how our businesses fare over the coming months and years. It is not a time for ‘battening down the hatches', but rather a time for more and better planning.

Alan Gleeson is managing director of Palo Alto Software, creator of Business Plan Pro® 11.0. For further information on business planning visit www.bplans.co.uk [1] and www.paloalto.co.uk [2]