How to manage rising costs without impacting growth

Rising costs are forcing many businesses to make difficult decisions. The challenge is not just reducing pressure in the short term — it is doing so without weakening growth, capability or customer value. 
 

The wrong cost response can create new problems 

When costs rise quickly, businesses often move to reduce expenditure as fast as possible. While that can be necessary in some areas, across-the-board cuts can create unintended consequences: reduced service quality, lower team capacity, weakened customer experience, delayed investment, and missed growth opportunities. 

A more strategic response helps businesses protect performance without cutting into the areas that matter most.
 

“When costs come under pressure, the goal shouldn’t be to cut everything equally. The most successful businesses take a more deliberate approach, protecting the activities, people and investments that support long-term performance.” – Justin Martin, National Advisory Leader 

 

Focus on smarter cost management, not just less spending 

Separate essential spend from inefficient spend. Not all cost is a problem. Some expenditure supports growth, capability, delivery and resilience. The key is to identify where money is being spent without generating sufficient value. 
 

“Not all costs are bad costs. The real opportunity often lies in identifying expenditure that no longer delivers a meaningful return and redirecting resources to areas that create greater value.” – Justin Martin, National Advisory Leader 

Review pricing and commercial settings. Rising costs should prompt a review of how the business prices its products or services. 

Questions to consider include whether prices are still aligned to cost-to-serve, whether discounting practices have become too generous, whether certain services are underpriced, and whether value is being clearly communicated to customers. 

Improve productivity before cutting capability. Growth can often be protected by lifting productivity rather than reducing capacity. Reviewing workflow, resource allocation, technology use and team structure may identify opportunities to do more effectively with what is already in place. 
 

“Many businesses find there are opportunities to improve profitability without reducing capability. Small improvements in productivity, processes and decision-making can have a significant impact over time.” – Justin Martin, National Advisory Leader 

Be selective about growth. Not all growth is equally valuable. In a high-cost environment, businesses need to focus on opportunities that are commercially sound and strategically aligned. 

Strengthen reporting and decision-making. Costs can erode performance quickly when reporting is delayed or unclear. Better visibility over margins, spend, and productivity can support more confident decisions and reduce the need for reactive responses later. 
 

“Good information creates better decisions. Businesses that understand their numbers are generally better placed to respond early, rather than being forced into difficult decisions when pressure becomes more acute.” – Justin Martin, National Advisory Leader 

 

Turning cost pressure into better discipline 

Cost pressure can be uncomfortable, but it can also highlight where a business needs stronger commercial discipline. 

The businesses that respond well tend to review their cost base more critically, reassess pricing more regularly, sharpen focus on profitable activity, improve visibility over performance, and make clearer decisions earlier. 
 

“Periods of cost pressure often become a catalyst for stronger commercial discipline. Businesses that use this time to sharpen focus and improve decision-making are frequently better positioned when conditions improve.” – Justin Martin, National Advisory Leader 

At BDO, our Advisory team helps businesses understand the commercial impact of rising costs and develop strategies that improve profitability while supporting long-term growth. 

Managing rising costs well is not about standing still. It is about making sure your business remains commercially strong enough to keep moving forward. 

Need help balancing cost control and growth? 

Managing rising costs is rarely about spending less for the sake of it. It is about making informed decisions that strengthen profitability while preserving the people, capabilities and investments that support future growth.  

To learn more about how BDO helps businesses improve performance, profitability and long-term resilience, explore our Business Advisory services or speak with your local BDO adviser about the challenges and opportunities facing your business.