Service Business Operations: Why Fixing Your Systems Must Precede Strategic Pivots

Strategic pivots are overrated. Do this instead.

Ever feel like your business needs a complete strategic overhaul? Before you jump into that shiny new direction, I'd like to share a story that might save you time, money, and stress—and potentially unlock growth you didn't know was possible.

Michelle's Architectural Dilemma

Michelle had built what many would consider a success story. An architectural firm with 10 employees, turning over $1 million annually with a healthy 20% margin. She'd managed this while maintaining a good work-life balance with two children under 10. By most measures, she was living the dream of a successful small business owner.

But beneath the surface, Michelle was wrestling with concerns that will sound familiar to many business owners:

• One of her four market segments was eating up resources while delivering minimal profit, yet it represented 35% of her revenue

• Overall revenue growth was beginning to plateau

• Exciting new high-growth markets were emerging, but her firm lacked experience in these areas

Like many of us facing business challenges, Michelle thought the answer was a completely new strategic direction. She'd been studying her competitors—some had become specialists in high-margin niches like luxury residential projects, while others had diversified across multiple sectors.

"Which path should I take?" she asked when we met. "How do I position my firm for the next phase of growth?"

Looking Beyond Strategy

I could see Michelle's dilemma clearly. The temptation to pivot to something new is strong when we feel our business hitting a plateau. But before diving into strategic shifts, I wanted to understand her current operation better.

"What's the annual billing target for each of your employees?" I asked.

Michelle looked thoughtful. "We don't actually set an annual billing target," she replied, a lightbulb moment visibly dawning.

This was our first clue. In professional services, it's typical to expect employees to bill approximately three times their salary annually. With 10 people, Michelle's firm should theoretically be generating closer to $2.5 million—more than double their current $1 million.

Her team was operating at roughly 40% capacity.

Make Better, Get More, Do New: A Service Business Execution Framework

This led me to share a simple three-step framework that has helped countless businesses unlock their hidden potential:

Step 1: Make Better (Fix the Bucket)

Before implementing new business growth strategies, first fix your service business operational efficiency to maximise current potential. For Michelle, this meant addressing efficiency losses like:

• Moving from fully customised services to more standardised processes

• Preventing scope creep by establishing clear boundaries with clients

• Streamlining administrative systems that were consuming valuable time

These changes might not be the most exciting part of business transformation, but they're low-risk improvements that can deliver swift results. Think of it as building a stronger foundation before adding new floors to your house.

Step 2: Get More (Fill the Bucket)

Once your bucket is intact, focus on increasing what flows into it:

• Offer additional services to existing clients who already know and trust you

• Boost client retention rates through improved communication

• Follow up on leads faster and more consistently (this alone can work wonders!)

• Enhance marketing effectiveness by focusing on what's already working

• Invest in team training to improve delivery quality

Step 3: Do New (Expand the Bucket)

Only after maximising current operations should you consider expansion strategies:

• Market expansion (new services to existing clients, existing services to new clients)

• Hiring for new capabilities that complement your strengths

• Implementing better management and incentive systems that reward the right behaviours

Focus on Service Business Operational Efficiency First

Michelle realised that what her business needed wasn't necessarily a new strategic direction—at least not yet. The most pressing opportunity was improving execution within her existing model.

She committed to fixing the holes in her bucket before seeking new water sources. This wasn't settling for less—it was recognising the untapped potential already within her grasp.

The Cost of Chasing Shiny Objects

What would have happened if Michelle had ignored these fundamentals and jumped straight to a new strategy?

She likely would have carried the same operational inefficiencies into new markets, potentially compounding her problems rather than solving them. Her capacity issues wouldn't disappear with a new direction—they'd simply manifest in different ways.

The cost? Wasted resources, team confusion, and possibly abandoning viable markets where she had already established credibility and relationships.

Transformation Through Execution

After six months of focusing on the "Make Better" phase, Michelle's results were remarkable:

• By implementing standardised proposal templates and delivery processes, her team reduced project setup time by 40%, allowing them to take on more work without feeling overwhelmed

• A new system for tracking and billing scope changes increased average project value by 15%

• Streamlining administrative procedures freed up an estimated 10 hours per week across the team—time that could now be spent on billable work

The most impressive outcome? Revenue increased by 35% without adding new staff, simply by maximizing service business capacity and improving service business profitability.

With these improvements in place, Michelle now had both the breathing room and the data needed to make an informed decision about her strategic direction—whether to specialise or diversify further. Best of all, she could approach this decision from a position of strength rather than desperation.

Strategy Isn't a Panacea

Sometimes, developing a new strategy is seen as the cure-all for business challenges. It's exciting. It feels proactive. It gives us a sense of control and momentum.

But there's a time and place for new strategic directions. Typically, that time comes after you've optimised your execution and squeezed all the potential from your current model.

As the saying goes: Strategy without execution is just hallucination.

If your business is facing growth challenges, ask yourself these three powerful questions:

1. Have I fixed the holes in my bucket?

2. Am I maximising the capacity I already have?

3. Do I have the operational foundation to support a new direction?

The most brilliant strategy in the world won't save a business that's leaking potential through poor execution. Sometimes, the most strategic move you can make is to perfect what you're already doing before expanding your horizons.

Think about it—what if you could increase your revenue by 30-40% without changing your business model, hiring more staff, or entering new markets? What would that do for your profitability, your stress levels, and your options going forward?

What about your business? Are there execution improvements hiding in plain sight that could transform your results? Sometimes, the treasure we're seeking is already in our possession—we just need to polish it up a bit.

I'd love to hear about your experiences with this in the comments below. Have you ever found unexpected growth by focusing on execution before strategy?

This blog post is based on a real business consultation, with details modified to protect confidentiality. The three-step approach (Make Better, Get More, Do New) has helped numerous professional service firms unlock hidden potential and optimise their operations before making strategic pivots.