You've heard the quote: "Tough times don't last, but tough business people do." In these days of changing winds and a sea of uncertainty, you'll need to stretch your resources and make the most of your shrinking budget. Here are some ideas on inventory control that can benefit you.

* Hidden Money in Your Inventory

If you're like more than 50 percent of businesses, you probably have slow moving items or "dogs" in your inventory--unnecessary stock that is tying up valuable working capital for you.

Freeing up that money can turn your business into a lean and efficient

operation. You can even generate extra money to help you through sluggish sales periods or reduce you tax bite every year (your equipment is depreciated, but your inventories are taxed, of course).

Trim unprofitable items, products, or lines. A small marketer of household products calculated gross margin on investment for each product line (which should have been in the ideal range of 20 percent to 25 percent). The owner was able to purge slow moving lines or "dead" inventory and find ways to reduce costs on others. Within 45 days, the inventory became trim, efficient, and more profitable.

Dump or markdown any product, component, or item that is not moving based on sales information by line. If you multiply your gross profit by what you can get for an item--say 50 cents on the dollar--you'll be surprised how much cash you can generate. [Note: Don't focus on your cost--what you paid for an item--and the reduced pricepoint you will have to settle for Dog items are dog items and they tie up your money So dump 'em.]

Avoid overbuying. Overbuying can mean excessive inventory and a lot of unnecessary cash tied up. Also when you look at inventory carrying costs--insurance, financing, storage, security, handling--those costs can easily run 25 to 30 percent per year!

A lean inventory reduces the cost of warehousing and purchasing. It speeds up order cycles and improves business relationships with customers.

Note: Consider selling excess inventory back to the vendor (you may get up to 50 percent less than you paid); to customers at a discount (up to 40 percent discount); to a Web site owner or liquidator that specializes in overstocked merchandise (figure about 10 percent of the sales price).

Solicit best deals and best options from vendors. Inquire about bulk buys, seasonal deals, and special offers. Also check if your vendors will warehouse selected items for you, delivering the items when you need them (a.k.a. "just-in-time" inventory control). In addition, see if vendors offer direct shipping ("drop shipping") to your customers, thus freeing up your inventory space and costs.