Have Emergency Funds Available
When times are good, too many businesses spend all available cash. Then when things turn less positive, there is little or no cash to fall back on forcing the business to borrow to meet its obligations. Our advice is to establish a separate "emergency fund" that is handled much like a personal savings account. Putting money into this fund every month will provide a nice cushion should times get tough. Bear in mind that this approach is a debt avoidance tactic. Incurring debt is expensive and puts additional pressure on the business, especially in difficult times. Having an emergency fund can help avoid or reduce the need for securing debt financing.