Eight Ways to Avoid a Cash Crunch

3. High rent: This problem hits many retailers, especially in an economy where consumers are curbing spending. A retailer may have agreed to a high rent in a prime location several years ago, thinking a rollicking economy would make it affordable. Today, when times aren't as good, that rent may spur the crunch. Make sure you can handle your beachfront real estate even if sales are low.

4. Overcrowded inventory: Greenfest says he's spoken with many entrepreneurs who insist they must stock every size or shape of the gadgets they sell, or (they believe) the customers won't come. One small-business owner told him his business had to stock ladders in every different size to stay competitive. But when asked how many times in the past 20 years they sold a 16-foot ladder, the answer was "one." Greenfest advised that for certain inventory, it's OK to tell the customer it may take a week to get it.

5. Reluctance to talk candidly with a bank: Bankers and landlords like it when businesses are upfront with their problems, rather than waiting until the situation is dire. A business owner has a better chance of renegotiating payments if he's forthcoming. But make sure you present them with a plan explaining why your cash flow is just a trickle and how you'll work your way out of the current undesirable situation.

6. Not reaching out to vendors: Many businesses only talk to vendors when they can't pay them, says Swartwood. It's important to maintain an ongoing relationship, and to have backup vendors just in case your current ones go belly up.