You can be on Entrepreneur’s cover!

Control Your Cash Flow Here are 5 ways to reduce your vulnerability during the credit crunch.

By Elizabeth Wilson

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

With a credit crunch and many banks tightening up or eliminating lines of credit, it's important for business owners to maintain a steady cash flow. Here are five ways experts say you can start the process:

  1. Diversify your revenue stream. Relying too heavily on one source for a majority of receivables is one of the largest areas of vulnerability for NCG Consulting owner Natalee Greene's clients.

    "Even if a small business has a client that's unlikely to go out of business, such as a federal government client, small businesses should ensure they have no more than 25 percent of income generated by one source. You can diversify by industry, department, product sold or other factors, depending on the nature of your business," Greene says.
  2. Cut back excess spending and protect your cash flow to meet payments. "Stay in touch with statements electronically," says Elena Sisti, founder and chairwoman of Savoy Bank in New York City. "Actively manage the money that's due to you, so you don't have collection problems."
  3. Cut costs whenever possible. "Really look at your own cash position. Negotiate better terms with vendors and accept credit card payments," Frank Baldassarre, president and CEO of e3bank, says.
  4. Raise capital in innovative ways other than traditional banking. "If you accept credit cards, there is something called a merchant advance where a third party will come in and review what your revenues have been and advance you capital today that you pay back in anticipation of future credit card receipts," says Deborah Osgood, founder of BUZGate, a business networking site.
  5. If you have excess cash, you should be leveraging it. "If banks are tightening up their credit, use it to borrow what you need as collateral, and have it in capital investments you need to grow the business. Having it in cash is useless unless you have disbursements on an ongoing basis," Osgood says.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

Sam Bankman-Fried Sentenced to 25 Years in Prison for Multibillion-Dollar Crypto Fraud

Southern District of New York Judge Lewis Kaplan said that the loss amount to the victims of Bankman-Fried's crimes surpassed $550 million.

Side Hustle

This Mom Started a Side Hustle After a 'Shocking' Realization in the Toy Aisle. Her Product Was in Macy's Within the Year — Seeing Nearly $350,000 in Sales.

Elenor Mak, now founder of Jilly Bing, didn't plan to start a business — but the search for a doll that looked like her daughter inspired her to do just that.

Growing a Business

To Achieve Sustainable Success, You Need to Stop Focusing on Disruption. Here's Why — and What You Must Focus on Instead.

Instead of zeroing in solely on disruptive innovation, embrace a pragmatic approach to innovation, recognizing and leveraging the potential within ongoing industry shifts.

Marketing

5 Ways to Get on the Media's Good Side (and Stay There)

When you're trying to make a name and a mark for yourself and your business, it's really important to get on the media's good side — and stay there.

Business News

Mark Zuckerberg Told Meta Engineers to 'Figure Out' Snapchat's Privacy Protections: 'We Have No Analytics on Them'

Recently unsealed court documents detail "Project Ghostbusters," Meta's project to work around Snapchat's end-to-end encryption to intercept data.