My editing philosophy is "it's never done". A part of me loves it when a publisher takes absolutely ages to reply (a big publisher has had one of my books for over a year and a half. . . but who's counting?), because when* they reject it, it's like a present that I get to dive into editing. . . especially when they give comments.
Right now I'm editing last year's nanonovel. I did about five drafts last year and thought it was pretty good (and had a beta look at it too), then the first publisher I sent it to basically said, "Really good, but doesn't make sense" and I realised the magical rules weren't clear, and needed a complete rethink. I left it alone for about six months, then figured out a better magic system, put it into the book in one draft, and kept editing, ready to send it off at the end of this year.
I'm having a WONDERFUL time re-immersing myself in the book. I'm entering it in a competition (Terry Pratchett something something) that required it to be about 30,000 words longer (than the original 50) so I added about 17,000 in new chapters, and I'm confident the rest will magically appear through editing (adding depth and sensory detail to existing scenes always makes them longer, even when I cut the bad bits). As I write, it's at 71,000, and I've barely started the close edit.
The first thing I did was do a basic go-through, with chapter-by-chapter notes keeping track of the plot, what characters look like, and the injuries of the characters (it has a short time-span, so someone who sprains their ankle in chapter one will still be limping at the end). I put injuries in orange, and things to change in red (eg. "Danny is mad at Amy for charging armed police and other risky behaviours - discuss it this chapter").
Then I looked at the structure and added all the new chapters in places I thought they fit. Then I did another full rough edit, noting on paper the way the five plot lines develop (columns and numbers), and exactly how many days it all takes (so I can add a ticking clock, and keep track of whether something happens on a Monday or a Saturday). I put marks next to the weakest chapters so I know to spend extra time on them.
Now that the structure is sound, I'm going through just one or two chapters in a day, trying to make each one spectacular with sensory detail and tension, while also making sure at least two plotlines increase in tension (and various other edit-y things). And I have another bit of paper with maps of all physical areas. Three chapters are on a crit forum on another site, and if I have time I'll get my partner to do a full-book edit (he's off work between xmas and new year's so that should be good).
So I have one physical file of notes, and three pieces of paper, all of which I'll throw away at the end of this - so next time, I have no preconceived notions of what a chapter is about.
When the close edit is done, I'll spell check and then do a final read-through just to check things are in order before sending it off.
*technically "if", but so far it's "when"