Times are challenging right now for many small businesses. Increased fuel prices and other rising costs have caused many owners to tighten their belts to make ends meet. While there are many obvious things to do to lower expenses, the following are some more in-depth strategies you can use to keep your bottom line looking healthy.

Review your inventory levels. It is always important to keep inventory turning. During a time of slowing sales, you need to evaluate your inventory more carefully and reduce the stocking units that are not turning well. Inventory turns are expressed in two ways -- days inventory (the number of days it takes you to sell your inventory) or inventory turns (the number of times you turn your inventory in a year). Do you know what your turn rate should be? Has been historically? Or what the industry average is?

Review/determine your company’s break-even point. Understand what level of sales is required to stay profitable.

Analyze your customers. Take a close look at your customer segments, and make sure you understand why they purchase from you. Segmenting can be done in several ways. For instance, you can use volume of sales; type of customer, such as purchase location (retail/wholesale/internet); type of buyer (commercial/government/personal); or by buyer demographics (educated/family status/residence location). Then you can analyze your various segments to determine what product/service features are important when customers make purchase decisions, which segment provides the best margins and/or greatest volume for your business and other identifying features. Take positive actions and maintain a positive attitude. People want to buy from a winner, so act like a winner! Do a little market research and be ready to identify and capitalize on potential opportunities. A close friend shared with me recently that he talked to a restaurant owner whose business has actually been increasing due to the fact that he’s taking advantage of a competitor/s cutbacks; offering more customer friendly hours (opening two hours earlier by customer request); offering friendly and personalized service (reintroducing big coffee cups and small cups again by customer request); and is actively combating any negative word of mouth in the local marketplace.

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Do not be so focused on cutting costs that you forget about trying to increase sales (while keeping costs the same). Consider charging something for products or services that are currently provided at no cost. Increase prices, and try to sell more to existing customers instead of constantly prospecting for new ones.

Take the opportunity to do some of the things you never seem to have time to do when business is booming. Engage in some strategic planning and/or market analysis to identify your best options for the future. Spruce up the business, or update employee manuals. Do some research on your competition. Build relationships with former and existing customers. Make good use of the time, and you will be ready to face the future. Positive attitudes can make a difference.

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