Insights for Founders and CEOs 

In this episode of Critical Few Actions, our very own expert Joshua Morse and host John Downes talk about the impact of operational costs on the bottom line of a business and the critical actions that owners and managers can take to improve their net profit margin. 

Do you know your Net Profit Margin? Many small and medium-sized business owners don’t always realised the amount of risk they carry to achieve only a modest return on their business investment. Josh and John discuss that while profit benchmarks vary by industry, a healthy small to mid-sized business should generally aim for at least 15% net profit. This level reflects a fairer return for the – often hidden – costs of business ownership such as personal guarantees, compliance burdens and financial risk. 

Are you getting the most out of what you spend?

Many SMEs achieve strong gross margins but profit still leaks away through everyday operational spending.  It’s not that these costs are hidden. It’s that they often aren’t optimised to create value. 

Costs such as HR and payroll, IT, finance, marketing and facilities or administration, should be more than just ‘fixed costs”. They should be strategic levers for growth and efficiency. 

Ask yourself: 

• HR and payroll – Are you delegating effectively or still doing tasks that could be outsourced or automated? 

• IT – Are you making maximising current systems before investing in new tools? 

• Marketing – Are you spending where your audience actually is and measuring results? Or are you spreading budget thin across underperforming channels? 

• Facilities – Are you using your space efficiently, or paying for capacity you don’t need? 

• Admin and compliance – Are routine tasks consuming time that could be redirected toward strategy? 

 

It’s not about cutting costs, it’s about getting more value from what you’re already spending.  With the right lens, overheads become opportunities and margins become stronger. 

 

Strategic Spending vs. Wasteful Overheads

One of the strongest reflections from this episode is this: before you spend more, squeeze more value from what you’ve already invested in. 

Take IT systems. Many businesses jump to expensive upgrades — but it may be that there is untapped value is already sitting within existing tools. 

The example Josh talks through is of a business who nearly committed to a full IT overhaul. But after reassessing internal capability, they focused on training and smarter configuration. The result? Major savings and improved performance. 

Instead of defaulting to new systems or services, ask: 

• What must the system do? 

• Are there underused features in your existing platforms? 

• Could AI integrations or plug-ins streamline workflows? 

• Have your team had enough training to use tools to their full potential? 

Being strategic isn’t just about avoiding waste, it’s about amplifying the return on what you’re already spending. 

Cash flow management: A strategic superpower

High-performing businesses treat cash flow forecasting as a leadership discipline, not just a finance function. Joshua and John recommend: 

• Building a cashflow forecast
  More than just a financial tool, it’s a business tool to keep you focussed on how all the different areas of the business are performing.) 

• Monthly, 3 monthly, and annual reviews
  A good discipline is to understand how cashflow is moving through your business in the short term, and over the longer term. 

• Being disciplined
  As a business owner, you’re always pulled in so many directions. You need to focus on what really matters, or make sure you’re using your time to focus on the areas of the business where you add most value. 

 

Compliance costs can’t be left to last 

From borrowing wisely to understanding tax obligations, Joshua reminds owners that strong financial control isn’t just about compliance, it’s about protecting the future of the business. 

Governance is a foundational capability that allows leaders to shift from reactive to proactive decision-making. 

 

What can you do right now?

If you’re a founder, director or CEO, here are four critical actions you can take to set yourself up for future success: 

• Benchmark your net profit margin against industry standards 

• Review your operational spend: Is it essential, strategic, or waste? How can each of these costs create better value in the business? 

• Build a 3-way cash flow forecasting for clear decision-making 

• Focus on where you add the most value and delegate the rest. Make sure that you’re spending your time on $500 per hour tasks, not $30 per hour tasks that others can take on for you.