Hunting for Cash in a Credit Crunch Environment

When experiencing an extended bear market, keeping the valves open for steady cash flow can be difficult. Banks tighten up on loans, and investors may wish to pull back.

So where does this leave you, the small business owner? Thankfully, there are a few options available to you when trying to tap another cash vein during a credit crunch.

Small businesses do more than provide services, they help keep cash flowing locally. Our federal and state governments recognize the need for this to help keep the economy healthy (or jump-start it when it's anemic).

Sit down with your tax advisor and locate all the tax breaks available. Keep in mind that even the ones that don't help you or your business directly can still be viable to attracting an outside investor looking for a tax shelter.

While bringing in an outsider may not seem attractive to everyone, it may be better than closing your business doors altogether. Sometimes investors are more concerned with acquiring write-offs rather than investing in cash-rich businesses. This option may provide you with a much-needed lifeline.

Don't allow your credit card's balance to grow beyond your control. Making your payments on time is important when things are going well—and even when they aren't. This can help you maintain an excellent credit score for times when you need to apply for a larger limit.

Be wary of applying for multiple cards, though. It may be better for you to stick with the business card company you trust. If you're a good customer, the company is more likely to work with you in lowering minimum payments or raising your credit line.

Many times, business owners don't realize what their greatest strengths are. Listen to your clients or customers. Sometimes, finding the solution requires rethinking the problem.

For example, a restaurant owner may aim to attract families dining out in the evening, but find that chairs stay empty. The answer could lie in catering to the breakfast crowd on the way to work. The same rethinking can apply to you and your business.

If business is down and you're credit-strapped, a little advertising can go a long way to alleviating the problem. Too expensive, you think? Do it the old fashioned way. Sometimes, the solution can be as simple as getting more face time with local businesspeople and customers.

Attend local events. Advertise your business, but in a subtle way. Think: "Hi, I'm Mary. I run the print shop down on 5th" over "Hi, did you know we have a sale going on now? Why not come in and see what you can save?"

The former may generate interest, but the latter will turn off almost everyone.

Hunting for cash in a credit crunch environment isn't easy. It can involve rethinking your business practices, as well as your credit, to maintain liquid funds. Keep your options open. Talk to your bank and credit card company. You may be surprised at the solutions they can offer.

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