Small Biz: Stay Afloat in Tough Times

Small businesses may be driving job growth in the U.S., but they are also facing headwinds for further expansion - or in some cases, even staying afloat.

A weak dollar and high inflation have pushed up costs for fuel, imported merchandise and other basic necessities. Consumers are cutting back, making it harder to pass on those costs as small business compete fiercely for their dollars. That is especially true for retailers that offer the same products as cost-cutting giants like Wal-Mart(WMT) or Target(TGT).

"Small companies are particularly challenged during poor economic times," says Tom Northup, a management consultant and author of the book Five Hidden Mistakes CEOs Make. "Most small companies aren't very well capitalized so when revenue goes down that puts great stress on the organization."

Still, there are some useful ways to tackle the costs, revenue and capital issues head-on to make sure your company rises above the rest.

Cutting Costs

Managers must comb through their business to figure out every last expense before deciding what to trim, says Chris Talis, a CPA and senior partner at Hedgerow Mergers & Acquisitions. Then, set up a monthly budget and monitor costs on a weekly basis.

"The best way to control overhead is to really and truly know what your expenses are," he says. "It's easy to overspend if you're not really keeping track."

Staying efficient is key. For instance, instead of driving around to business meetings on separate days, pile them all into one. Employees and managers should also stay on top of calls and messages while traveling so that they don't miss out on opportunities.