Australia came out of recession in the early 1990s and the country has enjoyed solid economic growth for most of the past 15 years, but now is the time to start thinking about how your business would fare in a tougher environment.

The many warnings include interest rate rises, fallout from the sub-prime mortgage market, slowing of Australia's mineral exports, labour and fuel increases.

None of this necessarily means a privately held business should assume the worst.  It does mean you should start weather proofing your business.

In good times businesses become slack about controllable costs, because the penalty for errors is reduced by the easy sale.

The response of many businesses during the last recession was to curtail their marketing budgets.

It was not considered critical and the benefits, if any, were sometime in the future (if at all).

When the economy picked up those businesses quickly discovered they had lost ground to their competitors because they had stopped promoting their business.

Could you hire casuals instead of permanent staff, until you get a feel for where the economy is going?

Major capital expenditure and pruning of stock levels is worth considering particularly if funding it with debt.

Debt reduction is worth consideration.

Good cash management is critical to small business, and early planning in tougher times is the key to good cash management.