Introduction: Small Changes, Big Financial Impact
Many SME leaders assume that meaningful profit improvement and stronger cash flow require sweeping restructuring or major operational changes. In reality, the biggest gains often come from very small, controlled adjustments applied consistently over time. These small, consistent 1% improvements across key financial levers compound, influencing revenue, costs, customers, and the overall value of the business.
This principle sits at the centre of the Cash Flow Story™ Power of One framework. The model demonstrates how improving seven measurable financial levers by just 1% each can dramatically enhance profitability, support more positive cash flow and strengthen business valuation across different industries. It provides SMEs with a clear structure for making smarter decisions at speed.
What Is the Cash Flow Story™ Power of One Framework?
The Cash Flow Story™ Power of One offers a practical, data-driven approach to improving long-term profitability and financial resilience. Rather than relying on guesswork, leaders can use this model to understand how incremental changes influence cash flow, working capital and overall company value.
Without a structured framework, many businesses fall into reactive cycles. They chase revenue growth without addressing margin, cut costs too late, or only become aware of cash flow issues when the cash position feels tight. By using the Power of One, every decision is grounded in insight. It brings clarity to decision-making and reveals how simple adjustments influence financial success.
Understanding Why Incremental Improvements Matter
How Small Shifts Lead to Major Gains
Incremental improvements accumulate. A slight increase in price, a small adjustment to payment terms, or a modest shift in stock levels may seem insignificant. Yet when applied consistently, these changes transform profitability and support stable, positive cash flow over the long term.
These shifts influence raw materials, the company’s expenses, overall costs, customer payments and even investor confidence. They create a trade-off between short-term action and long-term stability, allowing leaders to improve financial performance without undermining the customer experience.
The Role of the Economic Environment
Businesses today operate in an economic environment shaped by inflation, increasing prices, interest rates and unpredictable external factors. Incremental, structured improvements help companies navigate uncertainty and maintain stability. Leaders can evaluate financial data more accurately and prepare for changes that may affect customers, suppliers or broader market conditions.
The Framework Behind Measurable Financial Improvement
Moving Away from Reactive Decisions
A reactive approach to managing money makes financial progress unpredictable. Many businesses wait until costs escalate, debt accumulates, or revenue softens before making changes. This often creates unnecessary pressure.
The Power of One encourages a proactive approach. Leaders use financial models, cash flow forecasts, and financial statements to guide decision-making rather than relying solely on instinct. This clarity helps determine where improvements will deliver the greatest value.
The Value of Clear Financial Levers
Understanding financial levers helps leaders identify how each decision influences value, growth, liquidity and long-term profitability. When these levers are analysed through the lens of the balance sheet, income statement, cash flow statement and valuation models, leaders gain visibility into how the business operates beneath the surface.
Exploring the Seven Financial Levers SMEs Can Influence
The Universality of the Seven Levers
Regardless of sector or size, every business operates within the same seven financial levers. They influence revenue, margin, liquidity, stock levels, customer payments and overall financial success. When leaders make consistent, incremental improvements across these areas, they strengthen profitability and improve business valuation over time.
The Seven Financial Levers
Price – What you charge
Volume – What you sell
COGS – Direct costs of delivery
Overheads – Fixed operating costs
Accounts Receivable – How fast customers pay
Accounts Payable – How fast you pay suppliers
Inventory / WIP – Cash tied up in stock or projects
1. Price
Understanding the Power of Price Adjustments
Price is one of the most influential levers in the Power of One. Even a small price adjustment can increase profit because it does not require additional raw materials or changes to services. This single lever can create meaningful improvements in earnings and overall value.
Practical Considerations
Many companies hesitate to adjust prices for fear of customer pushback or deviating from industry average expectations. Yet a clear pricing strategy helps clients improve results without compromising service quality.
Key Insight: Price increases flow directly to the bottom line. Even tiny adjustments can deliver substantial profit gains.
2. Volume
Increasing Volume Without Overextending Resources
Increasing sales volume boosts revenue and helps spread fixed costs. It does not always require expanding into new customers or other businesses. Often, improvements come from better follow-up, stronger communication or refining existing services.
3. Cost of Goods Sold (COGS)
Why Reducing COGS Improves Margins
Reducing COGS increases margin immediately. This improvement often arises from reviewing supplier relationships, examining cost structures or refining workflows. These adjustments strengthen profitability while supporting efficient use of assets.
4. Overheads
Reducing Overheads Without Sacrificing Capability
Overheads gradually increase if left unchecked. Regularly reviewing expenses ensures costs remain aligned with revenue. Small adjustments, such as consolidating software or refining business units, support financial success without disruption.
Warning: Many businesses cut overheads annually but overlook small monthly increases that silently erode margins.
