Rising costs are a key concern for businesses again this year, driven by an array of factors including wages keeping pace with higher inflation, rising energy prices and supply chain issues.
It means margins are squeezed tighter than ever and amid ongoing economic uncertainty, no company can afford waste and inefficiencies. It’s not only about materials and balance sheets but also errors, duplications and processes that are not providing the best returns.
In 2026, firms need to be as sleek and efficient as possible so they get the maximum profit from their operations. But figuring out what’s working and what’s not, and what to jettison, is not always the easiest of tasks.
Focusing on Costs
It’s easy to assume businesspeople know everything they’re doing. Many, as they will tell you, do not, and it’s often a case of trial and error to get it right. Ian Wright, managing director of UK software firm PayrollPrices.com, is all too aware of this, especially regarding finances.
“My take is that many small- and medium-size businesses don’t know their true costs for how they get things done,” he says.
One way of slashing costs and becoming more efficient is to single out one area of operations at a time, Wright advises, and the benefits can often come quickly.
“To achieve fast improvements, (companies) can map out one key process — like payroll or billing — and eliminate unnecessary hand-offs. Managers may worry they’re losing control. But simple approval thresholds for low-risk requests can avoid bottlenecks that stall productivity and frustrate employees trying to get their jobs done.”
Every firm should be doing annual reviews of their contracts with suppliers, not simply letting them roll over from one year to another, with the same costs, Wright says.
“Rather,” he says, “ it makes sense to conduct an annual review of your supplier contracts and benchmark them against current market rates. Over time, long-standing agreements can fall out of line with the market, but cost pressures mean organisations are finally taking a hard look at them. Teams organise short review meetings around key cost drivers and this is where they discover savings opportunities.”
He cautions that when managers are looking to slash costs, it should be done carefully and methodically, or the business could suffer.
“One common action I notice among leaders is the rush to cost-cut, without realising the effect that this has on the workload of employees, which increases, and the error rate of employees, which rises,” says Wright.
“Also, there are many thousands of things to measure, but cost per transaction is always a good one.”
Production Process Issues and Contract Reviews
One way of eliminating waste and becoming a far sleeker operation in 2026 is to get rid of it before you start doing anything at all. That’s what’s working for Autumna Qian and her company, LeafPackage.
“Lock decisions earlier,” she says. “Most waste shows up before production starts. Clear approval cutoffs reduced rework and avoided unnecessary rush handling, keeping our given timelines close to the one to two weeks after approval.”
Qian, whose Hong Kong-based firm supplies eco-friendly packaging to clients in the US, Canada, UK and around wider Europe, also recommends that businesses “reduce revision loops”. She explained that for her firm, “[s]etting a fixed number of design review rounds cut back-and-forth and prevented teams from ‘perfecting’ work that was already good enough”.
It may seem counterproductive, but another method of ensuring costs don’t soar is to avoid always going after the best prices, according to Qian.
“Plan suppliers based on real demand,” she advises. “Working with reliable partner factories instead of chasing short-term price cuts reduced errors and remakes [for us], which are costly at small volumes.”
That’s because of the mistake, she argues, of “trying to save money by pushing teams to move faster instead of removing the causes of delay. Speed without clarity increases waste.” She further advises paying attention to the amount of revisions an order takes as it “directly reflects hidden inefficiency”.
The Value of Money
Elizabeth Rivelli, a personal finance and insurance expert at financial services comparison site BestMoney in the US state of Delaware agrees that a focus should be on contract appraisals.
“Efficiency stems from leadership knowing exactly what every dollar is buying,” she says, “yet often organisations simply renew their contracts each year with no real review.”
She advises that firms should “[r]eview recurring expenses regularly, including insurance policies, software subscriptions and service retainers. Make sure coverage levels and features match the needs of your current operations.”
