Entrepreneurs are so caught up in the day-to-day battle to stay in business that they often don't take the time to analyze what's going on with their inventory levels, experts say.

"Their planning mechanisms and tools are so bad ... they tend to pay attention to that one moment that is either bothering them or making them feel good," said Skip Briggs, president of Strategic Initiatives, a Severna Park-based retail consulting firm.

It's a sometimes fatal attitude, given the fact that merchandise can account for 50 to 70 percent of a retailer's total costs, said David Raymond, a merchandising analyst with RMSA Inc., one of 80 analysts that the Riverside, Calif.-based firm employs around the country.

"All the work you do on switching long-distance [telephone] companies has a very small impact on the bottom line, but if you can control that 50 percent area, you can have a significant impact."

To avoid problems, Raymond offers a few tips:

• Many retailers look at their inventory as one big piece of merchandise. But shoes, shirts, jewelry and golf balls draw different customers with different needs at different times.

Retailers should break down the merchandise into different categories so they can be analyzed separately and dealt with appropriately, he said.

• Keep records. Retailers who successfully conquer their inventory problems are the ones who know exactly what merchandise is selling at what time. That means constant perusal of sales reports to figure out what to buy and what to put on sale.

"If you don't know what you have on order, you don't know what you have down the road," Raymond said.

• A computer system helps with inventory control, but the retailer first has to have the discipline to use the computerized reports, Raymond said.

Systems vary in cost -- as little as $10,000 depending on the type of hardware and software used -- but the cost is not the key to whether the retailer should go high-tech, he said.

"The question should not be, `How much is this costing me?' It should be, `How much is this system improving my business?' " he said.

Retailers with at least $200,000 in annual sales should be able to afford a computer system that tracks inventory, Briggs said. His rule of thumb -- pay 2 percent a year on information technology costs.

Raymond's firm offers several free booklets with tips on inventory management called "How to prevent overbuying" and "Ten steps to better cash flow." To order a booklet, call (410) 561-1568