Caroline and Jan Paul Harding were at their wits end trying to think of a name for their new design and marketing company.

Mrs Harding explained: "We had lots of ideas, but they all seemed to be taken already when we searched the Internet. Then one day we were out walking the dog. He had just been into the river, so we just said 'wet dog' and that was it."

Before setting up Wetdog Creative, the couple had moved to Chadlington, near Chipping Norton, to work for a mail order fitness company in Witney, having met at a design agency in Northampton.

But after they both hit 30, they were itching to set up on their own, despite warning signs that Britain was on the verge of a recession.

"We had lots of experience and we felt that, between the two of us, we could cover everything. I do the project management and client side, and Jan Paul the creative side, so we didn't need to take anyone on. We could just run the business from home and keep our overheads down.

"It was relatively low risk — apart from the fact that we have to pay the mortgage. We felt it was now or never."

However, shortly after they had taken the plunge, it became clear that the economic downturn was likely to last longer than they had feared.

The services they offer — corporate identity for new companies, re-branding for existing businesses, brochure design, advertising, direct mail campaigns, exhibition design and project management and website design — were just the sort of things that get cut back in a recession.

Mrs Harding said: "In times of economic downturn, traditionally the first place managers look to slash overheads is from their marketing budgets."

She added: "Although we were aware of the falling growth within the economy, we believed we could offer businesses an alternative to the traditional design and marketing agency that would really work in our favour during those first few tricky months."

They seem to have succeeded. The couple managed to negotiate to work freelance for their old employer, and in their first six months they have found several new clients by word of mouth and by sending fliers to businesses in Chipping Norton and Stow on the Wold.

"People like to use local companies and it keeps costs down," she said.

The mix of new clients crosses a range of industries, including the legal profession, retail, hotel and catering, commercial relocation, renewable energy services, waste management, pilates, antiques and travel.

"The advantage of small companies coming in to an established industry at a time of economic uncertainty is greater than you might think," explained Mrs Harding.

"While the bigger companies have usually got high overheads and several employees to keep busy, small start-ups can spot a niche in the marketplace to grow when the larger firms are pre-occupied with cutting costs."

And being a small start-up, Mrs Harding says they have low overheads and can react more quickly than larger agencies.

"The fact that we are a husband-and-wife team could be seen as a disadvantage, but we decided to celebrate the fact that it is just us and that we've got new ideas and the enthusiasm to work closely with our clients to help them succeed during this difficult economic period."

It's all very well working in the same office as your spouse, but what is it like working together all day at home and then living together evenings and weekends as well?

"We have always worked together, since we met at the agency and then we both worked for the same company, so we knew we would be OK."

How about Barney, the wet dog?

"He's very happy, because we can give him a walk in the middle of the day if we're free. Working at home suits our lifestyle, and we think it's an advantage for our clients as well."