The 20-staff wall: why engineering firms stall before they scale

Across Australia’s engineering, industrial and construction sectors, 94% of businesses with staff employ fewer than 20 people. Right now, those businesses are growing much more slowly than their bigger rivals. 

2024-25 ABS Australian Industry data shows sales revenue for firms with 5 to 19 staff grew just 1.3% compared to 3.7% for firms with 20 to 199 staff, roughly in step with the 3.4% for businesses with 200 or more.  

And employment in the 5 to 19 band almost stalled at just 0.4% growth. Needless to say, a team only makes sense when you can keep it fed with the right work at the right margin, and many owners in this segment are finding they can’t. 

So, the pressure isn’t spread evenly, but if you run an engineering or industrial business with somewhere between fifteen and fifty people and are struggling for growth, you’re not alone. This article unpacks some of the reasons and implications of these troubling facts. 

Why it’s harder under 20 right now 

CreditorWatch describes a three-way squeeze: inflation and energy costs lifting expenses, higher interest rates tightening debt servicing, and softer demand making it hard to pass costs on. NAB has found small business input costs are increasingly outpacing the prices those businesses can charge. 

Large firms can absorb that. Smaller ones wear it.  

There’s also a structural problem under the cyclical one. A February 2026 paper from Industry Innovation and Science Australia found a smaller share of mid-sized firms than in comparable OECD economies, and that mid-sized firms here are more likely to shrink back to small than grow to large.  

In other words, the reward for getting through the 20-employee ‘ceiling’ is real. But so is the drag holding that back. 

Why 20 is the wall 

The data defines the significance of that number; experience working inside many small to medium engineering businesses shows us why it’s such a wall to get through. 

Below about 20 staff, the owner is the business development function. Work comes through their relationships, their reputation and their phone. That holds until the business needs more work than one person can find, while that same person is also running delivery, quoting jobs and managing the team. 

That’s where firms start taking whatever the market hands them. They quote because the job is there, compete on price because they have nothing else to compete on, and fill the pipeline with volume that turns out to carry no margin. Volume at the wrong margin is how a busy business can go broke; it’s the trap a cost squeeze punishes hardest. 

Getting past 20 means work has to be found without the owner personally finding it. 

What separates the firms that get through 

The firms that cross the line have made finding and winning work a system rather than a reaction. They know who they want to work with before those clients ever call. They’re visible to the right buyers early, so they’re in the conversation before price becomes the only lever left. They can afford to say no, which is the clearest sign a business has stopped being at the mercy of its pipeline. 

None of that is luck, effort or market timing. Most owners at this stage assume growth has stalled because they need to try harder, hire a salesperson, or wait for conditions to improve.  

Wrong. Businesses under 20 aren’t short of effort. They’re short of a reliable, systematic way to win the right work on purpose. 

That has a name engineers tend to distrust, so let’s first say what it isn’t: it’s not advertising, and it’s not brand for its own sake.  

It’s the capability and methodology that decide which work you win, from who, how you’ll find it and at what margin, the same way your finance function decides whether you get paid and your operations function decides whether you deliver.  

Yes, this is what modern B2B marketing actually is. 

Most small to medium engineering firms treat every other core function as essential and this one as optional. And the numbers above show the result. 

Getting past the wall 

Getting past 20 staff is hard right now. Costs are outrunning prices, rates are higher, demand is softer, talented engineers are snapped up by bigger firms, and the Australian economy has a long habit of pulling mid-sized firms back down. 

The firms that break through don’t do it on technical capability – everyone at this size can do good work. They do it by making business development something the business does, not something the owner does. Past 20 staff, that stops being optional. It’s what lets you keep the team you’ve built. 

The fix is building capability in a part of the business you’ve probably never paid attention to. 

For a straightforward way to see where the capability gaps are in how your firm addresses growth, we created a free online Growth Capability Gap Assessment. It’s a great place to start breaking through that stubborn 20-person ceiling. 

Growth, driven from the inside out.