In an economic downturn it is more important then ever that small business owners lead their companies and do not simply hope that things get better. Business leaders must plan and prepare to make sure that they address and manage the specific challenges that are currently being faced by their companies.

All small business owners must ensure that they are communicating effectively with staff. This is a major issue, and can have a significant effect on the morale and productivity of your workforce.

Research by the Chartered Management Institute (CMI) found that 62% of employees surveyed reported that they felt that their managing director or chief executive was out of touch with staff feelings.

Only 40% reported that the head of their company talks openly with staff on a regular basis and a mere one in five respondents said their business owners have an open-door policy.

Having clear lines of communication open with staff can also mean that you catch problems before they become major issues and ensure that you are spending time in the right areas of your business.

"We have creative, technical and commercial staff all involved in the same projects and so communication between them all is vital. In recent months we have made a conscious effort to get all of us talking more," commented Andy Devereux of Devmac, a web design and photography company.

"The better we all understand each other's roles and processes the more effective we become as a company. By communicating better with our staff they have a greater understanding of the mechanisms of the business, which leads to better customer service and higher sales."

For instance, one of your managers may have been performing above expectations last year, but have they ever worked in a recession before? By talking regularly with the manager, and the staff under them, it is possible to determine whether they require extra help to deal with the different business issues that a downturn in the economy brings.

However, it is also vital that staff feel that they are trusted by their company to do their jobs, and that small business owners do not micro-manage. A recent survey by the CMI found that just 8% of managers are given sign-off responsibility for the work that they undertake. This figure is clearly not high enough - what it the point in employing staff if you do not trust them to do their jobs? SME managers must talk regularly to staff but also have faith in them that they will do their job properly.

It is clear that for small companies to survive the current downturn good communication throughout their firm is vital. The owner of a business must know exactly what is going on in their company, which area of their business requires attention - and which area they would be better off leaving to their staff to get on with and do the jobs that they are paid for.