The Small Business Response to the Credit Crisis

Thrust into the current credit crisis, small business owners need to have a tight grasp on their current financial situation. This includes an understanding of liquidity and the amount of cash reserves available to sustain the business through a potential downturn. It also necessitates the understanding of the financial position of current customers, as this will affect the time for collections and new orders.

If your company is facing financial stress currently, this paper provides you with four steps to deal with this strain:

1. Develop a completely accurate picture of the company's financial situation.
2. Determine the feasibility of this business model being profitable.
3. If net income is positive, establish a creditor payment plan.
4. If net income is not positive and cannot be made such, resolve the company quickly.

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