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The worst mistake is not maintaining up-to-date cash flow projections so that future liquidity is maintained. The way to correct this mistake is to start immediately preparing monthly cash flow projections that reflect your best estimates of lower future sales.

If you do any kind of annual budgeting, you should also consider doing multiple versions - one for what you think will realistically happen, one if revenues are 15% off, and a "doomsday" scenario. What can you do under each scenario? Also, ask yourself if there are any "early warning" signs that occur that could give you some extra time to get ready for a downturn.

Another mistake is not lining up sources of cash well before a liquidity crisis is forecast. Potential sources might include: additional credit cards, family, friends, bartering with vendors, asking for longer purchase terms, landlord concessions, pursuing your accounts receivable, SBA guaranteed loans. When you go down this road, however, be sure to take into account all of the terms. For instance, it may be embarrassing to ask friends or family for help, but they probably won't charge you the same high interest rate you would incur if you built up a large credit card advance balance.

See our answer to Vince for a few thoughts about receivables and payables.

As for how to fix mistakes, the smart-aleck answer is, of course, don't make them to begin with but if you do ..... good communication usually helps. It may not solve the problem but it can help make it easier. This is true for vendors as well as employees. You probably don't like unpleasant surprises and neither do your suppliers. If you think there's going to be a problem, let them know... they'll usually appreciate the candor and forewarning. If you have to save on personnel costs - cut benefits, eliminate overtime, etc. - let the employees know what's happening ahead of time because they need to plan too. They might not find it pleasant but cuts for an understandable and justified reason will many times gain acceptance. It's certainly a better alternative that non-survival and being out of a job. Just like our recent Federal bail-out, a bad situation was made even worse by bad communication.

Good question. It's always good to ask this early on so you can avoid taking really Draconian measures later. The earlier you start, the less painful it might be at the other end. And it will also avoid the worst possibility, at some point in time, in finding yourself with a negative cash balance and no where to go.

Businesses that run out of cash are like airplanes that run out of fuel in mid-air - they coast for a very short period then crash and burn, leaving few survivors. This may be harsh but it's the reality.

So, first and foremost, take all measures necessary to preserve future cash/liquidity. This can be done by looking into the future and making a projection of what you anticipate as to diminished sales and, at the same time, estimate what your costs will be. This should be done on a monthly basis and the cash flow projection should cover, at least, the next six months. And remember - always underestimate revenues and overestimate expenses.

At the same time, look at everything you do. Do you really need brand name office supplies - generic ones are usually cheaper. If you need to send something FedEx, does it really have to be there first thing in the morning the next day or can it be anytime the next day - there's a big price difference. Can you modify either your product or service so as to be able to offer your customers more high-value, low-cost items. Keep in mind that Wal-Mart is doing exceptionally well in these difficult times by following that practice. For example, if you have a wine shop, consider focusing on highly rated wine that retails for $10 a bottle or less. Do you belong to any kind of association because sometimes groups have buying programs offering lower prices.

Also look carefully at resource planning. If you have a retail business, analyze when your business is coming in the door. Do you really need to be open at 9am? Do many sales happen after 5pm? And what about staff? How many people do you really need at any given time or day? Can you cut some hours or put some people to 4-day work weeks (They might like that because it cuts commuting costs by 20%).

These are just a few .... But you'll get the idea. Be creative.