According to Entrepreneur.com, in a perfect world, business owners would have plenty of time and energy to regularly review their balance sheets and analyze expenses, cutting unnecessary spending as they spot it. In reality, we often zero in on expenses only in a scramble to get back to sustainable profitability when the economy stagnates and growth stalls. But panic can lead to costly mistakes, and experts caution that while paring down may be necessary in the current climate, entrepreneurs should be careful not to cut so deep that they poorly position their companies for an eventual rebound. Here are three costs to reconsider and three cuts to avoid.

Smart Ways to Save
• Say no to costly customers. For a growing business trying to win big-name clients, it can be very tempting to bid low for a high-profile project. But if the job is going to cost you rather than make you money, you have to take a hard line.

• Look at your tech expenditures. Separate the need-to-have from the nice-to-have, and if you're paying for software licenses, go back to the company and haggle. 

• Bid farewell to underperformers. Given that people are probably your most expensive asset, you can't avoid personnel decisions when cost-cutting. Identify the bottom 10 percent performers in the company and sending out the pink slips.

Penny-Wise, Pound-Foolish
• Don't fire great people. Cutting key performers simply because they're well-compensated can kill morale — and possibly your business — so make strategic cuts and hold on to your best people.

• Beware of hitting bone. While you want to make sure your marketing dollars are spent wisely, resist the urge to cut the budget dramatically as a knee-jerk response to the recession.

• Keep your benefits. Good benefits, including medical and dental insurance, certainly don't come cheap, but they do keep you competitive with larger employers in the ongoing war for top talent. If you cut them now, you may find that when things turn around, it will cost you more to get back on track.

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