Q: We recently lost an important customer to a competitor, and it's not clear whether we will be able to survive. Short of pouring more of my own money into the business, what short-term actions would you advise?

Electronics assembler, Eagan

A: Customer concentration is a common danger with small businesses, where one or two key customers can determine a business's survival. I appreciate from your question that this is a matter of survival. My suggestions aren't long-term fixes but may give you breathing room to regain your footing.

Your first step is to manage the situation through effective communication. Calmly talk to your employees and banker about the serious problem facing your business. They have the most direct effect on your survival. If key employees bolt, or your lender cuts you off, you're toast.

Next, collect and conserve as much cash as you possibly can. The old saying "cash is king" applies here, and you are probably not going to be able to borrow money. If you offer your customers credit terms, start making collection calls. Those can be uncomfortable calls, but "the squeaky wheel gets the grease." Remember, that's your money they are holding. Make these calls as your normal course of business, not as a desperate signal. If they sense that your business is teetering, they may withhold payments trying to outlast you and their obligations.

Downsize immediately either by eliminating employees or reducing hours. Flatten your organization and cross-train employees to improve staffing efficiency. Institute a meaningful incentive plan. Key employees may be willing to share some pain now if they can see the benefit when things improve.

If you have outstanding business loans, try to negotiate short-term relief such as paying interest only or by extending the term of your loans. Your banker doesn't want the loans to go bad, but also wants to see that you have already taken every measure possible to turn things around.

Finally, resist the temptation to dip into your home equity or retirement assets. Because in the end, if you can't turn things around, you will want to get out quickly while salvaging your personal life.

Mike Ryan is the director of the Small Business Development Center at the University of St. Thomas Opus College of Business.