The Business Growth Capability Gap that Engineering Firms Face – and the Four Systems Needed to Close It

Did you know only 2% of Australian businesses hit $10m of revenue? According to the Australian Bureau of Statistics, 98% of businesses never make it.  

If your engineering firm has crossed this threshold, well done, you’ve achieved what most never will. But does continued growth feel harder now? 

And if you haven’t broken out of the 2%, why has growth eluded you? 

Surprisingly, based on our work with many engineering and technical businesses  (which is what we specialise in), the answer is the same… 

The Pattern that Stops Engineering Firms from Growing 

Many firms enjoy initial growth through strong technical delivery, founder relationships, and word-of-mouth referrals. It works brilliantly—until it doesn’t. 

Then growth stalls. Not because the engineering isn’t excellent. Not because the market has dried up. But because the systems that got you here won’t get you to $20 million and beyond. 

What Actually Changes at Scale 

That first phase of growth is about technical excellence and reputation. Your network refers you. Your track record speaks for itself. You win work because people trust your delivery. 

Whether it be getting from $5 to $10 million or $10 to $20 million, the next phase requires something fundamentally different: systematic growth capability that reaches much farther than the founder’s personal network – and operates independently of  it. 

This is the transition most engineering firms never make. Not because they lack ambition or technical skill, but because they don’t realize they’re missing specific growth infrastructure. 

The Four Growth Capability Systems You Need 

Having helped numerous firms navigate this transition, we’ve identified four foundational systems that are critical to scale. Some firms have one or two. Almost none have all four working effectively. 

System 1: Pipeline Generation 

The Question: Do you have new prospect identification and outreach processes that ensure your pipeline flows predictably?  

Most engineering firms have relationship-dependent pipelines. When we ask “How do you generate opportunities?”, the answer is typically: “Referrals from past clients, word of mouth, and very occasional RFP invites.” 

That passive approach has natural limits. Your network is finite. Referrals and RFPs are unpredictable.  

Systematic pipeline generation means you can answer “yes” to these questions: 

• Can you generate qualified opportunities on demand, not just when referrals arrive? 

• Do you have multiple proven lead sources operating concurrently? 

• Can you forecast the next two quarters’ pipeline with reasonable confidence? 

Without this system, your growth capacity is capped at whatever your referral network can support. 

System 2: Competitive Positioning 

The Question: Can prospective clients articulate the reason they should choose you in 30 seconds? 

Here’s a test: Ask three of your staff – or three clients t- o explain why someone should choose your firm over alternatives. Do you get the same answer? Is it defensible and differentiated, or generic? 

Engineering firms often compete on implied and generic capability: “We do quality work, our clients are happy, we have depth of experience, just look at our track record.” But at $10 million+, you’re competing for projects where decision-makers have never worked with you. They’re comparing you against three other equally qualified firms.  

Effective competitive positioning means: 

• You’ve identified and articulated what clearly differentiate you from alternatives 

• Your client-facing team has consistent, defensible talking points 

• Prospects understand your unique value within 30 seconds of encountering you (in person or online) 

Without this system, you compete primarily on relationships and price—both of which limit scalability. 

System 3: Client Engagement 

The Question: Do you have a structured, repeatable client engagement process? 

In terms of growth, winning more work from clients is often your low-hanging fruit. 

Most engineering firms handle each client engagement slightly differently. The founder manages the relationship; the engineers do the work. The approach varies based on who’s available; here’s no documented process from initial inquiry to contract to delivery to expansion; nobody is specifically accountable to growing each client. 

This may work at smaller scale. By $10 million+, it’s become a constraint. You can’t systematically maximize revenue per client. You can’t predict conversion or retention rates. You can’t train new salespeople effectively because there’s no consistent process to train them on. 

Structured client engagement means: 

• You’re systematically identifying expansion opportunities with your existing  clients 

• You have a repeatable process that all team members can follow 

• You communicate regularly with inactive and former clients 

• Without this system, opportunities get missed, and leakage can occur. With it your clients think about you more and you become their preferred partner 

System 4: First Impression Impact 

The Question: When prospects research you online, do they see, read and feel clear evidence of your capability that matches your services and professionalism? 

