Understanding the Commercial Side of Your Business: The Unsung Hero of SME Growth

When it comes to small and medium-sized enterprises (SMEs), the spotlight often falls on product development, marketing strategies, and customer service. Yet, one crucial element often overlooked is commercial understanding—knowing your numbers, understanding risks, and making financially sound decisions. This blog post aims to shed light on this unsung hero of business growth. We will explore why a deep understanding of the commercial side of your business is essential, and how it harmonises with other aspects like contract management to propel your business to the next level.  

Why Commercial Understanding is Critical

The intricacies of running a business extend far beyond delivering a stellar product or service. At the core, commercial understanding is what often separates a stable, growing enterprise from a struggling one. It’s the capability to translate your passion and skills into a sustainable and profitable business model.  

Elements of Commercial Understanding

Here’s some of the key commercial elements which you need to understand about your business:-  
  • Budgeting and Financial Planning: Understanding your costs down to a detailed level enables you to set prices that are competitive yet profitable.
  • Risk Assessment: Knowing the risks involved in every business deal or new venture is crucial for long-term success.
  • Market Analysis: This involves studying your competitors, understanding your target audience, and identifying market gaps.
  • Operational Efficiency: A clear grasp of your operations allows you to streamline processes, thereby saving time, resources and cost.

The Symbiosis of Commercial and Contractual Understanding

In many SMEs, contract management and commercial understanding are often compartmentalised. However, the two should ideally work in harmony. Contractual obligations can have significant commercial repercussions, so understanding one is incomplete without the other. Here’s how they can work together:  
  • Negotiation Skills: Contract negotiation isn’t just a legal process; it’s a commercial one too. The terms you agree on will directly impact your bottom line.
  • Compliance and Costs: Regulatory compliance is another area where commercial and contractual aspects overlap. The costs of failing to comply can be catastrophic.
  • Long-Term Partnerships: A keen commercial understanding can help you identify and negotiate contracts that benefit your business in the long run.

Boosting Profitability with Commercial Understanding

So, you’ve got your contracts sorted and you understand your legal obligations. But how do you maximise profitability? The answer lies in your commercial strategies.  
  • Customer Lifetime Value (CLV): Assess the value each customer brings to your business over the long term. Tailoring your products and services to these insights can significantly boost revenue.
  • Upselling and Cross-selling: Once a contract is in place, there may be opportunities to offer additional services or products that complement what the customer already has, thereby increasing profitability.
  • Cost-Benefit Analysis: Always weigh the costs against the benefits for any business decision. This kind of analysis should be integral to your decision-making process.

Business Growth Through Strategic Commercial Decisions

We’ve discussed the essential elements of commercial understanding and how it pairs with contractual commitments. Now let’s talk about using this knowledge to foster business growth.  
  • Scalability: With a solid grasp of your commercial and contractual landscape, you can more confidently plan for scaling your business.
  • Sustainability: Your keen understanding helps ensure that growth is not just rapid but also sustainable.
  • Innovation: Understanding your commercial standing can give you the freedom to innovate, setting you apart from competitors.

Commercial understanding is not a standalone concept but a critical component that works hand-in-hand with contract management, legal compliance, and other business operations. Mastering this aspect is often what separates successful SMEs from those that struggle to scale and sustain their operations. At Looking Glass Solutions, we offer a holistic approach to help you navigate both the commercial and contractual complexities of running a business. Feel free to reach out for an insightful discussion on how we can assist you in taking your business to the next level.


If you’re looking to deepen your understanding of the commercial side of your business, or simply wish to discuss your contractual needs, we at Looking Glass Solutions are here for an informal chat. No strings attached, just genuine help and advice.