The time to take the measure of your management’s capability is when business slows, not when everything is booming. Slowdowns often disclose earlier management ‘sins’ that require immediate correction to prevent a loss of profitability.

Many economists predict a continuing slowdown from the economic pace experienced in 2008, so here are six moves to consider that could help keep you profitable during the current recession.

1.  Analyze your current clients. Find ways to show clients that you appreciate their business. Stay closer to your top clients and look for opportunities to serve them with additional products and services.

2.  Watch your margins. Review your pricing strategy and keep up with supplier increases. Work closely with key suppliers. Consider consolidating purchases if you can negotiate a better deal or improve terms.

3.  Monitor employee productivity. People are a large fixed expense category. Divide your total personnel cost by total revenue to find your sales per employee. Divide your total personnel cost by total gross margin to find your gross contribution per employee. Reduce or eliminate overtime hours. Look for ways to eliminate outmoded or unnecessary activities and redeploy personnel to maximize effectiveness.

4.  Avoid reducing marketing and sales effort. Business slowdowns often cause competitors to pull in their horns. You may gain significant new business by maintaining effective marketing and sales activities when others pull back. New accounts can help offset revenue loss from attrition or current customers buying less that usually takes place. Be sure to tie any sales incentive compensation to gross profit contributions.

5.   Watch cash flow and working capital like a hawk. Tighten up on serious past due accounts. Take a physical inventory and identify obsolete and slow-moving stock to dispose of at a discount. Avoid buying when an item is already in stock.

6.  Review significant fixed costs. Request competitive insurance quotes for property and casualty, and general liability. Eliminate duplicate coverage. Get a second opinion on key man life insurance and employee benefit plans. Check utility rates and consider changing electricity suppliers if significant savings are possible. Review telephone and cell phone expenses and plans. Consider reducing or eliminating some owner and management extras added during boom times.