Rivelli suggests that companies centralise their purchase through one or more suppliers, as they can often get more favourable prices than if they used many more. “Don’t allow people to go to different vendors for the same supplies. By negotiating favourable payment terms, (firms) are keeping their cash-flow intact and maintaining the financial health they need so that service is not compromised. Also, during slower periods, this range helps them keep afloat.”
An area that often drags many companies down is obsessing about the lowest prices they can get up front, Rivelli says, and they end up failing to take into account annual costs in their totality.
“We need to look for ways in which we can reduce total per capita operating costs, because unless CEOs are watching this critical number, they have no idea if they are actually achieving efficiencies, or merely moving dollars around in the system,” she says.
Impact of Daily Habits on Costs
Small changes can make big differences in companies, and impact their level of costs and profits. That’s the message from Suvrangsou Das, whose firm EasyPR specialises in cost-cutting and efficiencies. Das says he has “transformed service teams into global markets by eliminating waste, leakage of costs and workflow inefficiencies in day-to-day operations.”
He says that many years in management has “made me understand that the slightest changes of the processes can save the margins and keep the teams efficient and reasonable.
“The small daily habits are the biggest sources of the business waste that remain unchecked. At EasyPR, definite fixes lead to savings and did not damage the client delivery or the morale of the staff.”
What that translates to in reality, says Das, is that the amount of “approvals was minimised and relocated into a single workflow. The content reviews that previously consumed four days are completed in 20 hours and the re-edits reduced by 32 percent”.
Das says it’s advisable to review software and tools every few months to see how it’s performing. For instance, at his firm, one such review “resulted in a reduction of software expenditure by 18 percent, by removing idle media and analytics tools” and that going forward and in line with that policy, “purchases are made based on real data on their use during the previous months; hence, renewals are equivalent to the actual need”.
Working out costs per task and not arbitrarily slashing workforce numbers when cashflow is tight is another way of helping to ensure a company is at its most efficient, he adds.
Meanwhile, the head of a process-improvement consulting firm, Michael Clingan, says managers shouldn’t try to fix everything at once but go through areas step by step to uncover wastage. .
Clingan, who runs Colorado-based Claymore Group, advising firms from healthcare to manufacturing, technology and more, offers a five-point efficiency plan.
“Identify the one thing most impacting profitability. Could be sales, making parts or packing boxes, but the constraint is singular.
“Focus on improving that area. Don’t get distracted by shiny “opportunities” in other parts of your business. They’ll get their turn but you’ll already be making more money by fixing that first constraint.
“Having a hard time improving the constraint? Then have other areas help out. Even if they look busy, in reality they’re probably impacted by the constraint.
“If the constraint is still constraining, it’s now justified to invest in more capacity at the constraint.”
And finally: “Has the constraint moved? When you fix the first constraint, another issue is promoted to being your new constraint. Start over with the first step and keep going.”
People-Led Processes, Not Automation
Sira Masetti is a consultant who founded advisory firm Siry to, in her words, “pinpoint where their processes could use more human touch. That includes everything from customer support to dealing with internal reporting.
She cautions, however, that, in the rush to save costs, it’s not always the wisest move to eliminate staff positions in favour of automation.
“We should be mapping existing workflows rather than aspirational ones,” she advises, “in our case, a mess of inefficiencies, where the same data is entered multiple times in different places, personnel are expected to perform manual checks that could be more effectively executed by technology and steps that technology could automate are entirely omitted.”
Masetti says that to avoid these pitfalls, companies should start using new tools in one team only, not across the entire operation. This lets them find any problems that could have ripple effects across the business, and contain them on a smaller level. “This approach not only allows an avenue for honest feedback but also develops strong internal advocates for the change,” she says
“Often, I see companies wanting to move quickly by launching several new systems simultaneously. However, teams looking to rush tend to neglect clearly defining the roles and responsibilities necessary to plan, deploy and maintain such systems.”
She adds that “[t]eams will also want to measure cycle time for each process to verify that work is truly happening faster from start to finish, so they can gauge where bottlenecks still exist.”
