Cost management is part of leading a business. However, when done incorrectly, it can undermine long-term performance and do more harm than good.

I’ve never believed in slashing staff when times get tough. That’s a panic move—and panic isn’t a strategy. Instead, I lean in. I invest in expanding my team, bringing on more salespeople. I double down on what drives revenue. Because if costs are rising (and they are for all of us), you need to sell more, not shrink. Maybe your margin per widget drops, but if you’re moving more widgets, you’re still ahead.

This is the mindset shift every executive needs right now: Cut fat, not muscle. Growth is still the goal. But how you get there has to be smarter, leaner, and more deliberate.

Here’s how I approach profitability from the CEO’s chair when every line item is going up.

Zero-based budgeting is not optional

If your budgeting strategy still follows a simple “last year plus 5%” model, it may be time to rethink the approach. In this economy, rising costs call for sharper, more intentional decisions. You must ask: Do we actually need this expense? Why are we still doing it this way?

I use a zero-based budgeting strategy, where every expense starts at zero and has to earn its way back in. Sort expenses from largest to smallest. Look at the big levers first, such as real estate, tech contracts, and marketing spend; but don’t ignore the small stuff.

That $9 monthly subscription? The software no one uses? It adds up. Assign ownership. Who’s responsible for each line item? If no one knows, that’s a red flag. Effective budget management isn’t just about cutting; it’s about clarity, accountability, and alignment across the entire leadership team.

Get aggressive with vendor negotiations

Your vendors are facing the same economic pressure as you are. That gives you leverage.

Ask them to work with you. Shop around. There are always newer, hungrier vendors looking to land a solid account. Loyalty works both ways. When you’re loyal to a supplier, they’ll likely reciprocate. Request concessions or discounts. And ask for more value, not just lower cost.

This isn’t about nickel-and-diming people. It’s about revisiting relationships with the urgency that today’s business environment demands. If you’ve been with the same vendor for five years, it’s probably time to re-benchmark your pricing. Markets shift, so should your contracts.

And above all, never allow contracts to auto-renew without review. It’s risky and just poor oversight.

Extend your float, improve your cash flow

Cash is the lifeblood of any business. You might be profitable on paper, but if your cash flow is tight, you’re operating on dangerous ground.

One effective strategy is to pay invoices with business credit cards, which can provide some breathing room. Negotiate net-30 or net-60 payment terms. You’re not trying to dodge payments. You’re managing your cash cycle like a pro.

Additionally, if possible, pre-invoice your customers. If they trust your delivery and timing, some will gladly pay early, especially if it locks in pricing before another round of cost increases.

Another move: Align billing cycles with your payment terms. It sounds obvious, but many companies let cash go out faster than it comes in, and that creates unnecessary strain. Watch the timing, not just the dollars.

You need to pull every lever that improves working capital. These are the kinds of details that separate reactive operators from strategic CEOs.

Share some of the pain with customers

Raising prices is a reality, but it can’t be your only lever. And you can’t pass along 100% of the cost increases to your customers without expecting some pushback. Think of it as a partnership and be transparent. If your material costs increase by 30% and you raise prices by 10–15%, most reasonable customers will understand, especially if you’re delivering consistently and clearly communicating the value you bring.

If you need to adjust pricing, ensure that you also upgrade your offer. Add value. Improve turnaround time. Increase transparency. If you’re going to charge more, make it feel worth more.

This is how long-term relationships are built—by navigating tough seasons with your clients, not at their expense.

Play offense, not just defense

Here’s one common oversight in leadership: You can’t save your way to real growth. You have to sell your way through challenges.

That’s why I hire in down cycles. I put more boots on the ground in sales. Because if we’re cutting waste and controlling costs, then every new sale is that much more valuable. Sales cure a range of operational problems. It fuels momentum and allows you to make better decisions from a position of strength, not scarcity.

Build a culture that knows the numbers

This part often gets overlooked, but it’s critical: Your team needs to understand how the business generates revenue and how costs impact that picture.

Teach them. Walk them through the real math behind each sale. When employees understand how profitability works, they make better choices. They waste less and innovate more.

Too many companies guard their financials like a state secret. That’s a missed opportunity. When everyone sees the whole picture, everyone rows in the same direction.

Lead with purpose

Managing profitability in a rising-cost environment isn’t about making one big move. It’s about dozens of smart, decisive ones.

Cut what doesn’t matter and invest in what does. Rethink your contracts, your vendors, your cash flow, your sales strategy—everything.

Profitability is the result of intentional leadership, not just quick fixes. If you’re treating your budget like a living, breathing document, and using it as a tool for opportunity, not fear, you’re playing the right game.

Remember, real leadership doesn’t show up when everything’s easy. It shows up when every decision counts. When costs rise, a smarter executive approach is to analyze ruthlessly, spend intentionally, and grow aggressively. Profitability is more than just spending less; it’s about maximizing value. It’s making better moves. And the best leaders don’t play defense—they lead with purpose.

Adam Povlitz is CEO & president of Anago Cleaning Systems, one of the world’s leading franchised commercial cleaning brands and a leader in technological advances relating to business operations and facilities services. Visit anagocleaning.com or connect with him on linkedin.com/in/apovlitz.