In today's competitive business environment, middle-market companies must constantly seek ways to reduce costs and increase revenue, while maintaining high product and service quality. Balancing these priorities requires a strategic approach that aligns cost-saving and revenue generation strategies with organizational goals. Focusing on key functional areas can unlock significant efficiencies and growth opportunities.
Cost-saving and revenue generation approaches are grouped into seven essential facets of every organization. Discussed below are various ways improvements can directly impact profitability and performance:
Strategy
Data and technology
Risk and compliance
Accounting and finance
People
Operations
Transition
Strategy
To be a high-performing organization, all members of your team must be aligned toward achieving your goals. This requires them to understand what actions are required of each function within your organization and how their performance will be measured. The more your employees are aligned with what you’re trying to accomplish, the more productive they’ll be in achieving your goals.
If you define cost savings or revenue generation goals, then make sure related objections and action plans are defined at the department, team, and individual levels.
Data and technology
Medium- to large-sized companies with extensive digital infrastructures should consider cloud cost optimization. This service can reduce costs by improving cloud resource usage, eliminating unnecessary expenses, and improving operational efficiency.
A cyber maturity assessment can help identify vulnerabilities and define actions to strengthen system security. Costs associated with cyberattacks that result in system downtime and ransom payments, not to mention reputational blemishes, can be debilitating for businesses.
Risk and compliance
Risk and compliance strategies aren’t just about protecting your business from potential liabilities. They also serve as a crucial driver for attracting new customers and retaining revenue streams. For technology companies with over 25 employees, obtaining a
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(SOC 2) certification can be a powerful differentiator.
The investment — typically from $20,000 to $45,000 — can lead to significant revenue retention and growth by assuring customers of robust data protection and operational security. This helps companies solidify their market position and strengthen customer loyalty by meeting stringent compliance standards.
On the enterprise risk and performance front, a comprehensive risk assessment can identify opportunities to enhance efficiency and effectiveness across the organization. These assessments help businesses pinpoint areas to strengthen policies and controls, streamline processes, and better align departments and teams.
By leveraging technology and improving internal structures, companies can reduce operational risks, improve performance, and drive better business outcomes. This holistic approach to risk management protects the company from disruptions and positions it for long-term growth and success in a competitive market.
Accounting and finance
Efficient financial management is key to reducing costs and enhancing value. For middle-market companies, the following strategies can significantly impact profitability.
Transformation
Modernizing accounting and finance processes can save time for higher value tasks. By leveraging technology and refining roles, businesses improve forecasting and operational efficiency. This allows senior finance staff to focus on strategic analysis rather than routine processes.
Outsourcing
Outsourcing finance and accounting functions enable start-ups and midsized companies to reduce costs, convert fixed expenses into variable ones, and access specialized expertise. Many companies see measurable savings within three months of transitioning these functions, with return on investment often reaching 150% of the initial cost.
Tax savings
C corporations (C corps) engaged in international sales can use the foreign-derived intangible income (FDII) deduction. This approach can yield significant tax savings, with a typical ROI of 100%–500%.
Cost recovery
A sales, use, or gross receipts tax refund review can uncover refund opportunities, particularly in industries like manufacturing, technology, and healthcare. These reviews are often conducted on a contingent fee basis, minimizing financial risk while recovering costs.
Property tax reduction
Companies with substantial real estate holdings should consider appealing their property tax assessments. These appeals typically require minimal upfront investment, and savings are contingent on approval from taxing authorities.
Recovering past payments
Businesses with large state income tax liabilities can recover overpayments through state income tax refund reviews. Like property tax appeals, these reviews have little upfront cost and are contingent on approval, offering a low-risk way to reclaim funds.
People
People are at the core of any organization's success, and improving their productivity directly impacts cost savings and revenue generation. Aligning talent with strategic business goals is essential for growing companies or those undergoing transformation.
A key approach is evaluating roles and responsibilities so that each employee operates at their highest and best use. Companies can identify where time and talent are underutilized by conducting a workforce efficiency review, allowing them to reallocate tasks and responsibilities to better match employee skill sets. This increases productivity and job satisfaction, as high-value employees can focus on strategic, revenue-generating activities rather than routine administrative tasks.
Investing in employee development programs — particularly in leadership, technology adoption, and process management — can foster a more adaptive and agile workforce. When employees are empowered with the right tools and training, companies often see improved performance across the board, from faster project turnaround times to higher customer satisfaction rates. Organizations can unlock hidden efficiencies and support long-term growth by aligning people strategies with broader business objectives.
Operations
Operational efficiency is a cornerstone of profitability, especially for middle-market companies aiming to compete with larger industry players. Streamlining processes reduces costs and accelerates business agility, allowing companies to scale operations more effectively.
A comprehensive process improvement initiative can identify bottlenecks, redundant workflows, and inefficiencies costing the business time and resources. By leveraging automation and technology, businesses can eliminate manual tasks and reduce error rates, allowing teams to focus on more value-added activities.
This shift not only cuts operational costs but also improves overall business performance by enhancing the speed and accuracy of output.
Another key area for improvement is supply chain management. Companies that enhance their supply chain through data analytics and vendor management can reduce inventory costs, reduce delays, and better manage cash flow. By refining operations, companies can create a more resilient and scalable foundation for growth, allowing them to adapt more swiftly to market changes and opportunities.
Transition
Strategic planning can significantly reduce costs and maximize value in sell-side transactions. By working closely with transaction advisors and investment bankers, companies can time their quality of earnings (QoE) report to decrease roll-forwards, cutting unnecessary expenses.
Another critical step is the early preparation of the tax structuring deck. This allows companies to maintain flexibility and optimize tax outcomes, mitigating risks and ensuring potential savings throughout the transaction.
These approaches not only reduce immediate costs but also enhance deal value, positioning companies for sustained financial benefits and competitive advantage post-transaction.
