Dog trainer Jeff Gellman dispenses information about his company, Solid K9 Training, at a booth at Tuesday’s business expo.

The Providence Journal / Kathy Borchers

A recession is a time of both opportunity and risk for small business, Fox Business News reporter Shibani Joshi said in an address at the Business Expo Tuesday.

Joshi began her presentation at the Rhode Island Convention Center with a video clip from Fox that profiled three young businesses that were expanding, even in a bad economy. The clip also pointed out that tech companies such as Microsoft and Apple got their starts in the recession of the early 1980s. She called them “recession babies” that kept on growing.

“I love that video,” Joshi said, adding that small entrepreneurs have maintained the trust that big business has lost in recent months. She cited poll numbers that show 63 percent of the public says small business will lead the country to a better economy.

But Joshi pointed out that a third of all businesses fail in their first year of operation. Failure to manage cash flow, she said, is the number-one reason small businesses fail.

She said business owners must have a precise knowledge of monthly sales and expenses, even if they use outside accounting services to keep the books. Owners should also plan ahead, she said, with both best-case and worst-case scenarios. “The more scenarios you have, the better prepared you are for the future.”

Because of the difficulty obtaining financing in the current credit crunch, she said, hanging on to cash is paramount. “Cash is king, and the king wants a fat throne,” she said, and outlined some of the ways companies can maximize their assets: adding employees cautiously; leasing rather than buying; keeping inventories as low as possible; and managing billing and accounts so money comes in quickly and goes out slowly.

Companies starting out can try to ally themselves with big-name corporations to enhance their credibility, she said. Customers who are household names can also lend some panache to a little-known company. A board of directors, or a less-formal group of advisers, stacked with experts also can help with both reputation and expertise, she said.

Someone in the audience asked if the advisers should be paid. Yes, answered Joshi, if you expect them to be motivated, but added that incentives can come in the form of stock or other equity if cash is short.

When faced with the difficult task of raising money, Joshi said, commercial banks are still the prime source of small-business capital. When an audience member asked about raising money through stock offerings, Joshi said that path is essentially closed off.

She said the basics of good business credit are essentially the same as maintaining good personal credit — minimize outstanding loan balances and credit lines. Pay your bills on time. Know your credit status in advance, and iron out any outstanding problems before you approach a lender. Then know exactly how much you want to borrow, and why. Above all, she said, have a plan to pay it back.

“The bank just wants its money. The bank doesn’t want to own your house, it doesn’t want to own your business, it doesn’t want to own your widget-maker,” she said.

Joshi, 33, has had a varied career in media and business. She has an MBA from Harvard and completed the investment analyst banking program at Morgan Stanley. She has also worked for CNN and as a senior manager in strategy and business development for Disney/ABC Media Networks, where she helped start ABC News Now. She joined Fox Business Network in 2007.

asmith@projo.com