However well you do and however hard you try there will always be times when cutting operating costs becomes essential. You never want to let people go - these are your colleagues and may be your friends - but if your business is to be preserved you may have no choice. The market dictates the size of our businesses and while we can influence things we will always have to adapt to it.

As I write, in the Summer of 2008, many many firms are facing a meltdown in demand for conveyancing. This work has been the bread and butter of so many small firms for as long as they can remember and most are worried stiff about what to do. But we are in self-preservation mode here and have no choice.

The old business rule in such times is "Cut early and cut deep." The thinking is that you have to stop hard-earned reserves being frittered way in trading losses and so must cut the size of your operation to suit demand, but also that as these things are so hard on morale we need to take one biggish cut, after which we can start to look forward more positively, rather than repeated small cuts that leave everyone feeling constantly vulnerable and miserable. Get the bad news out of the way, even if it has to be quite bad, and move on.

If redundancies are going to be necessary you do have the opportunity to weed out underperformers - many believe that it has to be "last in first out" but it doesn't. It is also the case that the minimum statutory redundancy payments are not at all high - many firms in fact offer more as an incentive for a quick, harmonious exit by the employee, so that in practice it turns into a compromise agreement departure.

Unless you are already familiar with such things as a first step you may like to read the excellent ACAS guidance and there is a .pdf you can download. Click here:

Beyond this, unless you already have one in your firm, I always feel that guidance from a proper employment solicitor is wise and I would set about finding one. The cost of getting this wrong is high and in fact the management time lost in defending a tribunal claim will probably cost you far more than the settlement awarded. The right skilled advice is, in my view, essential.