Your margin problem isn't what you think it is
I talk to business owners every week who tell me their margins are tight. When I ask what they're doing about it, the answer is almost always the same: "We're looking at raising prices." That's the last thing you should do.
Here's the reality: most SMBs leak 3-7% of revenue through inefficient purchasing, poor inventory management, and supplier relationships that haven't been reviewed in years. That's margin sitting on the table. Before you risk losing customers with price increases, fix the fundamentals.
Start with what you're already spending
Your cost of goods sold is the single biggest lever you have. Most business owners treat their supplier relationships like they're set in stone. They're not.
Pull your purchasing data for the last 12 months. Look at your top 20 suppliers by spend. When was the last time you actually negotiated with them? If the answer is "when we started working together," you're leaving money on the table. Suppliers bank on inertia. Your loyalty is costing you.
Next: are you buying the right quantities? Many SMBs over-order to hit volume discounts, then sit on inventory that ties up cash and sometimes goes obsolete. Run the numbers. A 3% discount isn't worth it if you're carrying three months of excess stock.
Measure what actually moves the needle
You can't improve what you don't measure. Most business owners track gross margin at the company level and stop there. That's not enough.
Break it down by product line, by customer, by project. You'll find patterns. Some products are subsidizing others. Some customers are costing you money. One of my clients discovered that 15% of their SKUs were generating 80% of gross profit—the rest were barely breaking even or losing money.
Once you see this clearly, you can make real decisions. Discontinue the losers. Double down on the winners. Renegotiate with the customers who are squeezing you. This is where margin improvement actually happens.
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Fix the operational leaks
Margin leaks hide in your operations. Returns and rework. Waste and spoilage. Overtime because of poor planning. Shipping errors. Each one seems small, but they add up fast.
A manufacturing client came to me frustrated with their margins. We spent two days mapping their production process. Turns out they were scrapping 4% of materials due to outdated specs that no one had bothered to update. Four percent. That went straight to the bottom line once we fixed it.
Look at your processes with fresh eyes. Where are you losing product, time, or money? What's being done because "that's how we've always done it"? Those are your opportunities.
The pitfall: doing it all at once
Here's where most business owners go wrong. They get excited, try to fix everything simultaneously, overwhelm their team, and accomplish nothing.
Pick one area. Supplier negotiations, inventory optimization, or operational efficiency. Fix that first. Get the wins on the board. Build momentum. Then move to the next area.
Margin improvement is a process, not a project. You're building better habits and systems. That takes time and focus. Trying to boil the ocean gets you nowhere.
Start today
Your margins won't fix themselves. Every month you wait is another month of leaked profit. The good news? Most of these fixes don't require big investments—just clarity and discipline.
If you want to talk through where your biggest opportunities might be, I offer a free introductory call. No pitch, no obligation. Just a conversation about your business and where you could tighten things up. Book it through the website.