Whittier Hearing Center Inc. has endured hard times before.

Eight recessions have come and gone since the hearing care company opened its doors in 1955. Even though the economy is souring again, the company's owners expect that recent investments in staff education and equipment upgrades could mean higher sales this year.

"We've been through these recessionary periods many times," said Mary Ann Gilbert, director of audiology and co-owner of the business, which offers tests, hearing aids and ear protection gear. "We survive by being very value-focused for the patients. That helps us because the patients trust us and we get increased referrals from them and the medical doctors in our community."

The 20-person company was careful to manage its money so it could invest in itself. Now its five audiologists have doctoral degrees and its equipment is on par with that of leading regional hearing centers such as the House Ear Clinic in Los Angeles, Gilbert said. The company also is working to expand its reach beyond the local community.

When times are good, too many small businesses take a lackadaisical approach. Sloppy practices may not be fatal to a small business when cash is flowing, but when times get tough, those same bad habits could open cracks that threaten the profitability or even the viability of a small company.

Is your business recession-proof? Take a look at the checklist below, and remember, the solution is no mystery: Manage your cash, court your customers and create new opportunities, just as Gilbert's company has tried to do.

"In the end, these are steps that can help in any economic situation," said Daniel Morales, director of the San Gabriel Valley Small Business Development Center. Unfortunately, it can take the pain of an economic downturn before many entrepreneurs are willing to make the time to work on their businesses, not just in them.

The growing squeeze is obvious. The economic confidence of small-business owners dropped sharply this month from February, with the index falling to 77.8 from 90.9, according to a survey of 1,000 small firms nationwide by Discover Financial Services. The March survey also showed that more small-business owners say they have experienced cash flow problems over the last 90 days: 47% compared with 43% in February.

Too often, small-business owners let their apprehension over a souring economy block the action they need to take to strengthen their businesses, said consultant Brandon Shamim, chairman of the Los Angeles Area Chamber of Commerce's Small Business Council.

"Our guiding principle is: Be targeted. Be disciplined. Be visible," said Shamim, who is also president of Beacon Management Group in Pasadena.

Here are tips from Morales, Shamim and the American Institute of Certified Public Accountants that could help your small business weather an economic downturn.



Operate lean

Check your balance sheet and income statement to look for places to free up cash. "Cash is king," Morales said. The more of it on hand, the more options you have as a small-business owner.

Start with a close look at your financial statements, including the balance sheet, which gives a snapshot of your company's finances. It lists assets, liabilities and equity. If you're not sure what those terms mean, ask your CPA for help. If you don't have a CPA, now may be a good time to find one.

Your income statement, which is also called a profit and loss statement, summarizes revenue and expenses. If you aren't making a profit, or if it's too slim, come up with a list of ways to lower your break-even point, the point at which your revenue exceeds your expenses. Your list will include steps to increase sales and lower costs.



Redo debt

If your company is in good health, consider increasing or signing up for a line of credit to provide future working capital. Restructure, reduce or optimize your other debt. Are you paying a high interest rate on a loan, leasing unnecessary equipment or facing a balloon payment? Renegotiate the terms.

Free advice from your local small-business development center or from SCORE (www.score.org) can get you started. To find a center near you, visit the state's online business portal at www.calbusiness.ca.gov/cedpgybsbdc.asp.



Morales is finding that credit card debt has become a big burden for many small-business owners, which card firms had targeted with easy sign-up rules. And as banks tightened credit, lots of small-business owners relied on their credit cards to fund their operations. Many are now finding that late payments can trigger punishing interest rates.



Manage inventory