Optimizing Business Efficiency through Strategic Cost Management: A Framework for Profit Maximization in SMEs

Purpose- This study develops a strategic cost management framework aimed at enhancing operational efficiency and maximizing profitability, particularly for small and medium enterprises (SMEs). It emphasizes integrating advanced digital tools and aligning cost strategies with organizational objectives. Design/methodology/approach- A quantitative approach integrates primary data from surveys and interviews with SME managers and secondary data from industry reports. Statistical methods, including regression and ANOVA, analyze the relationships between cost management practices and financial performance. Findings- The framework highlights the critical role of improving Return on Assets (ROA) and reducing cost-to-revenue ratios to achieve higher profitability. Advanced digital tools, such as ERP systems and AI analytics, enhance real-time decision-making and cost transparency. The study shows consistent profit margin increases across sectors, underscoring the framework's adaptability. Research limitations/implications- Implementation challenges include technological adoption barriers and limited resources in SMEs. Future research could address sector-specific strategies, SME-focused models, and sustainability integration within cost management frameworks. Originality/value- This research contributes a novel, technology-driven cost management framework applicable across industries, enabling organizations to adapt to dynamic markets while aligning cost strategies with long-term growth objectives.