12. Nudge Up Your Margins Before You Sell

Small margin wins that add serious value to the sale price

Problem Statement

Many owners get told to “grow revenue” in the lead up to exit. So they push for more sales while margins quietly stay thin. Turnover climbs although profit does not keep pace. Buyers see busy teams plus crowded order books, yet when they look at gross margin and net profit the numbers feel underwhelming. That gap often turns into a lower multiple or a heavily conditional offer.

Margin is one of the fastest levers you can pull before a sale. Small improvements flow straight to the bottom line. In my view this is where a lot of value is quietly left on the table because owners are simply used to “how we have always priced things”.

What An Owner Might Say

“If we lift prices I am scared customers will push back so I have just tried to do more volume.”

“We discount to keep the work flowing. Once everything is paid the bank balance looks ok although I know we are working far too hard for what drops out the bottom.”

Why It Happens

Most SMEs are built in survival mode. Early on you say yes to almost any work at almost any margin because cash today feels more important than profit next quarter. Those early prices and deals often hang around long after the business has grown up. No one quite remembers why a certain rate was set. It just feels dangerous to touch it.

Owners also tend to focus on revenue headlines. Turnover is an easy number to talk about with friends, lenders and advisers. Margin requires a bit more digging. Without regular visibility of gross profit by product or service, you can accidentally push growth in exactly the areas that help least.

Cost creep plays a quiet role. Freight rises, wages move, inputs edge up in small steps. If prices do not keep pace, margin shrinks year by year. Because the change is gradual it rarely triggers a big conversation. Everyone works a little harder instead.

There is also a very human fear of rejection. Many owners like being seen as generous and helpful. They worry that tightening discounts or lifting prices will damage relationships that have taken years to build. So they protect feelings rather than protecting margin, which might feel kind in the short term yet unhelpful when you are trying to sell.

What To Do About It

Start with a margin health check rather than a price hike. Ask your accountant or a savvy team member to pull simple reports that show gross margin by product, service line or customer group for the last year or two. Highlight the heroes with strong margins plus the laggards that drag the average down. Seeing this in black and white often delivers a few “why on earth are we doing that” moments.

Choose a small number of priority areas to tackle. You might decide to focus on three things. Underpriced services that soak up time. Old legacy deals still on mates rates. Products where input costs have risen without a matching price review. This keeps the work manageable rather than trying to fix everything at once.

Design small, targeted price moves rather than sweeping increases across the board. For example, lift specific service rates for new work, tidy minimum charges, polish call out fees, reset rush job premiums or refine how you quote complex jobs so scope creep is less likely. Customers tend to accept precise, well explained changes more easily than a blunt “everything costs more now” message.

Look for margin inside your delivery as well as in your price list. Tighten wastage. Improve planning so staff spend fewer hours fixing preventable issues. Standardise common jobs so experienced people are not reinventing the wheel each time. Even modest productivity gains can lift effective margin without changing the number on the invoice.

Review discount habits. Make sure every price reduction has a reason that still makes sense in a sale context. Strategic volume, genuine partnership, entry to a new segment. If the honest answer is “we drop the price because it feels awkward not to”, that is a habit worth changing. Set clearer rules on who can approve discounts plus how low they can go.

Consider whether some work should quietly disappear. If certain products or customers consistently erode margin, it might be smarter to phase them out, reprice them firmly or reshape the offer. Losing low or negative margin volume can actually improve overall profit which is what a buyer cares about.

How To Keep The Momentum

Margin improvement needs rhythm so it does not slide back into “one tidy up we did that time”. Build a regular margin review into your monthly or quarterly cycle. Look at gross profit by line, check any big shifts, then agree two or three practical actions before the next review.

Share simple margin stories with your team. Help them understand that an extra one or two percent of margin across the year can add serious value to the eventual sale price. That might influence how they scope jobs, protect time, handle rework or talk about discounts with customers. People are more careful when they see the connection between small choices and big outcomes.

Keep communication with customers calm and honest. When you adjust pricing, explain briefly what has changed plus how you will keep delivering value. Most reasonable customers understand that input costs move. They object more to surprise than to the change itself. Where you genuinely fear pushback, start with new customers first. Once you see that the market accepts the new levels, you gain confidence to tidy legacy deals.

Track the impact of changes. Show yourself the difference in dollars, not just in theory. Seeing profit lift while volume holds steady can be hugely reassuring. Those numbers also become part of your sale story. You can show buyers that margin has improved in a deliberate, sustainable way rather than through last minute cuts.

Golden Nugget

“Every extra dollar of margin you bank before sale tells a buyer your business is not just busy, it is disciplined.”

How RegenerationHQ can help

RegenerationHQ works with owners who suspect their margins are softer than they should be, yet feel nervous about rocking the boat before exit. We start by listening to how you price, how you deliver and where you feel pressure. From there we help you build a simple margin picture that highlights the few levers most worth pulling.

Together we design practical tweaks that suit your market and your appetite for change. That might include reshaping offers, adjusting minimum charges, tidying discounts, trimming unhelpful complexity or improving how jobs are scoped and reviewed. In my view the best margin work feels almost boring once it is in place. Clear, repeatable, not dramatic.

We then help you turn those improvements into a stronger exit narrative. Buyers can see the numbers of course, yet they also want to know that margin gains are real, repeatable and not just a last minute squeeze. With thoughtful preparation you can show that you have nudged margins up in a way that benefits staff, customers plus any future owner, which is exactly the sort of story that supports a respectful sale price.

If you want a steady guide beside you while you get ready for one of the biggest decisions of your working life, RegenerationHQ is ready to help you walk that road with clarity and confidence.