The credit crisis and economic downturn have already pushed some companies to the brink of bankruptcy. Should you hunker down and focus on cash? Or should you use the downturn as an opportunity to grab market share and drive long-term growth? In reality, both strategies have inherent risks to the business.

Everyone knows that in an economic crisis, cash is king. However, most business leaders and managers don’t have much experience managing a business around cash flow. They have spent their entire careers focused on earnings and growth, and often find it hard to switch gears. Here are eight considerations to keep in mind during these difficult times:

Realistically assess your financial condition. It’s critical to understand whether your company is financially underperforming or distressed. This assessment should show how much cash you need to generate — and how quickly you need it. Generating a lot of cash fast is more likely to put the long-term health of your business at risk.

Short-term cash requirements often trump long-term strategy. In normal times, it’s smart to develop a sound long-term strategy and then stick with it. But these aren’t normal times. If a short-term cash crisis drives you out of business, your long-term strategy doesn’t really matter.

Cash flow trumps earnings per share. For a distressed business, the key to survival is cash flow. That’s a huge mental shift for most CFOs and managers, who are accustomed to focusing on earnings per share. Since companies don’t normally focus on cash, most do not have an easy way to determine what their cash position is, or how long their cash will last. Distressed companies might need to track and forecast cash flow weekly, or even daily. Earnings might be important to Wall Street, but cash keeps the lights on.

Attack on all fronts. To build a war chest of cash, you need all of your leaders to be on the same page in making cash a top priority for the company. All potential cash sources must be thoroughly examined. These sources include everything from stemming price leakage to reducing cost and working capital to selling underutilized assets.

It’s about the portfolio. Develop a portfolio of integrated programs to generate cash with an eye toward reinforcing the long-term viability of your business. Focus on cost and working capital “quick hits” to generate an immediate liquidity cushion and to fund longer-term structural programs such as closing stores and selling off business units. A combination of activities can strengthen your balance sheet and help you capitalize on the upturn.

Action trumps analysis. In a crisis, you don’t have time for detailed analysis or deep reflection. The longer you wait, the more narrow your options. In normal times, the 80/20 rule can help you avoid analysis paralysis. But when your liquidity is drying up, you might need to shift to 60/40.

Expect the unexpected. Develop downside financial scenarios for your business and understand — in advance — what the key trigger points are (e.g., order book reductions), and what specific actions you will immediately take to preserve cash.

Retrenching trumps growth. Businesses usually focus on growth. But for distressed companies in a tough economy, the key is shrinking the business to a profitable core. That might mean closing plants, laying off staff, pulling out of shaky markets, reducing your product portfolio, liquidating underused assets, spinning off non-core businesses, and even turning your back on unprofitable customers. This contraction reduces cash erosion and generates new cash through asset sales.

Different companies have different needs and respond to a downturn in different ways. Companies with strong businesses and balance sheets can capitalize on the situation by gobbling up struggling competitors or poaching their competitors’ best customers. These companies can afford to take a long-term view and position themselves to capitalize on the upturn — and they should. However, other companies will need to take dramatic action just to survive. For these companies, managing cash flow must be the top priority.

Excerpted from a Deloitte Consulting LLP report titled “No credit? Big problem.” Written by Don deCamara, principal strategy & operations.

For more information, visit: www.deloitte.com/us/debates/nocredit.