While savvy business leaders are geared up for the expected tougher times ahead, the bulk of UK firms are refusing to prepare for the worst, according to a new poll.

The study by the Society of Turnaround Professional (STP) and GE Commercial Finance indicates that only 4 per cent of turnaround professionals are confident that firms here are well equipped to deal with a downturn in the economy. Moreover, 52 per cent of the participants thought that UK firms are poorly prepared.

STP chief executive Christine Elliot said: “With the last major slump in the economy having been in the early 1990s, many of today's business managers and owners have not had to deal with the consequences of softening demand and limited credit availability. Being able to successfully deal with these more adverse conditions will require businesses to focus on their cashflow, costs and markets.”

According to the poll of STP members, the top three sectors most likely to be hit by deterioration in the economy are retail, leisure and manufacturing industries. When it comes to regions, business operations in Wales, the North East and London are expected to suffer the most.

John Jenkins, chief executive of the Business Finance division of GE Commercial Finance, commented: “In recent years, the consumer has been a major force underpinning the strength in the UK economy. Interest rate hikes, increased tax burden and fuel inflation have taken their toll which, in turn, limit discretionary spending in areas.”

The professionals polled stated that the primary concern for businesses should be the improvement of their cashflow. Jenkins added: “Many profitable firms can quickly end up in difficulty if they have not focused on generating cash quickly. Using alternative forms of finance, such as asset-based lending, could play a significant role in helping some firms release cash tied up in assets such as invoices, inventory, plant and machinery.”

Also on the list of tips is to seek the advice of experienced managers and business advisers early on and to focus on winning new business from customers less likely to be hit by a slowdown in domestic demand.