How to Increase Profitability in a Small Business

Running a small business is hard work and while sales are important, it’s profit that really keeps the lights on.

Many businesses focus on growing turnover, but if costs are rising faster than revenue, your bottom line can take a hit. That’s why increasing profitability, not just sales, should be a key goal for every business owner.

Here are some simple, practical ways to boost profits without working 80-hour weeks or overhauling your business overnight.

  1. Know Your Numbers

Understanding where your money is coming from and where it’s going is the first step. If you don’t know your profit margins, overheads or break-even point, you’re flying blind.

➡️ Tip: Work with an accountant to get regular reports and keep your bookkeeping up to date. The more you know, the better decisions you can make.

  1. Focus on High-Margin Products or Services

Not all sales are created equal. Some products or services might generate a lot of revenue but very little actual profit.

➡️ Tip: Identify which parts of your business are the most profitable and double down on them. Don’t be afraid to drop or increase prices on low-margin offerings.

  1. Improve Efficiency

Time is money. If you or your team are spending hours on admin, chasing invoices or using clunky systems, it’s costing you.

➡️ Tip: Automate where you can, streamline your processes and invest in tools that save time (like cloud accounting software).

  1. Review Your Pricing Strategy

Many business owners undercharge out of fear of losing customers. But pricing too low can damage profitability and undervalue your work.

➡️ Tip: Regularly review your prices. A small increase, even just 5–10% can have a big impact on your bottom line, especially if your costs are rising.

  1. Control Your Costs

Profit isn’t just about making more; it’s also about spending less. Look at your regular outgoings: are there subscriptions, services or suppliers you could reduce or renegotiate?

➡️ Tip: Carry out a cost review every 6–12 months. Even small savings add up over time.

  1. Get Your Tax Right

No one wants to pay more tax than necessary. With the right planning, there may be allowances, reliefs or ways of working more tax-efficiently.

➡️ Tip: Talk to your accountant about profit extraction, allowable expenses, VAT schemes and year-end planning.

  1. Set Clear Goals and Monitor Progress

Profitability doesn’t improve by accident. Set targets, track your progress and adjust as needed.

➡️ Tip: Monthly or quarterly check-ins with your accountant or business adviser can keep you on the right track.

Please also see: https://www.gov.uk/growing-your-business

We’re Here to Help You Grow and Keep More of What You Earn

At An Accounting Gem, we help small businesses across Ipswich and East Anglia make more profit without the guesswork. Whether it’s reviewing your costs, refining your pricing or helping you plan tax efficiently, we’re on your side.

📞 Book a free initial chat with our friendly team today and let’s talk about how to make your business work better for you.

Please see another An Accounting Gem blog:  https://www.aag-accountants.co.uk/%f0%9f%9a%80-business-planning-that-powers-growth/

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