Many are concerned that the outlook for the kitchen, bedroom and bathroom industry over the coming months is less than promising. Amid fears of a possible recession, the increasing cost of living and other financial constraints, consumers are continuing to hold back on perceived luxuries, such as spending on their homes. This, in addition to the decline of the construction and new build market, has had a major impact on your sector.

In these uncertain times, the survivors will be those who are prepared for change - and that's why contingency planning is more important than ever for continued success.

For example, by creating a financial 'buffer' for your business you can make sure that any unexpected events - from a major loss of business, to the sudden arrival of a major competitor or new legislation - are less able to push your business over the edge.

As a first step, it is crucial to recognise threats and opportunities in your own market place. With less consumer money up for grabs, anyone in retail is competing for a share of a diminished cake so it is vital to ensure you keep up to date with industry initiatives and a close eye on your competition.

At times of keen competition, the winners are those who are prepared to go the extra distance to add value to their retail offer, to be different, so make sure you anticipate customer demands and stay ahead of developing trends. The arrival of new competitors or changes to your local area or customer base may not affect your business straightaway but you need to make sure you are prepared.

Know when new legislation or red tape changes come into force and prepare well ahead of important deadlines so that a hefty bill doesn't hit you too hard. Make sure, for example, you make note of the pre-Budget announcement so you can anticipate any changes which could affect you well in advance of the Budget.

Watch out for monthly interest rate announcements as a sudden rise or fall can have a big impact on both you and your customers. A fixed rate of interest on your borrowing will help you to budget effectively.

Take the opportunity to deal with any problem areas such as outstanding bad debts. Too many retailers focus most of their attention on finding customers and securing sales, not realising that these are just the first steps towards making a profit. Actually getting paid for your work can be an uphill struggle and bridging the gap until money comes in can mean make or break for many young businesses.

Encourage prompt payment with customers by setting out clear terms and conditions in advance, stating how you will be expecting payment and when. Avoid risk by asking for money up front or consider giving customers an incentive to pay on time with discounts for prompt settlement. Run a credit check on new customers to gauge how reliable they are likely to be by asking them to provide bank, credit and trade references and using a credit reference agency to verify them.

Most importantly, don't be afraid to chase. Late payment can often just be an administration oversight and your unpaid invoice might just be buried in a pile of paperwork, so don't hesitate to get in touch by phone or email with a polite reminder.

Conversely, make sure you set a good example. Good working relationships are instrumental to business success in your industry so you must treat others as you would like to be treated and make sure you pay your own suppliers on time. This will ensure your business has a good reputation which means you will be more likely to get credit if or when you need it.

Make the most of extra cash to create a contingency fund rather than leaving it sitting unused. Try setting aside regular sums in a high-interest business deposit account. Funds can then be used to earn interest for quarterly VAT, or annual income or corporation tax payments.

Even in business every penny counts, and there are many ways to trim extra pounds off your costs which can then be fed into the contingency fund. One of the easiest ways to make quick and substantial savings is to shop around for cheaper alternatives to the suppliers and other providers you currently use. Some time spent researching what's available can save you valuable cash in the long run. Look at regular outgoings such as utilities or bank charges and make sure you shop around for the best deal.

If you haven't managed to plan a contingency fund then a business overdraft is one of the most effective means of funding short-term finance. Easy to arrange, you will only pay interest on what you borrow. If an overdraft facility is set up and maintained, it can ensure that you have instant access to emergency funding, possibly as a stopgap to cover the purchase of essential equipment or new stock while an insurance claim is being processed.

There's no point pretending that the worst can never happen. As part of your routine business planning, assess your vulnerabilities, consider the impact of a major crisis or a disaster on your business as well as the ongoing effects of the turbulent economy. Use this information to develop and test a business continuity plan which pinpoints key staff members and tasks to ensure a swift recovery following any sudden events and a return to normal business operations with minimal disruption.

Making sure that you have the correct type of insurance for your business is also essential. Look for flexible cover that will meet the specific needs of a retail business and consider taking out business interruption cover which can provide cover for loss of revenue or profits or the additional costs of working. Index-linking your property cover should also make sure that you are insured for current market values.

Throughout all of this, it's vital to update your business plan as budgets can quickly become out of date. Make sure you record actual figures as you go along so that any unexpected variations can be spotted straightway and then amend your forecasts accordingly.

Looking to the year ahead, it is evident that 2009 will present many challenges for the kitchen, bedroom and bathroom industry. To ensure they not only survive but potentially thrive during this period, retailers must take extra precautions now to prepare for the unexpected. Inevitably it means putting more time and effort into your business strategy - but it could prove invaluable should a crisis occur.