To avoid the pain of a tough economy, kitchen and bath owners must take action – or risk having their businesses fall so far in the hole that there is little chance of rescue. Professional crisis managers strongly recommend budgeting your firm to its core as the very first step in taking responsible remedial action.

This budgeting process is critical because it enables owners to make smart overhead-reduction decisions, establish correct pricing formulas and develop key management tools to successfully steer their operations through rough waters. I encourage owners to do it over a three-year period because it gets them to think strategically and provides them with a vision of what to do if business turns out better than expected.

When considering each expense account, the guiding principle should be whether that expense delivers direct value to the client. If there’s negligible value, the account should not be funded. Here are the 10 steps to follow in this budgeting process.