Begin by looking for expenses that appear to be excessive. These are the first costs you should cut back. If cutting these costs does not get you down to your new break-even number, then you need to take a close look at all your indirect spending. You might consider doing additional cost-cutting on a line-by-line basis or slicing a percentage across-the-board. In most cases, I would advise cutting costs line by line, since it seems to be the more tailored approach. Downsizing is not an easy feat. It will require you to make hard, but necessary decisions. You may be required to layoff office employees, reduce office salaries - yours included ? or move to a lower priced location. In the long run, these tough decisions will make the company much stronger. 4. Improve Cash Flow By lowering your direct and indirect costs, you are two-thirds of the way to improving cash flow. The final thing you need to do to improve cash flow is to manage your receivables and payables more effectively. In my September Contractor Power article, I shared ten tips on how to do this. Please check out this article to obtain valuable insight on cash flow improvement. 5. Increase Marketing The last step in this five-step process is to increase your marketing. Since the market is slow, you will need to boost your marketing efforts in order to improve your sales numbers. Begin by reviewing your current marketing efforts to determine what is working and what isn't. Also ask fellow contractors what marketing tactics are working for them. Once you have this information in hand, you should stop the marketing tactics that are not getting results, continue with the tactics that are, and employ a marketing tactic or two that fellow contractors are finding successful. Try to keep your marketing budget at or below its current level. If additional marketing funds are needed (which is likely), use the money that was cut in order to get you below break-even. Keep in mind that the goal is not to exceed your break-even number. Hopefully, you agree these five steps will be very useful for dealing with the current market downturn. If so, the next step is to employ them. They will allow your company to survive and even thrive in this tough and competitive business environment. I write for the Contractor Power Newsletter on a regular basis and am always looking for interesting and relevant topics. If you have a business-related question you would like me to answer in one of my upcoming articles, please feel free to contact me at info@paradigmstrategies.com. If you would like to read any of my previously written Contractor Power newsletter articles, you can view them at www.contractorpower.com. About the Author Kevin Lister, founder and president of Paradigm Strategies, the business advising firm to the trades, is a leader in the field of business performance improvement. He possesses nearly 20 years experience in business management and consulting, effectively operating his own ventures and assisting others with realizing business success. With an entrepreneurial spirit and a business owner's point of view, Kevin brings hands-on expertise to helping building contractors, sub-contractors, and suppliers. Kevin has deep knowledge and understanding of the trades, based on fifteen years in the construction industry, a family history of owning trades businesses, and a genuine interest and enjoyment in helping blue collar enterprises. Kevin possesses a Masters of Business Administration (MBA) from Olin Graduate School of Business at Babson College and a Bachelor of Science in marketing from Bentley College. He teaches management and marketing for the University of Phoenix Online. Kevin is a member of several professional and business organizations, including the Institute of Management Consultants (IMC), the Associated Subcontractors of Massachusetts (ASM), the Builders' Association of Greater Boston (BAGB) and the Boston Chapter of the National Association of the Remodeling Industry (NARI). Kevin has been awarded the Certified Remodeler Associate (CRA) designation from NARI. He has also been named to the board of directors of the Eastern Massachusetts Chapter of NARI. | 
