The money comes in. The money goes out. That's how business works. A successful business has more money flowing in than streaming out. Wouldn't it be idyllic if cash flow stayed that fluid? Unfortunately, all businesses have to face the fact that sometimes the money stream goes dry. But a disruption in cash flow doesn't have to signal the end of your venture and, with the right planning, it doesn't have to create a significant problem.

Basically, your problem is too much expense that isn't supported by sufficient revenue, so you've got to deal with both sides of the imbalance. Don't even think about financing this effort with a loan or line of credit, or a (gasp) credit card. You'll just be heaping more debt onto an already towering stack of bills you can't pay! Plus, when money is tight, a loan officer is going to see greater risk and charge you a higher interest rate, if you even qualify. Instead, let's look at how you can get your cash flow out of the stagnant puddle.

Revenue can come from various sources: sales of your products or services, overdue accounts, owner investment, and liquidating assets. Avoid making emotional decisions that are based on frantic worry. Before you cash in your retirement account or take a second mortgage on your home to funnel cash into your business, explore other opportunities.

The best jump start is to rely on your products and services because, in the long haul, that's what's going to keep you going. Assign someone to “dial for dollars” — make collection calls to delinquent accounts. Use a professional collection agent for grossly delinquent customers if you're not getting results on your own.

Take a look at your inventory. If something is just taking up space, it's time to move it out. You can't afford to have your money tied up in merchandising that is taking up residence like a squatter. Reduce it for quick sale. Contact likely customers and make them an irresistible offer. If you can break even, great. The point here is not to turn a profit but to generate income.

Speaking of great deals, consider a special sale to prompt a rush of sales. Offer a sliding discount for higher purchases. For example, spend $50 and get a $10 gift certificate for a future purchase. For a $100 purchase, get a $25 gift certificate. If you've got an email list, send out a notice of a private, unadvertised sale. For service providers, offer a month free when a customer prepays for a specified number of months in advance.

You also need to recognize that extending credit to customers is slowing down your revenue stream. They get the goods or services and you wait around for the money, while your creditors are losing patience. Limit your credit accounts. Institute a monthly minimum in order to maintain an account. Offer a 2% discount for early payment and 5% for prepayment.

The next step toward relieving the cash crunch is reducing your expenses. Look at items like office supplies, postage, subscriptions, and memberships. If you want to know how much you're wasting on paper, just look at how often the recycling bin starts to overflow. All that paper also equates to more toner and ink cartridges, which can be quite costly. And how many times do you send a letter or package via overnight shipping when regular mail will do? Do you provide company vehicles? Have you looked at your phone usage? Offer incentives to employees who come up with cost-cutting ideas. You'll get them thinking and reinforce the importance of frugality.

The most important method for dealing with a cash crunch is to avoid it altogether. You can do this when you take the time to get organized and plan ahead. Cash flow doesn't happen in a day or two. If you're tuned in to your business on a day-to-day business, you can see it coming. There are definite signs.

A good-paying customer starts to slip a little. You're not adding new accounts on a regular basis. Production costs are going up. The soaring price of gasoline, for example, indicates that you are going to pay more for shipping. This extra expense can either eat away at your profits or you can make adjustments so your cash flow isn't damaged. Here are some tips to prevent the cash crunch from putting the squeeze on your business:

Purchase a business planning software program that will generate monthly cash flow reports. Don't waste your time with a program that only tracks this important task on a quarterly or annual basis. In one quarter, you can go from fluid to dry as a bone. Check the monthly reports and look for patterns of a downturn. One month could be a quirk. More than two or three requires prompt attention.

Forecast sales and expenditures for both short- and long-term. Take into consideration busy and slow periods. How much will you have to spend on the cost of your goods in order to generate inventory that won't be turned into cash until much later? Will you have the funds to carry over until that inventory is sold and paid for? Do you anticipate capital expenditures that will require a significant investment?

Institute a purchase order system. If employees are ordering whatever they need, you can be sure that money is no object. Employees can requisition the supplies they need and have all purchases made by one department in order to get the best pricing through bulk purchasing. At the same time, request a purchase order from your customers so that the terms of the payment are clear.

Review the cost of your goods. Is there a way to streamline the expense? Are there products that aren't generating enough sales? If so, consider dropping the product or determine what you need to do to make it more appealing to the consumer.

Review sales reports weekly. Look for shifts that could signal a problem. Are you relying heavily on a handful of customers? Can you survive if one or two of them drift away? Are sales from regular buyers dropping off? What percentage of your gross sales are coming from new accounts?

Review your monthly statements. Make sure you are not being hit with extra fees. Check your phone bill to see if your rates have increased.

A cash crunch can be deadly to a small business. You don't need to suffer from the stress and anxiety of worrying if you can make payroll or even keep the doors open another week. Take the time to do the planning that will ease you through cash flow problems. By forecasting your financial needs well in advance, you can plan accordingly. In this way, you can anticipate the need for a short-term loan long before you're so desperate that you don't qualify. You can foresee when you might have to trim expenses or make inventory adjustments.

The most important concept to remember is that by keeping control of your business you prevent it from taking control of your life!