What nobody tells you about scaling a boutique consulting firm

Securing investment - or an exit - for your boutique firm is the toughest it's been in the past three years.

That's according to Mike Hicks, the CEO & Founder of Catalysis Advisory, who I spoke to in the latest episode of The Consulting Pulse podcast.

Catalysis Advisory specialize in helping firms navigate growth transition & investment, and Mike joined me to discuss the strengths that set firms apart... as well as the blind spots that hold them back.

Here are six key takeaways from the session about scaling your consulting firm - featuring some uncomfortable truths as well as some hidden gems.

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1) The hidden constraint holding firms back

When boutique consulting firms scale, the biggest bottleneck is often at the top.

As Mike put it:

"If there isn't capacity in the top team to work on the business, then chances are, any good intentions will get blown away."

He's talking about senior leaders still delivering in their firms... still selling, managing, leading and, unfortunately, firefighting.

Founders often feel like they're juggling twenty different roles - and this is where Mike recommends role peeling: finding a way to strip back - whether it's via delegation or automation - these roles over a period of time.

If founders don't peel them away, then there won't be any capacity to execute the strategy necessary for growth.

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2) Growth breaks skeletons

Many consulting firms arrive at private equity conversations after their best three years ever.

And that's precisely where the danger lies.

Only ~37% of companies that grow at 20%+ for three years manage to keep growing for two more. The rest stagnate, shrink, or die.

That's because rapid growth often masks structural fragility, and revenue grows faster than the skeleton holding it up.

A strong run of client wins can mask:

• Fragile delegation
• Overstretched founders
• Thin middle management
• Informal processes that no longer scale
• Cultural cracks papered over by growth

Mike's recommendation?

"You'll need six months just to rebuild and allow the next stage of growth - otherwise, you're just going to fall over."

So rather than hyper-focusing on the next stage of growth, think about whether your organizational skeleton can actually carry that next stage.

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3) Every professional services firm's weak spot

When Mike compares professional services firms with other growth businesses, one area consistently stands out: delegation.

Professional services firms are struggling significantly more than other firms with delegation - because status comes from client delivery.

Senior leadership feel they're too busy to fix the problem of being too busy, on top of feeling like they're sacrificing their professional capability for the sake of the firm.

"There's nothing sadder than when I come across a chief exec who says they're too busy to bring in the resources to be less busy - there's just no way out of that cycle."

To break this cycle, it likely requires a level of discomfort. But intentional delegation is the best way to stop polishing the goldfish and start polishing the tank.

“A lot of companies spend time trying to polish the goldfish in the aquarium. Whereas actually the most effective way of improving the fatness of the fish… is to improve the the quality of the water.”

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4) You have hidden "pockets of oxygen" in your firm

Most firms have hidden, untapped potential below the top team - which Mike terms "pockets of oxygen".

While senior leaders are (typically) the bottleneck, talented mid-tier leaders often go underused and, as a result, feel frustrated.

"A lot of these people are frustrated because they're not given the opportunity, and they're usually less overstretched than people at the top."

The smart move, then, is pretty clear: mobilize time lower down the organization.

Initiate cross-functional working groups. Structured problem-solving assignments. Delegated improvement projects. Strategic taskforces.

This will do four simultaneous things:

1. Reduce executive bottlenecks
2. Produce better solutions
3. Build cross-functional alignment
4. Develop future leaders

These hidden gems aren't as rare as you might think, they're just usually univited.

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5) Consulting firms aren't as 'different' as they think they are

There's a common belief in boutique consulting firms that they're unique - that their challenges are special.

However, the data says otherwise.

Across thousands of executive surveys...

• Strategy quality? Similar to other sectors.
• Competitive intensity? Similar.
• Growth ambition? Similar.
• Team effectiveness? Similar.

Here's where consulting firms do differ:

• Delegation - as we've established, they struggle with this more than other sectors
• Organizational maturity - they often rate themselves as less scalable
• Processes & KPIs - they report weaker systems & data infastructure
• Leadership development - structured coaching & development tends to lag

Consulting firms might be world-class at advising clients on improving their own problems... but they slack on fixing their own.

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6) Don't pretend you've "nailed it" when seeking PE investment

Self-awareness matters more than perfection when it comes to private equity.

"There's nothing worse than a team who think they've got it all nailed down, and then you find out there's holes all over the place."

Investors don't want a spotless record, but they do want acknowledgement and accountability for holes in your operations, strategy, and finance.

Because private equity isn't just about getting money - it's a partnership.

"The whole point of going to private equity is not just to get the money, but to get a partner to help you navigate through the next stage of growth."

And this partnership works best when leadership teams show true clarity.

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Final thoughts

The firms that scale sustainably are the most honest, not the loudest.

They ask:

• Where are we fragile?
• Where are we founder-dependent?
• Where are we underdeveloped?
• Who are we underusing?
• Are we building managers, or just promoting great consultants?

The uncomfortable truths are usually where the hidden gems live.

And the firms willing to look there first are the ones most likely to keep growing when the easy growth ends.