BenchPress 2023 – Smaller consultancies are not prepared for an economic downturn

Despite growth in 2022 and optimism for 2023, profits of independent consultancies in UK&I are in significant decline.

We have also found that not enough is being done to guard against current and future economic uncertainty.

The results of the Consultancy BenchPress survey, the leading benchmark survey for sub-£30m consultancies in the UK and Ireland, reveal that in 2022, 82% of consulting firms grew, with nearly half of those growing by more than 25%.

However, the benchmarking survey, which is a collaboration between us, The Consultancy Growth Network, and The Wow Company, found that rising wages, increased associate costs and widespread discounting have contributed to a significant drop in gross margin (55% in 2020 to 42% in 2022).

This drop in gross margin has had a knock-on effect on remuneration for consulting business owners who are, on average, earning less now than during COVID. Our survey respondents also identified an impending recession as their biggest external threat. However, our analysis confirms that founder-led consultancies are not taking the necessary action to mitigate the risk of a recession and protect their businesses in the future. Over-reliance on a single client, under-investment in infrastructure and sales capability, and a failure to get closer to clients all put the future of some in the sector at risk.

The Consultancy BenchPress Report

The Consultancy BenchPress Report is compiled from the results of the survey of nearly 250 consultancy owners and presents comparable Key Performance Indicator data alongside insights, tips and tools to support the growth of ambitious founder-led consultancies.

In addition, this year’s full report, now available to survey participants and members of The Consultancy Growth Network, includes the specific actions consultancies need to take to protect themselves, and even thrive, during the impending recession.

“The results of our survey are a wake-up call for those consultancy owners who are not spending enough time working on their business,” says Marc Jantzen, Founder and CEO of The Consultancy Growth Network.

“Despite acknowledging the threat of the recession, they are not focusing enough on profits, pricing, new business, client account management and all the other things they need to be doing to continue to grow through 2023.”

Real and relevant comparable KPI data

For three years, consultancy leadership teams have been integrating benchmarks from the Consultancy BenchPress Reports into their board meetings and targets. “Now, more than at any time since 2020 when Consultancy BenchPress began, dedicating the time to look underneath the bonnet could mean the difference between consultancy owner blind optimism and justified confidence,” explains Marc.

“Based on the evidence gathered in our survey and the knowledge and lived experience of those in The Consultancy Growth Network community, we have identified six key opportunities for boutique consultancies to raise their game,” explains Peter Czapp, co-founder of The Wow Company and BenchPress. “These show consultancies what high performance looks like in the sector and enable them to prepare for what’s coming next.”

An abridged version of the Consultancy BenchPress report is available to everyone via the link below. The full version is accessible to members of The Network via the Growth Hub.