Small Business Survival: Last Chance Lifelines for Keeping your Business Afloat

There are many reasons why businesses fall on hard

times - and it’s not always the fault of the broader economy.

Poor management, a bad location, over-expansion,

insufficient capital, or a lack of planning - many of these factors, if

not avoided, can certainly weigh down a business or even sink it.

If your business is experiencing financial difficulty

and is struggling to survive, here are some steps you can take to keep

the creditors and the IRS from your door, as well as some potential

lifelines and "refresh" business strategies that can help you stay

afloat.

Managing Cash Flow

Getting a grip on cash flow is the first essential

step towards positioning your business for survival and future growth.

Start with an assessment of your

short-term cash flow and develop a plan for your

immediate needs. This includes taking stock of all outflows - including

credit card bills, utility and commercial lease commitments, bank loans,

employee payroll, taxes, etc. - together with an assessment of your

incoming cash flow and a plan for prompt collection of payments owed.

If you need to delay payment of other bills, try

working with your suppliers to reduce rates, or implement a payment plan

that gives you time to get back on your feet.

But, however severe your cash flow issues are, try to

be meticulous about paying taxes, particularly those associated with

employee payroll. The IRS holds business owners liable for unpaid

employment taxes, whether you are incorporated or not. 

Below are some excellent resources to help you manage

your business cash flow and take control of your business finances

before they take control of you.

• Understanding and Expanding Cash

  Flow

  - Learn how understanding your cash

  flow trends can help you take control of your business finances.

• Bookkeeping Basics for Small

  Business

  - Proper bookkeeping practices

  are important to the operation and survival of any business.  Without

  them, your business is susceptible to not only cash flow issues, but

  potential legal problems as well.  To help business owners have a better

  understanding of smart bookkeeping practices, read this quick 101 in bookkeeping basics.

Leverage Financial Lifelines

There are several financing lifelines that can help

small businesses overcome short-term cash flow problems or help

alleviate existing debt. These include:

• Revolving Lines of Credit (RLC) - A

  revolving line of credit (RLC) is a flexible method of borrowing cash

  for your small business. It is very similar to a credit card in the

  sense that an RLC has an established credit limit that you can borrow up

  to, only without a plastic card. Although do note that to receive an

  RLC you must be operating profitably. Read "The Basics of Revolving Lines of Credit"

  to learn more about how you can apply for and

  take advantage of revolving lines of credit.

• The ARC

  Loan Program -

  Interest Free Loan for Debt Repayment - Backed

  by the SBA, the ARC Loan program was introduced in 2009 to help small

  business owners who are struggling to pay the interest on existing loans

  and debts such as credit card bills, capital leases and other loans

  made without an SBA guaranty. The program provides interest free loans

  of up to $35,000 for up to six months. Read "Managing Small Business Debt -

  Government Loans and Refinancing Lifelines" for more information

  about this and other programs from the U.S. government.

Learn from other Small Business Owners

If there is one thing that the current economic

uncertainty has demonstrated, it’s that entrepreneurs are fighters. From

customer service to marketing; from creative uses of technology to

tighter financial controls - small businesses are fighting back with a

toolbox of resources that challenges conventional business models,

introduces greater efficiencies, and opens doors to new opportunities. 

Read "Surviving the Recession and Planning for

a Rebound - How Small Businesses are Doing It!" for some insights

and tips drawn from across the Business.gov Community of experts and small business

owners.

Additional Resources

• Running a Seasonal

  Business – Thriving and Surviving Year-Round

• What Happens when I

  Default on a Business Loan?

• Handling Employee Layoffs as a Small

  Business Owner

• Bankruptcy Options for the Small

  Business Owner

  - Explains what bankruptcy

  is, how it works, and can help you determine what bankruptcy options are

  available and helpful for your business model.

• Have an Exit Strategy - If

  the time has come to exit your business, read "Getting Out - Developing a Business Exit

  Strategy that Anticipates the Expected & the Unexpected" to

  prepare and plan for the impact on your employees, your business

  structure, its assets, and your tax obligations.

• Managing Small Business Finances  -

  This guide from Business.gov covers everything from where to get

  business credit to accepting forms of payment from customers, and more.