Quite a few economists think we are already in a mild recession and that it will get worse before it gets better. Having been in business for more than 40 years, I’ve been through several recessions. In a perverse way, I like recessions. What? Stay with me here. 

In good times many business owners (including me) get too comfortable. We don’t fire poor performers, we spend more than we should and we don’t shop our suppliers/vendors as often as we ought to. A recession forces business owners to address these issues, and if we do, we come out of the recession lean and mean — and more profitable than before the recession.

So, what steps should you take in a recession? Here’s what has worked for me during past recessions:

• Take a hard look at each of your employees. Lay off or terminate those who aren’t fully meeting your expectations. Your biggest savings will be in the personnel area, but this is the last thing most owners want to do as it’s painful and you also don’t want to lose the investment you’ve made in training employees. Suck it up and do it, as cutting back on paperclips won’t get you there.
• After you’ve made cuts, if some remaining employees have a bad attitude, lay them off too. You don’t need someone you spared from the layoff undermining morale among the rest of your staff. 
• Look at long-term employees you may have outgrown. It’s hard letting people go who have been with you for a long time, so perhaps offer them a generous severance plan to leave the organization. 
• Scrutinize every expense. Some expenses are mandatory (rent, utilities, phone, etc.) and some are discretionary (meetings and conferences, business travel, customer entertainment, etc.) Stop discretionary spending until the recession is over.
• See how much overtime each hourly employee is incurring and cut it back or stop it unless approved in advance.
• Talk to your insurance agent and see how much you could save if you changed carriers from AAA- to A-rated companies. During the last recession we did this and saved a significant amount of money. By the way, we are still with that A-rated company, and they have done a fine job for us.
• Talk to those you lease buildings and equipment from and ask for a payment reduction until the recession is over. We got significant concessions in this area during the last recession. 
• If things get really bad, cut your pay as much as you can and cut the pay of your remaining employees by at least 10%. 

Once you’ve come up with your plan to cut overhead, set up a meeting with your banker and share the plan. Your banker may even have other ideas that can help you. Also, your banker will applaud you for being proactive versus reactive. Remember, no one plans to fail, but many people fail to plan.

Related: How companies can engage young professionals during a recession

Jim Sobeck is CEO of New South Construction Supply,  a building products distributor based in Greenville with 11 locations in the Carolinas, Georgia and Florida. He is the author of “The Real Business 101: Lessons From the Trenches.” newsouthsupply.com.