TRADING through the last recession was tough for Harry Skidmore. His customers fell away, cash flow almost stopped and he had to sack 120 of the 200 employees at his Derbyshire printing equipment supply business, Easibind International.

“We grew very fast during the 1980s, from sales of £500,000 to £10m by 1990,” said Skidmore.

“Everything in those days was about going for growth, which you got through sales and marketing.

“When hard times came we found the business was built on nothing. Confidence went, people suddenly stopped spending and bad debts mounted up.”

Admitting defeat would have been easier than continuing to trade, said Skidmore. “People told me it would be easier to walk away, but I felt I had a responsibility to keep the business going. It took years to recover.”

As signals of distress among small firms mount, Skidmore is confident that the lessons he learnt in the last downturn have stood Easibind in good stead. “Rather than just going for growth again we rebuilt the business on a more sustainable model. We have a smaller sales and marketing team and our products have changed. We are more focused on serving a few large, demanding but reliable clients rather than small volatile companies.”

The firm recovered, not by cutting its prices, but by improving products for customers, creating cost savings, efficiencies and environmental improvements for them, said Skidmore.

“We have focused more on our people’s skills and we have invested in technology and new products. We are now a centre of excellence for Hewlett-Packard.”

A growing number of firms could do well to apply the lessons learnt by Easibind and other survivors of past downturns. According to the rescue and recovery specialist Begbies Traynor, the number of firms facing county court judgments of more than £5,000 or winding-up actions soared in the second quarter of this year by 685% from the same quarter last year.

Although financial services is one of the hardest hit sectors, Braxxon Technology, which serves the investment community, has learnt the hard way how to weather sudden downturns and is confident it will do so again. It almost went under in the 1990s when one of its large clients, the Midland Bank, stopped paying its bills. Drastic action was needed to save the firm, said founder and chairman Chris Renardson.

“Luckily we were a young business with a small and eager team and not many overheads. Our biggest cost was salaries, so everyone except one person agreed to take a pay cut. Within a year cash flow recovered and we had only had to let that one person go.”

Failing to act swiftly in 2001 when business once again dropped away hit the firm hard, said Renardson. Banks and other financial institutions stopped spending money, forcing the firm to sack 24 people.

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