20 Strategies For Managing Operational Costs And Driving Growth

For businesses facing rising operational costs, company leaders face increased pressure to maintain profitability. Staying competitive while staying “in the green” requires a proactive and strategic approach to cost management.

To that end, 20 Forbes Business Development Council members highlight some of the best practices for turning cost challenges into opportunities for sustainable growth. From leveraging technology to investing in high-ROI domains, these strategies can help your company remain successful and exceed its goals.

1. Capitalize On Technology

Leaders can redefine efficiency by leveraging technology to scale without compromising quality. They should treat innovation as an investment rather than a cost, embracing automation and AI to streamline processes and free up human capital for creative and strategic pursuits. – Umang Modi, TIAG, Inc.

2. Use Data To Drive Company Decisions

Leaders should prioritize gathering actionable information, leveraging it strategically and investing in tools that provide continuous insights to enable more efficient and informed decision-making. Companies can significantly reduce inefficiencies and drive operational excellence by replacing assumption-driven strategies with real-time analytics, forecasts and integrated data streams. – Alexander Masters, MBA, BIDA, Siemens

3. Balance Automation And Human Interactions

Thinking outside the box and embracing AI and other tech solutions can help lower operational costs in many instances. Especially for young companies, doing more with less should always be at the core of business strategy. However, I think it’s important to balance the amount of technological solutions a company can automate while still maintaining and providing world-class customer service. – Tyler Hurlburt, Energea

4. Target The Most Receptive Audience

Company leaders should leverage data to optimize marketing spend and target the most receptive audience. This ensures maximum ROI from every campaign, driving efficiency and exceeding goals even with rising costs. – Maria Youth, PATH2RESPONSE

5. Use Data To Optimize Operations

Leaders can manage rising costs by leveraging data-driven decision-making to optimize operations. Identify inefficiencies via analytics, automate tasks, adopt variable cost models, boost workforce productivity and build strategic partnerships. This approach ensures proactive cost management while fostering innovation and sustainable growth. – Erik Greenstein, United Parcel Service

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6. Focus On Upselling And Cross-Selling

While a long-term solution would be innovation, automation and the use of technology to increase efficiency, a short-term solution could be the focus on upselling and cross-selling to existing customers. This maximizes revenue per customer while reducing acquisition costs, ensuring a higher return on investment and supporting profitability despite increased expenses in the short term. – Egle Pavyde, hVIVO PLC

7. Eliminate Redundancy And Prioritize The Essential

Adopting automation and data-driven decision-making is crucial for reducing costs. By minimizing manual tasks, eliminating redundant workflows and prioritizing essential projects, companies can drive efficiency. Leveraging analytics helps focus on high-impact growth opportunities, ensuring resources are allocated effectively without inflating costs. – Jayant Walia, Gainbridge

8. Partner With A Managed Services Provider

One strategy is to partner with a Managed Services Provider (MSP). This approach addresses the growing IT skills gap by reducing the need for in-house hiring and leverages the cost efficiencies of MSPs, including volume discounts and shared operational resources. Additionally, MSPs offer access to a robust ecosystem of best-in-class technology providers, enhancing innovation and operational agility. – Lori Thomas, MetTel

9. Incorporate Automation In Operations And Customer Service

Automation, wherever possible, remains key to bringing in operational efficiencies. More so with the evolution in AI and related tech, there are more and enough opportunities to rationalize costs in functions like operations and customer support. As long as automation and AI are implemented as strategic initiatives, and not as a me-too strategy, it almost certainly delivers efficiencies. – Bindesh Pandey, Comviva Technologies Limited

10. Allow For Flexibility And Partner With Experts

Leaders should prioritize flexible cost structures, focus on automation and build strategic alliances to share resources and reduce overhead. Additionally, they can pool expertise and technology to help them adapt swiftly, keep expenses in check and stay ahead of demands. By working with partners and investing in automation, leaders can manage rising expenses, maintain agility and create room for sustainable growth. – Ashu Goel, WinWire

