Since 2012, Thexton Armstrong has researched profit leakage across small and medium-sized businesses. The findings are consistent, with profit leakage occurring in nine out of ten companies, and with average leakage now exceeding nine percent of turnover.
The biggest causes? Pricing and margin policy. Productivity. Sales and marketing.
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The impact of leakage varies by sector. In manufacturing businesses, average leakage runs at around 7.5 percent, driven mainly by productivity. In trade and wholesale, around 6.1 percent, with sales and marketing the biggest contributor. In service businesses, leakage reaches around 9.8 percent, linked primarily to pricing, productivity and sales.
At nine percent leakage, a business turning over £1 million could have up to £90,000 of unrealised profit potential. At £2.5 million turnover, up to £225,000. At £5 million, up to £450,000.
These figures are not a promise of results. They show why it is worth knowing where profit may be escaping in your own business.
You may not need more revenue. You may need to stop losing the profit your business already earns.
Profit leakage rarely announces itself. It hides in the everyday small issues, repeated across the business, quietly compounding.
Prices that have not kept up with rising costs, or discounts given without understanding the margin impact. Staff who are busy, but not fully productive. Billable time, materials or variations that go uncaptured. Inconsistent sales activity. Late paying customers. Stock tying up cash that could be working harder.
The result: the business works hard but keeps less of what it earns.
thexton amstrong focuses on seven areas where profit commonly leaks:
Reducing leakage is not about cutting costs. It is about improving how the business prices, delivers, manages capacity, collects cash and converts effort into profit. When you keep more of what you earn, cash flow strengthens, reliance on external finance falls, and the business becomes more attractive to funders, staff and customers alike.
If you are unsure about any of these, your business may be leaking profit.
Profit leakage is also rarely just a financial issue. It often shows up as long hours, pressure on the owner, frustration with the team and the persistent feeling that the business should be producing more than it does. The longer these leaks go unnoticed, the more normal they start to feel.
Our Profit Leakage Session helps you identify where profit is being lost, estimate what it could be costing your business and understand which improvements would make the biggest difference.
This is for business owners ready to look honestly at how their business is performing, particularly if profit is lower than expected, cash still feels tight, margins have not followed turnover growth, or you suspect your pricing, team or sales process could do better.
Profit leakage compounds. The longer it stays hidden, the more it costs.
We’re here to support you at every step—whether you’re looking to grow, recover, or prepare for exit. Let’s talk about how our methodology can work for you.
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