Firms should adopt simple but effective strategies to survive during economic woes

Small and medium-sized enterprises (SMEs) need to be particularly careful to ensure that they balance the books as there are no immediate signs of a quick economic recovery. Companies also need to brace themselves for a possible second wave of the financial tsunami.To avert the likelihood of companies going under, there are good management practices that they can consider in order to maintain healthy balance sheets. According to Mark Gilbraith, a partner at PricewaterhouseCoopers, there are strategies that can be implemented to help prevent SMEs from running into debt.

He said reviewing general expenditure, such as business travel and entertainment expenses, would be a good start. From a budgetary perspective, it was essential to find ways to reduce spending levels or remove them wherever possible.

'Companies allowing non-capped entertainment expenses should consider changing the system immediately and draw a budget limit,' Mr Galbraith said. 'And business travel frequency should be reviewed case by case and [the firm should] cut down the length of stay for individuals whenever possible.'

Companies that offer enviable employee benefits, such as sponsoring gym memberships, children's education and holiday allowances, should consider suspending these perks. 'It may seem trivial but it can add up to an enormous [cost] if [they are] not careful,' he said.

As staff retrenchments would probably continue through the first half of the year, Mr Gilbraith said companies offering overtime pay should keep this to a minimum if it was not practical to cut it out entirely.

Employees would not be surprised with measures to drive costs down in difficult times. 'Working overtime without proper compensation is not a nice thing to do but it has to be done in the interim,' he said. 'But I am sure employees would fully understand that and go along with what is considered best for the company.'