According to INE, Portugal's national statistics office, there were 1,526,926 companies in Portugal in 2023. SMEs made up 99.9% of them and employed 77.1% of the workforce. Almost every one of those businesses asks the same question at a first coaching session: how do I make more money? And almost every owner arrives with the answer already prepared: I need more customers.
More customers helps, but it is only one of five levers. I often see business owners pour time and budget into chasing new enquiries when the profit was sitting in their margin or in the average value of each sale. In this article I run the numbers on a hypothetical SME to show why small improvements across five figures produce a far bigger result than one large improvement in a single figure.
The 5 ways, in an engineer's language
At ActionCOACH we use a simple formula. A company's profit is the result of five variables:
- Number of leads: how many people or businesses show interest in a given period.
- Conversion rate: what percentage of those leads become customers.
- Number of transactions per customer: how many times, on average, each customer buys in the period.
- Average sale value: what each transaction is worth in euros.
- Margin: how much of every euro invoiced is kept as profit.
Leads times conversion gives you customers. Customers times transactions times average sale gives you revenue. Revenue times margin gives you profit. Because it is a multiplication rather than a sum, every improvement amplifies the others. That is the part most owners underestimate.
A hypothetical SME, in round numbers
Picture a technical services company in the Porto area with 9 people. Its numbers for one year look like this:
- 2,000 leads (quote requests, website enquiries, customer referrals).
- A 25% conversion rate, which means 500 customers.
- 3 transactions per customer per year.
- An average sale of 400 euros.
- A net margin of 20%.
Revenue: 500 customers x 3 transactions x 400 euros = 600,000 euros. Profit: 20% of 600,000 euros = 120,000 euros.
Now the exercise I do with nearly every owner: improve each of the five numbers by 10%. Not 50%, not double. Just 10%.
- Leads: from 2,000 to 2,200.
- Conversion: from 25% to 27.5%, giving 605 customers.
- Transactions: from 3 to 3.3 per customer.
- Average sale: from 400 to 440 euros.
- Margin: from 20% to 22%.
New revenue: 605 x 3.3 x 440 = 878,460 euros. New profit: 22% of 878,460 euros, roughly 193,260 euros. Five 10% improvements lift profit by around 61%. Had the same business put everything into 10% more leads, profit would have grown by just 10%.
Look at the effort involved, too. Moving conversion from 25% to 27.5% means closing one extra proposal in every 40. Moving the average sale from 400 to 440 euros might be a single well presented add on service. None of these changes calls for a revolution.
Why the economic data makes this urgent
This is not a theoretical exercise. Portuguese SMEs face three concrete pressures on their margins.
The first is labour cost. According to PORDATA, the minimum wage rose from 870 euros in 2025 to 920 euros in 2026. In a business with several people close to that level, the increase hits the margin directly, and margin is the fifth way.
The second is inflation. PORDATA records 2.3% for 2025. A business that did not review its prices that year lost average sale value in real terms without noticing.
The third is cash flow. The Informa D&B Payment Behaviour study (12th edition, 2026) shows that only 20.2% of companies in Portugal pay within the agreed terms. Profit on paper that takes months to arrive does not pay salaries. So when I work on margin with a client, I work on payment terms as well.
Where to start on each way
Leads
Before spending more on advertising, measure where your current leads come from. Many businesses cannot say how many enquiries they received last month. Without that number, there is no way of knowing whether a campaign worked.
Conversion
This is usually the cheapest way. Replying to a quote request the same day, following up after three days and having a simple script for the first call can shift the conversion rate without spending a single euro on marketing.
Transactions per customer
The question is: what reason am I giving the customer to come back? Maintenance contracts, periodic reminders and offers designed for existing customers all raise purchase frequency.
Average sale value
Bundles, complementary services and price reviews. Many SMEs are wary of raising prices and end up absorbing costs the market would happily pay for.
Margin
Analyse margin by product or service, not just the overall figure. There are almost always lines of business that eat up the team's time and leave little or no profit.
A checklist to measure your 5 ways
- Do I know how many leads I received in the last 90 days, and from which channels?
- Do I know what percentage of those leads became customers?
- Do I know how many times, on average, a customer buys each year?
- Do I know the average value of each sale, and whether it rose or fell against last year?
- Do I know the margin on each product or service after all direct costs?
If the answer is no to two or more of these, the first job is not to sell more. It is to measure. What is not measured cannot be managed, let alone improved with accountability.
One action for this week
Block out an hour, open the last 12 months of invoicing and fill in the five numbers for your business. Then pick a single way, the one where a 10% improvement looks easiest, and set one concrete action for the next 30 days, with an owner and a review date. At the end of the month, compare the result with your starting point.
If you would like to work through this with someone who has done it many times, the ActionCOACH Porto team would be glad to talk. It is the kind of work we do in 1:1 Coaching and in the 90 Day Planning Workshop, always with the numbers on the table.