Growing a consultancy rarely follows a smooth, predictable path. Early success often comes from founders’ personal networks, long hours, and rapid client wins, but growth soon brings pressure from hiring, delivery, and building internal systems. Many firms feel this strain as teams expand and informal processes stop working. Successful consultancies anticipate growth challenges early, strengthening systems and management while preserving culture, agility, and client focus to scale sustainably.
In management theory, scholars say that professional service firms grow through a series of S-shaped stages from their founding to becoming billion-dollar multinationals. The S-shapes (Figure 3) arise because each stage of growth prompts new challenges that slow progress, forcing leaders to invest time and resources into structural solutions (such as governance, organizational, and financial systems). These solutions then drive a period of accelerated growth, which stalls again when the company encounters new problems.
In practice, things are often different. Two-thirds of founders reported no revenue plateau, except due to bad luck, early client loss, or recessions.
This doesn’t mean the inventors were wrong about the theory; successful founders anticipated inflection points and took deliberate action. In addition, Professional Service Firm automation software has reduced the bureaucracy needed for growth.
As founders usually pay for software per seat, the investment grows gradually rather than around a specific growth point or plateau.Several founders said they disliked managing detailed systems, hierarchies, and bureaucracy, so they exited their businesses before such organizational investments became necessary.
The inflection point that was evident in many firms was less concerned with revenue and more to do with productivity. In the start-up phase, founders are doing everything and have no need for anything but the most basic planning systems. During the growth phase, founders often face demands pulling them in different directions.
One of the founders I coach told me:
‘We’re trying to generate sales for growth, but also know that we need to build the systems to support this….We’re trying to get our new hires up to speed, but also trying to deliver. There just isn’t enough time in the day’.
Sadly, there are no easy answers, which is why the growth phase is often the hardest phase to complete successfully. In addition, in the first two phases, many firms are still working out what their core services really should be. The final stage is the scale phase, where key services and formal systems enable delegation, making operations easier for founders.
If they have built the right engine, they generally just need to keep a steady hand on the wheel, provide sufficient fuel, and perform occasional service. I get annoyed with all the internet advice on ‘scaling’ a firm because, unless you’re a solo consultant or coach offering primarily digital services, you have to go through a lot of pain before you can reach the scaling phase.
That said, many CEOs still recognise when their firm reaches a fundamental plateau or shift, even if profits remain steady. This typically occurs when a firm grows to around 25–35 employees. Beyond this point, operations become more complex, and the informal communication and management systems that once worked start breaking down.
Angrez Saran, who sold 8Works to Oliver Wyman told me:
‘we got to 20 people when sharing the administrative work across your leadership team of three or four people was really hard. We were being pulled into do quite tactical things, which just didn’t make sense. So we made a conscious decision to actually outsource as much of it as possible and then bring in support. We enhanced our operations capability by bringing on an additional person’.
Logan Naidu founder of Dartmouth Partners told me:
‘we got stuck about 20 to 30 person mark for almost two years. I simply couldn’t feed work to everyone at that size. We didn’t have enough great salespeople. And we just didn’t have any infrastructure’.
Angie, who grew and sold Virgo said:
‘we found ourselves at 30 peoplewhere it’s the perfect size agent. You’ve got great mix of clients, a nice mix of people, but you can be in touch, and all over all events. You have to move into a different way of running the business after this’.
Those companies that successfully grew beyond this point did so by bringing in more formal, professional systems. Professional Service Automation, management layers, training, defined roles, reporting, and HR/finance specialists eased growth transitions without harming culture or innovation.
[1]Phelps, R., Adams, R., & Bessant, J. (2007). Life cycles of growing organizations: A review with implications for knowledge and learning. International journal of management reviews, 9(1), 1-30.
[2] Despite S-Curve theories of business growth being taught in most business schools, there is scant empirical evidence for this ‘stage model’. As I have generally focused on successful firms many of which sell before getting to an inflection point, my own evidence in this book is insufficient to test the hypothesis.
