7 Tips to Stay Afloat When Times Get Tough Businesses can survive a cash-flow crunch, but the wrong move can be fatal.

Many small business owners struggle with cash-flow issues. They may not be paying themselves, at least not a fair market wage for the type of work they do and the hours they put in. They may be putting money into the business to survive.

These entrepreneurs are struggling to keep their enterprises afloat. Below are seven tips for making ends meet when times are tough.

1. Get control of the checkbook and inventory. Verify that every nickel that leaves your business is going to a legitimate creditor. A surprising number of small businesses fall victim to fraud.

Related: 10 Ways to Keep Your Company's Cash Flow Alive

Similarly, make sure that your inventory is going to paying customers and not home with your employees. The Small Business Administration estimates that 30 percent of small business failures are the result of embezzlement, employee theft or fraud. Don't think that your business is exempt. As Ronald Regan said, "Trust, but verify."

2. Make prudent reductions in operating expenses. Unless you have no choice, don't slash and burn, making cuts that will cripple your business in the long term. However, in difficult times, it makes sense to reduce operating expenses.

One example of a place to look is overtime pay. If sales are below budget, you shouldn't be paying overtime to production and warehouse workers. If you are in a bind, you may need to reduce hours for non-exempt employees and/or ask exempt employees to take a temporary salary reduction. These are not easy decisions, but they are preferable to bankruptcy.

3. Delay capital spending. Unless the payback is very short (a couple of months at most), delay capital spending (such as buying a new building or equipment) when the business is in a cash crunch. In the long run, you have to invest in your businesses or see it die a slow and painful death. However, there are right times for investment. When a business is struggling to make payroll, it's not the right time for capital spending.

4. Reduce working capital. Accounts receivable and inventory suck up cash. When things are tight, collect what is owed to your business as quickly as possible. However, be cautious about factoring your receivables. When annualized, the interest rates are often usury. For example, paying 3 percent for the use of money for a month is more than 36 percent annually when compounded.

Related: Obsessed With Revenue? Don't Forget to Check Gross Margin.

It can be less expensive to finance your business on credit cards. Selling excess inventory, even at fire sale prices will generate cash. Reducing inventory without hurting customer service will put cash in your pocket. Similarly, stretching your payables without damaging supplier relationships can be helpful.

5. Consider refinancing. Restructuring debt can lower monthly payments. All else equal, if the term of a loan can be increased or the interest rate reduced, monthly payments will drop. Refinancing assets can put cash in your pocket.

6. Ask for concessions. If you have been assessed fees, penalties or interest, ask that they be waived. Request extended terms. Don't hide from creditors. They will often be willing to work with you if you communicate with them -- particularly if they think that the alternative to working with you is that they get paid nothing when you declare bankruptcy.

7. Grow sales -- maybe. One of the most common reactions to a cash flow squeeze is to grow sales. This makes sense. All else equal, sales growth will generate increased profit. But, as a savvy finance expert drilled into our heads, "You can't buy beer with profit, you can only buy beer with cash."

If growing sales means increasing accounts receivable and inventory, it can actually result in a short-term reduction in cash flow. Companies can literally grow themselves into bankruptcy, and do all too often. Before attempting to grow sales to relieve cash flow pressure, make sure that this will make things better, not worse.

Businesses can survive a cash-flow crunch, but the wrong move can be fatal. What's needed is a well-crafted plan of action that will inevitably include some or all of the seven items above.

Related: Are You Prepared for Your Small Business to Flatline?