On the novels, I carry out at least three edits. The first one is to cut out mistakes, repetitions and so on. The second edit is to ensure the story does make sense and to strengthen things as I need to and ensure there is consistency in the plot and my characters (unless the lack of consistency is part of the plot of course). The third edit is to try to read the manuscript as if I'd never come across it before and to see it from a would-be agent's/publisher's viewpoint. I think one big danger to any would-be author is to get too close to the story and as a result not to be able to see its faults so trying to read it from an outsider's perspective helps overcome that.
I don't even think about trying to submit work before I've gone through all of this. And I have used outside agencies in the past, notably the Hilary Johnson Advisory Service, which I found really useful and reasonably priced. I try to remind myself the whole point of editing is to make the story as good as I possibly can make it before trying to send it out to the market and therefore it is worth getting it right.