An Appraisal of Strategic Cost-Cutting Measures in Maintaining Profitability: A Case Study of SMEs in Benue State
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Background of the Study
Small and Medium Enterprises (SMEs) are critical to economic development, providing employment and contributing to GDP growth. However, maintaining profitability in the face of economic challenges requires effective cost-cutting measures (Deloitte, 2023).
In Benue State, SMEs face high operational costs due to inflation, inadequate infrastructure, and fluctuating market conditions. Strategic cost-cutting measures, such as process optimization and resource efficiency, are essential for these businesses to sustain profitability and remain competitive (Okonkwo & Agbo, 2024).
This study evaluates the effectiveness of cost-cutting measures employed by SMEs in Benue State and their role in maintaining profitability.
Statement of the Problem
SMEs in Benue State are increasingly struggling to maintain profitability due to rising operational costs and limited access to capital. While cost-cutting measures can alleviate financial pressures, many SMEs lack the strategic frameworks to implement these measures effectively (Ezekiel et al., 2025).
Research on cost-cutting strategies often emphasizes large corporations, with little focus on SMEs in Benue State. This study aims to bridge this gap by appraising the cost-cutting strategies employed by these businesses.
Objectives of the Study
- To identify the cost-cutting measures adopted by SMEs in Benue State.
- To analyze the impact of these measures on profitability.
- To explore the challenges SMEs face in implementing cost-cutting strategies.
Research Questions
- What cost-cutting measures are employed by SMEs in Benue State?
- How do these measures impact the profitability of SMEs?
- What challenges do SMEs face in implementing cost-cutting strategies?
Research Hypotheses
- Cost-cutting measures significantly impact the profitability of SMEs.
- Process optimization positively affects SME profitability.
- Challenges in implementing cost-cutting measures negatively influence business performance.
Scope and Limitations of the Study
The study focuses on SMEs in Benue State, examining their cost-cutting strategies and impact on profitability from 2023 to 2025. It excludes large enterprises and SMEs outside Benue State. Limitations include limited financial data disclosure by SMEs.
Definitions of Terms
- Strategic Cost-Cutting: Deliberate measures taken to reduce operational expenses without compromising quality or productivity.
- Profitability: The ability of a business to generate income and sustain operations over time.
- SMEs: Small and Medium Enterprises, typically characterized by limited revenue and employee numbers.
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