This is the system engineering firms most commonly underestimate. “We’re engineers, not marketers. Our work speaks for itself.” 

Except it doesn’t—not to prospects who’ve never worked with you. 

Here’s what happens: A prospect gets your company name from a colleague. Before calling you, they Google you. They look at your website. They check your LinkedIn. They’re forming an impression of your business, capability, style and professionalism. They are asking themselves: can they do the work I need done, and do I want to work with them? 

If your digital presence isn’t up to your actual offering, you lose opportunities before conversations even start. 

Effective first impression systems mean: 

• When prospects research you, they see clear evidence of your technical capability and size 

• Your professional presentation matches the quality of your technical delivery 

• Prospects can immediately understand your expertise and credentials 

• You demonstrate your trustworthiness 

Without this system, you’re fighting perception problems that shouldn’t exist.  If they think you look small, then they won’t reach out. Even if your case studies are relevant. 

Each of these systems requires different initiatives to address. We can’t go into all the solutions here (we do across numerous other blogs though), but if you’d like an expanded overview, get in touch and ask for our Growth guide ‘Unstuck my growth’ 

Why Engineering Firms Resist Getting Systematic About Growth 

In our experience, engineering firm owners resist building these systems for predictable reasons: 

“We’re too busy delivering projects.” True. But this is circular logic. You’re busy because you lack systematic growth capability, which means you’re constantly scrambling for the next project, which keeps you too busy to build systematic capability and capacity to manage more work. 

“Marketing is expensive and we’re not sure it works.” Also valid scepticism. Many engineering firms have tried marketing that didn’t deliver results. But these aren’t marketing systems—they’re growth infrastructure. The difference matters. Yes, marketing will have a role to play, which is why you need specialist engineering marketers driving things from your side of the table; and here’s how. 

“Good engineering should be enough.” Maybe it was enough to get you to $5 or $10 million. But it’s not enough to get you to $20 million+. The firms that successfully scale past this threshold all make the same realisation: technical excellence is necessary but not sufficient.

The Growth Capability Gap and What This Means for Your Firm 

Want the uncomfortable truth?  

Most engineering firms operate with gaps in three or four of these systems. They have bits and pieces—maybe solid technical delivery creates good first impressions, or strong founder relationships generate some pipeline—but they don’t have complete, systematic infrastructure. 

That’s the growth capability gap. And it’s why 98% of businesses never reach $10 million, and why even fewer scale beyond it. 

You’ve proven you’re good at what you do by reaching your level. The question is whether you’re willing to build the systems required for the next stage. 

If you’re reading this and recognising your situation, you’re facing a choice: 

You can continue operating with relationship-dependent growth, hoping that working harder and delivering better engineering will eventually translate to sustained scaling. Some firms stay at this plateau for years, even decades with the owner never being able to step away without the risk of it all falling over. 

Or you can acknowledge that your next phase of growth requires different capability and systems than what have in place now, and systematically build what’s missing. 

The firms we’ve seen successfully make this transition don’t do it overnight. They start by analysing which specific systems they’re missing. They prioritise which gaps to address first. They build infrastructure methodically while continuing to deliver projects. 

But they start with honest assessment: Which of these four systems do we actually have in place? Which gaps are constraining our growth most significantly? 

Help to Build Your Growth Capability 

We get it: we’re talking about opening up new workstreams within your organisation that are unfamiliar and some require specialist skills. It’s not as if you have spare resources lying around to do the work, nor can you employ somebody, nor can such system changes be driven from outside. 

This is precisely why we developed the fractional resourcing solution we’ve become known for; we place a part time senior manager inside your organisation to work alongside you, and back them with a range of skilled resources outside to provide implementation skills – from web production to outreach specialists. 

If that sounds of interest, book an initial discovery meeting with Rick Merten here.  

InsideOut Group works with engineering, industrial and technical businesses developing the growth capability required to scale beyond founder-dependent models.