5. Accounts Receivable
Faster Customer Payments Strengthen Liquidity
Customer payment terms strongly influence cash flow. Small improvements in invoicing, communication and follow-up routines help maintain a healthier cash position. Improved collection speed also supports more positive cash flow throughout the financial year.
Faster payment from customers transforms cash flow health. A 1% improvement might mean:
Clearer payment terms
Automated reminders
Weekly invoicing rhythms
6. Accounts Payable
Optimising Supplier Payments Protects Cash
Aligning supplier payment cycles with operational requirements helps protect liquidity and avoid unnecessary debt. This lever helps companies balance cash availability with strong supplier relationships.
7. Inventory / Work in Progress (WIP)
Freeing Cash Tied Up in Stock
Inventory and WIP represent money not yet realised. Reducing excess stock levels or refining project workflows supports stronger liquidity, improves the balance sheet and reduces reliance on liquidated assets during periods of change.
Insight: Many SMEs have thousands of pounds tied up in unnecessary WIP or slow-moving inventory. A simple system frees that cash almost instantly.
Why 1% Improvements Create Outsized Impact
Small improvements across multiple levers create powerful outcomes. When supported by financial data, discounted cash flow insights and comparable company analysis, these changes contribute to higher business valuation and stronger long-term stability.
When all seven improve by 1%, the combined effect far exceeds any single adjustment. The result is:
Higher profit margins
Faster cash cycles
Stronger working capital
More predictable financial performance
Higher business valuation multiples
Small improvements, applied consistently, outperform big changes that never happen.
Strength Through Better Information
Using clear financial models helps leaders understand the company’s strengths and where refinement is needed. This clarity enhances valuation models, supports revenue growth strategies and helps determine the present value of future earnings.
Common Mistakes SMEs Make When Improving Financial Performance
Relying Too Much on Revenue Growth
Revenue alone does not guarantee profit or value creation. Without margin improvement or cost review, revenue growth can mask cash flow issues.
Cutting Costs Without Strategy
Reducing costs without understanding the impact on services or customers may weaken the business. Effective cost reduction requires reviewing core components, not quick fixes.
Ignoring Stock Levels and WIP
Excess stock quietly absorbs cash. Many companies underestimate how much money is tied up in inventory or unbilled work.
Overlooking Payment Cycles
Payment terms influence liquidity. Without reviewing how quickly customers pay or how long suppliers give credit, businesses lose opportunities to strengthen cash flow.
Focusing on Short-Term Fixes
Short-term actions may solve immediate challenges but rarely support sustainable profitability. Structured improvement creates more lasting value.
Practical Examples of 1% Improvements
A Simple Scenario
Consider a business that achieves the following:
Raises price by 1%
Reduces COGS by 1%
Reduces overheads by 1%
Collects payments 1% faster
The combined impact can produce a 5–10% or greater improvement in cash flow — without large strategic initiatives.
Example: A client reduced debtor days by 2% and increased prices by 1%. Together, these small moves lifted quarterly cash flow by 11% while maintaining customer satisfaction.
How GTi Helps SMEs Apply the Power of One
At GTi Business Systems, we implement the Cash Flow Story™ Power of One model using practical systems that make improvement measurable and repeatable. Our process connects financial visibility with operational control, creating a rhythm that drives consistent results.
Interactive dashboards to track all seven levers
Weekly financial leadership routines
Leading-indicator scorecards
Optimisation playbooks for pricing, costs, and cash flow
By aligning finance, operations, and decision-making, SMEs gain a clearer view of where to focus effort for the greatest impact.
Conclusion: Small Moves, Big Outcomes
Incremental improvements shape the long-term value of the company. By focusing on small, structured adjustments, businesses strengthen profitability, stabilise cash flow and create conditions for sustainable financial performance. This method supports resilience, clarity and stronger business valuation outcomes.
It’s built through small, intentional 1% improvements made consistently across the right levers. Master the Cash Flow Story™ Power of One, and you’ll unlock a more profitable, cash-efficient, and valuable business — one small change at a time.
Next Steps for SMEs
Leaders should begin by reviewing financial statements, examining cost structures and identifying areas where improvement is realistic. When businesses combine structured insight with steady action, they build strong foundations for financial success.
Next Step for you
Book a free strategy session to diagnose your seven financial levers and build a measurable plan to improve cash flow, profitability, and valuation.
Frequently Asked Questions
How does the Power of One model actually improve cash flow?
By quantifying how a 1% improvement in each of seven levers affects profit and working capital, the model shows exactly where small actions can release cash or increase margin. It converts intuition into a measurable strategy.
Is the Power of One only suitable for large businesses?
No. The model is specifically designed for SMEs. Because it focuses on incremental, low-risk changes, it works for any business size or sector — including those with limited financial infrastructure.
How quickly can results be seen after applying the framework?
Improvements in pricing, receivables, or overheads can deliver visible cash flow benefits within a single quarter. The key is consistent application and tracking of each lever’s progress.