11. Streamline Workflows And Adopt Cost-Effective Tools

One strategy to help company leaders manage rising operational costs is optimizing processes and leveraging technology to increase efficiency. By focusing on streamlining workflows, eliminating redundancies and adopting cost-effective tools, leaders can reduce expenses while maintaining quality. This approach allows businesses to stay competitive and achieve their goals. – Matthew Buckingham, Focal Point

12. Maximize Profits With A Dynamic Pricing Model

I really like the idea of dynamic pricing models. For example, a small coffee shop could use this by offering discounts on pastries in the afternoon when sales are slower or slightly increasing prices on popular drinks during peak morning hours. This helps the business maximize profits while still providing value to customers at the right times. – Bryce Welker, The CPA Exam Guy

13. Routinely Review And Optimize Supply Chains

One effective strategy for managing rising operational costs is to embrace technology and automation. By investing in advanced technologies, leaders can streamline processes, reduce manual labor and improve efficiency. This not only cuts costs but also enhances productivity. Additionally, regularly reviewing and optimizing supply chains can uncover cost-saving opportunities. – Vishal Dugar, Cognizant Technology Solutions

14. Maintain Transparency And Empathy With Customers

In an era of inflationary costs, leveraging your pricing to help maintain (or increase) margins is key. Even when there is a backlash on higher prices, customers understand increasing costs. A position of “I’ll share the pain with you,” meaning you increase prices but demonstrate your costs have increased even more, often wins the day and allows companies to hit or exceed their revenue goals. – Doug Fuehne, Pricefx

15. Discover Cost Drivers And Optimize Expenses

Reviewing COGS (cost of goods sold) offers insights into cost drivers. This includes reviewing IT expenses like cloud services and SaaS, requiring regular vendor evaluations or in-house alternatives. Hidden drains like maintenance fees and subscriptions demand frequent reviews. Optimizing partnerships and expenses ensures better resource allocation and cost efficiency. – Srinivas Vadhri, Kestone Integrated Marketing Solutions

16. Promote Innovation And Invest In New Tooling

Productivity improvement is the core driver of growth for the U.S. economy. Key drivers of productivity are innovation and investing in new tooling and equipment, including tools such as data analytics and AI, for efficiency. This enables businesses to get more done with the same level of human capital, which allows them to absorb rising costs without passing on the price increases to customers and drive growth. – Raj Sharma, ITOCHU

17. Get Creative With Customer Retention Strategies

One strategy that leaders can focus on in the current economic climate is maximizing revenue from their existing customers by being creative with retention strategies, instead of wasting budget by more sales headcount to drive new logo acquisition. They can also embrace automation and technology tools, and drive this with speed! – Pradeepa Kolli, LHH (The Adecco Group)

18. Redesign With The Cost Curve Reshaping Strategy

Counter-intuitively, cost management often fails because leaders chase efficiency in silos. The winning strategy is “cost curve reshaping”—fundamentally redesigning how costs scale with growth. Like a chess master sacrificing a pawn, sometimes spending more in key areas while cutting elsewhere creates a more profitable growth trajectory. – Sidharth Ramsinghaney, TWILIO

19. Conduct Regular Process Reviews And Self-Checks

One strategy to help company leaders manage rising operational costs is conducting regular reviews to ensure processes are optimal and efficient. Leveraging technology, especially AI, is key to automating tasks and reducing expenses. Embracing innovation, investing in education and performing self-checks enable leaders to adapt, streamline operations and exceed their goals. – Anna Jankowska, RTB House

20. Automate Sales Outreach And Forecasting

Incorporating automation tools can help leaders manage rising operational costs and exceed goals. An abundance of AI tools today promises faster results with less work, helping employees accomplish more in the same amount of time. Whether it’s streamlining SDR outreach through AI or forecasting sales using AI, automation software can be an affordable way to hit goals while keeping costs down. – Raviraj Hegde, Donorbox