Peaks and valleys: a banker's advice to small businesses on surviving an economic downturn.

In Michigan, we certainly have never taken a strong economy for granted. Despite our recent, unprecedented run of strong sales years in our auto industry and new home markets, the economy has now hit a downslide--and small businesses could be hit hard. By remaining alert and resourceful and following a few basic guidelines, small businesses can weather this storm.

Running a successful business involves tracking your bottom line. As scary as it may seem, you need to realistically assess your financial situation in terms of cash and cash flow.

Do a monthly cash flow analysis, projecting out one year. Determine when your cash position will be tight. Realistically assess whether you have financial solutions that will cover those tight cash times.

Focus on your sales. Realize that in bad economic times, sales releases often decline. Assume sales decline by 10, 15 or 20 percent--what effect will that have on your cash flow?

Look at your sales volume and determine what kind of a reduction, percentage-wise, you can take in sales and still remain profitable.

If a dip in sales is likely, continue to be aggressive in your sales efforts even if you're afraid you can't handle the ensuing demand. In tough times, it's easier to outsource some work than get work into your shop. Look into other businesses that might be able to temporarily handle your overflow.

Look at all your discretionary expenses and tighten as much as possible in any area you can.

Anticipate what is going to happen. Determine how many months of losses you could survive with your existing cash position, and be ready to look at options like non-traditional lending sources.

Once you've realistically assessed your financial situation, it may become clear that you need to gain access to cash. The first way to do this is to approach your bank to see what kind of loans or lines of credit for which you qualify.

Traditional lending products may be unavailable to you because of your company's lack of history. Don't despair: Your bank may be willing to partner with an alternative lending source that can offer products to bridge the gap until you do qualify for traditional lending financing. For example, with interest rates coming down, you may be able to refinance some of your assets through an alternative lender, giving you access to ready cash. A short-term solution like this is often all your small business needs to weather an economic crisis until you can qualify for a line of credit or other traditional bank-based product. Banks don't want to lose you as a customer and generally will do all they can to keep you. If you and your bank work together, the transition to an alternative lender (and, later on, back to the bank) can be smooth and relatively seamless.

As you experience the peaks and valleys of owning a small business, particularly when economic times are hard, continue to realistically assess the financial health of your business. Realize there's help out there if you do get into trouble--and make sure you get the help early.

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W. David Tull is chairman and president of Crestmark Bank, a member of the Detroit Regional Chamber.