How to Increase Profit Margins Without Working More
I had a late lunch with a dear friend (and former client) last week. Perhaps one too many sangrias for me, but the Quattro Formaggi pizza and Kale Caesar Salad were perf (yay UNA!). I cannot imagine a better way to spend a Friday afternoon.
Anywho, at one point, the convo turned to overhead. Her overhead, my overhead. And honestly, I think this topic has been top of mind for a lot of people lately as we all look for ways to keep the everyday and not-so-everyday costs of running a business down.
When I look back at the last 4.5 years of running my business, my profit margins have swung wildly from 20% to 46%. This has meant much different bottom lines for this multiple 6-figure business owner.
Yes, I’m doing much different project-based work now and fully utilizing AI, but - wow - things have changed.
And almost none of that growth in profitability came from working more.
It came from making a few very specific decisions about overhead that most owners avoid.
Here are two of the changes I made to my overhead expenses that had a significant impact on my firm’s profitability:
Encouraging clients to pay via cheque or e-transfer where possible
I know you know this, but credit card processing fees (aka QBO fees) are significant. 2 or 3% isn’t bad when you’re only earning $50k in revenue, but add another zero to that number and all of a sudden, you have an extra $15k or $20k in interest/bank charges on your P&L.. and for what?
Yes, it may take a few extra days to get that cheque in the mail or for the e-transfer to come through, but I'm sure you'll be fine. Personally, this has been a noticeable savings direct to my bottom line.
Considering which subscriptions I renew annually
Another 5-figure expense I was dealing with was a subscription to a service that management consultants rely on for industry-specific data. I’d subscribed to this service for a while and had tons of recent data and reports saved on my comp… so why was I renewing again??
Despite 338 emails from the salesperson, I didn’t renew, but I will likely subscribe again in 2027 so I continue to have current data.
In my experience, most ongoing overhead expenses don't get cut because of statements like - "isn’t 30% of revenue considered reasonable” ??? I mean, maybe. But unquestioned “reasonable” expenses still add up over time. This is exactly the kind of stuff that quietly eats away at your profit margins (and mine).
And if you’re still reading this, I’d be remiss if I didn’t mention team changes. At one point, I had a team of seven people working with me - this was a combo of overhead (admin asst) and direct labour costs (other consultants).
I enjoyed parts of a really collaborative working environment, but there were massive inefficiencies and challenges that came with a remote team of that size.
And, let’s be honest, I was a pretty inexperienced business owner at that time which didn’t help things either. Using a lot of tech, I’ve changed my team composition significantly and that has been a big part of my profitability jump too.
All together, these intentional changes have helped me boost my firm's profitability massively - i.e. going from 19.8% (2021) to 46% (2024) when industry average was 28.8% (Management Consultants, IBISWorld Reports, 2025).
So, if you're like me and you want to decrease your overhead and boost your business' profitability, here’s a simple piece of homework:
What are your two or three largest overhead costs right now?
Are they actually improving your business and adding to it in some strategic way… or are they just the unquestioned expenses you’ve always had?
If you had to rebuild your business from scratch today, would you still have these expenses?
And, if you’re looking at your numbers and thinking “I know there’s more profit here, I just can’t find it” - this is exactly the work I love to do with my clients.
Let’s chat and figure out how to get your margins above industry average too: https://app.acuityscheduling.com/schedule/b7d824d2/appointment/67912755/calendar/3086653?appointmentTypeIds[]=67912755