Top 10 Survival Tactics in a Tough Economy

1. Cash flow is king

As a small business owner, you must know how your cash flows. This isn't fancy accounting; it's simply tracking how cash comes in versus how it goes out. Take two hours, and use your QuickBooks or check register to get a grasp of this monetary movement.

2. Trim the fat

Many small businesses experienced a tremendous run in the last 10 years. Since they had good cash flow coming in the door, they allowed fat to accumulate in the things going out the door. Now is the time to look at where your money is going, and eliminate unnecessary items. This includes the business Hummer, that expensive copier lease and the T1 connection instead of basic cable modem. You may need to make some tough decisions about eliminating employees.  It's critical that you get your cash outflows to a manageable level ASAP.

3. Look into the future

When clients and projects were rolling, most entrepreneurs believed that new business would materialize whenever things temporarily slowed down. Those times are gone. Analyze what money is coming in during the next three months, specifically from where, and when.

Compare this to the new cash outflows that you assessed in the step above. If things are tight, that's fine; if more is going out than coming in, trim more and find additional income. Do this exercise each month, always looking at least three months out.

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