The 150 Employee Growth Trap
Over the past month, I’ve been on the road working with AEC and other professional service companies on their strategic plans. I’ve observed a similar theme with many of them as they approach the 150-employee mark. They are no longer small firms. They have real depth, established markets, great reputations and leadership teams that have grown up together. Most are well regarded and financially sound.
And yet growth slows. And, they wonder, why? Is it us? Are we not doing something? For those who have boot-strapped their organizations this far, the challenge is a head scratcher. At this stage, strategic conversations tend to become increasingly tactical. Should we expand into a new geography? Add a service line? Pursue an acquisition? Adjust the structure? The analysis is usually thoughtful. The debate is serious. But the friction underneath tells a different story.
Recently I spent time with a well-run employee-owned firm in this size range. Strong culture. Respected CEO. Ownership concentrated with a majority shareholder and a small group around the table. Every growth discussion eventually returned to the same tension. Some saw expansion as necessary to remain competitive. Others were more cautious about risk, capital, and investments. Emerging leaders were capable, but not yet meaningfully invested as owners. No one fundamentally disagreed about how to grow. They disagreed about appetite, time horizon, and what the firm was ultimately trying to build. It wasn’t a strategy problem. It was an alignment problem.
Firms at this stage often believe they are debating tactics. In reality, they are confronting institutional intent. What is our end-game? Are we building a regional legacy firm? A national platform? A long-term evergreen company designed to steward itself across generations? Or something else? Those are ownership and governance questions. Until they are answered directly, tactical debates tend to circle. Expansion feels heavier than it should. Capital discussions become political. Relationships get strained. Leadership development slows because the destination is unclear.
When intent is explicit, decisions simplify. Capital structure aligns with ambition. Equity distribution reflects time horizon. Leadership pathways become clearer. Investments required reveal themselves as more obvious. Before refining your strategic plan yet again, pause and ask two more fundamental questions at the Board and ownership level: What are we actually building? Why is it important to us?
Scaling from 150 to 250 or 500 people is less about operational complexity and more about stewardship clarity. Growth by debate exhausts an organization. Growth by design steadies it. The firms that endure decide what they are building first. The tactics necessary to move forward then reveal themselves.