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Conserving cash is one of the keys for small business owners intent on surviving and thriving in tough economic times, a retired banking executive and foundation manager told a local audience this month.

"Cash is king," Mike Pivarnik said. "Accumulate as much cash as you can."

Pivarnik is a retired banker from Pennsylvania and the manager of a foundation devoted to supporting students of the Austrian school of economics founded on free market principles. He spoke during one of the business forum series luncheons sponsored by the Steamboat Springs Chamber Resort Association, Colorado Mountain College and Mountain West Insurance.

For business owners, the path to defending their bottom line and increasing liquidity in a recessionary economy leads to confronting reality.

"Accept where you are today, and overcome denial. If you cannot get past this point, there is no hope," Pivarnik said. "It's all about getting right in your head and focused on managing through difficult times to get ahead."

Pivarnik finds people have a difficult time accepting that their business and their personal lives are joined at the hip. They think that because they have an S corp., they are two separate things.

"I think that's a mistake," Pivarnik said. "People often forget that they signed a personal guaranty" when they signed loan documents.

Frequent communication with your banker and understanding his or her point of view is important, Pivarnik said. The second hardest thing a community banker has to do is turn a business down for a loan. But the single most difficult thing for a banker to do is to collect on a bad loan. And that goes a long way toward explaining why it's sometimes difficult for small businesses to obtain loans.

Avoiding that circumstance begins with discussing your situation with your banker, he said.

"Above all, don't call your banker out of the blue and say, 'I'm done,'" Pivarnik urged.

Dean Vogelaar, president of the Steamboat Springs branch of Mountain Valley Bank, said community bankers always will work to help small businesses, but collateral often is an issue.

"This is a community of small businesses, but relatively few of them own their business real estate," he said. One of the best ways to avoid difficulties during economic downturns is to begin a business with as little debt as possible.

Vogelaar thinks prospering through the recession will require that small businesses in the Yampa Valley work with a team including their banker, landlord and vendors.

After acknowledging that their business now is operating in a changed environment, business owners should dust off their business plan, no matter how informal it is, and adjust it to take the changing economic landscape into account. That means revisiting a five-year profit-and-loss statement to make it more realistic.

If that sounds intimidating, Pivarnik said, tackle it anyway.

"It's not as hard as you think," he said, "and often you find that the process was more important than the end product."

By first projecting a baseline profit-and-loss statement and then projecting what will happen if the bottom falls out of the economy, business owners will begin to formulate what steps they will have to take if the economy becomes further weakened.

"It forces you to look at each and every individual element of your business," Pivarnik said.

Now is the time, Pivarnik said, for relatively healthy businesses to explore their ability to secure a line of credit that might preserve their liquidity if the recession deepens.

"This is a great time to go out and obtain a line of credit. I would urge you to go out and get it done today," he said.

Nothing beats access to cash in tough times.