For business owners ready to improve margin, efficiency and long-term sustainability It’s not just about working harder. You’re growing. You’re hiring. You’re delivering. The P&L might show strong revenue growth, but somehow the bottom line feels underwhelming or unpredictable. You’re not alone. Many SME business owners find themselves at a crossroads: the business is functioning, but profit isn’t flowing the way it should. Cash gets tight. Margin feels squeezed. And even with strong demand, the pressure never quite lifts. At this stage, some owners instinctively cut costs. Others push for more sales. But rarely do they step back and ask a better question: “What are the levers I can pull to improve profit without burning out my team, slashing quality, or racing blindly into more complexity?” That’s what this insight is about. We’re going to explore 7 practical profit levers that apply to service-based businesses (e.g. IT, consultancy, and recruitment) as well as product-led businesses (e.g. e-commerce or specialist manufacturing). Each lever can stand alone, but the real impact comes from taking a holistic view.
1. Price: The overlooked growth driver
Let’s start with the least comfortable topic for most business owners: price. If you’re still charging what you did two years ago, or pricing based on hours or unit costs alone, you’re likely undervaluing what you do. In service businesses, even a 5% price rise (if executed well) can result in a 20%+ increase in net profit, because your delivery costs often stay the same. Product businesses face different pricing dynamics, but the same principle applies: the fastest way to improve margin is often strategic repricing of high-value or underpriced items. Ways to improve pricing:
- Benchmark against your competitors, but don’t mimic them; be focused on your value.
- Introduce pricing tiers or bundles, especially in service businesses. This provides clarity.
- In products, experiment with strategic anchor pricing (e.g. a premium product that frames others as good value).
It’s not uncommon for a 10% price increase to have an immediate and tangible difference to net profits.
2. Volume: Grow the right kind of sales
Volume is often misunderstood. More sales alone don’t equal more profit — in fact, chasing volume without a margin strategy can be dangerous and lead to overtrading. The key is to focus on profitable volume, scaling what already works, and avoiding the temptation to overextend into untested markets or underpriced deals. This is particularly important for businesses that deliver time-intensive services or physical goods with tight logistics. More clients or customers don’t help if they’re not profitable. Where to focus:
- Identify your most profitable services or Products and double down on them; perhaps via referral schemes for existing clients.
- Create upsell or cross-sell pathways for existing clients/customers.
- In product businesses, look at subscription models, reorder incentives or loyalty programmes.
This can also motivate staff who feel their time is more valued and not taken up with difficult, low-profit work.
3. Margin: Understand what you really keep
If you don’t track margin by product line, service type or project, it’s easy to assume you’re doing better than you are. For service businesses, margin can quietly erode through scope creep, discounts, over-servicing, or inefficient delivery. For goods-based businesses, margin can be hit by supplier costs, shipping, warehousing, or product bundling strategies. How to protect or improve margin:
- Track true margin per product/service (not just overall gross margin).
- Review your pricing vs. delivery effort regularly — especially in high-touch services.
- Consider raising minimum order sizes or introducing fees for complex, low-margin fulfilments.
An example could be reviewing how free postage is offered.
4. Efficiency: Do more with what you already have
You don’t need to automate everything. But if your team is spending hours each week on admin, manual data entry, or chasing clients, you’re bleeding profit. For both service and product-based SMEs, operational efficiency often becomes a competitive advantage once you pass the £500k–£1m revenue mark. Small improvements compound. Saving 10 hours a week is like gaining a part-time team member — without hiring one. We are in an era of extremely fast technological change; if you aren’t considering the usage of automation and generative AI, you’re already in danger of falling behind. How to improve efficiency:
- Map your 3–5 most common internal processes and highlight bottlenecks or repetitive steps/tasks.
- Introduce simple automation tools (e.g. e-signatures, invoice triggers, CRM workflows).
- Streamline handoffs between team members or departments.
“We saved a full day per month just by automating our recurring invoices and client reminder emails.”
5. Capacity utilisation: Use your people and assets wisely
Are your best people doing their best work, or filling in forms and fixing problems? Whether you sell time, knowledge, or physical goods, poor utilisation is a silent profit killer. You’re already paying salaries, licences, equipment and rent; make sure that spend is delivering value. In service businesses, this might mean ensuring billable staff aren’t stuck doing internal admin. In product businesses, it could mean increasing throughput or optimising warehouse flow. Quick checks:
- What % of your team’s time is client- or product-facing vs administrative?
- Are you using the full features of your tools/tech stack?
- Could roles be better structured to free up senior time?
6. Cash conversion: Profit is meaningless if it’s not in your bank
Ever made £20k profit on paper and still struggled to pay the VAT bill? Cash conversion is about how quickly you get paid and how long you hang onto money before it goes out again. It’s often overlooked, but it’s critical for profit sustainability and growth. Service businesses with long payment terms or poor billing habits suffer here. Product businesses with poor inventory management or excess stock can also struggle. How to fix it:
- Invoice sooner. Always. (Don’t wait until month-end or job completion.)
- Introduce Direct Debit or automatic payment methods.
- If holding stock, review reorder points and identify slow movers.
I’ve seen a business move to a direct debit model, which directly reduced average debtor days by half.
7. Risk & resilience: Keep the wheels turning
Profit only matters if your business is protected. Too many SME owners operate without considering concentration risk (one key client), team risk (one key person), or tech risk (no backups or security). And when something breaks, it’s too late to fix it reactively. Resilience planning isn’t glamorous, but it’s essential if you want to safeguard your profit gains. What to look at:
- Is >25% of your revenue dependent on a single client, supplier or team member?
- Do you have contingency plans for illness, outages or delivery disruption?
- Is your insurance current — and matched to your actual risk?
“When our ops manager was off for two weeks, things ground to a halt. We’ve now created process manuals and simple checklists, so no one is a single point of failure.” How to get started, without getting overwhelmed You don’t need to tackle all seven levers at once. In fact, we’d strongly advise against it. Instead, set aside a few hours this quarter to step back and assess:
- Which lever is weakest right now?
- Which lever would make the biggest impact if we improved by 10–15%?
- What can I measure, tweak or test, without needing a full restructure?
From there, build a simple 90-day plan:
- Choose 1–2 levers to focus on
- Set a specific goal (e.g. increase average client spend by 10%)
- Assign one person to track progress; accountability is key.
If repeated quarterly, this habit alone can improve net profit by 20–50% over 12–18 months, with no change to headcount or marketing spend.
Profit is not the enemy of purpose
Some business owners shy away from the word “profit”, worried it feels greedy or cold. But profit is what fuels your mission. It’s what allows you to pay great people. To fund growth. To stay in control. It’s what gives you freedom and headroom. If your business is doing good work, helping customers, and solving real problems, then it deserves to be profitable. And if you’re doing all that without a proper return? Maybe it’s time to review the levers. At Grasp, we work with growing SMEs to not just tidy up the books — but to improve the business model itself.
Want Our Help?
Explore our Enhanced and Bespoke plans to see how we can support you improve your profitability via our ‘Profit Levers – Unlocking Cash and Margin’ advisory session. This blog is for general information only and does not constitute professional advice. Always seek tailored advice relevant to your specific circumstances before making decisions based on this content.
