How to Assess Consulting Growth Potential Using the 5R Model

Written by Luk Smeyers | 07 October 2025

Due to my experience working with consulting firms, I am regularly asked by acquisition teams – be it investors or large consultancies – to act in an advisory capacity.

(Not so) fun fact: far too many consulting firm acquisitions fail at the root.

I saw it first-hand.

As a member of acquisition assessment committees, I reviewed dozens of boutique consulting firms that looked great on paper.

They had strong topline growth.
Their margins looked really good.
Their leadership teams consisted of exceptional experts.

However, the financial due diligence and leadership interviews only gave part of the picture. Some firms were commercially fragile. Their “good on paper” status was either luck or a result of short-term strategies.

They were not designed for sustainable performance.

That’s why, next to the usual due diligence, we used an additional lens. We called it the 5R model.

I’ll discuss this model in the article, along with which growth factors appear to be the hardest for consulting firms to embed in their daily practices and long-term strategies. The 5R lens isn’t only useful when a consulting firm is looking for buyers. It’s a way to test whether the business is truly built for long-term success.

The 5R Model of Consulting Growth Assessment

The 5R Model forces consulting firms to ask the hard questions.

First, here is an overview of the model.

Now, let’s zoom in on every growth dimension.

#1. Reputation

Question to ask:

Does the firm carry absolute authority in its market, or is it invisible without organic introductions?

Why it matters:

Consulting firms with strong authority in their market don’t need to cold-call prospects, chase opportunities, and hustle for every introduction. They are known as the go-to experts for a very specific set of problems. They own an issue.

This level of authoritative reputation drives inbound opportunities, pricing power, and revenue reliability. Clients seek out these firms.

Furthermore, reputation offers compound interest – the more visible a firm is, the more opportunities it attracts, the more recognition it gets.

Without a strong market reputation, growth depends on luck and personal networks.

#2. Repetition

Question to ask:

Are there repeatable and compounding offerings and patterns of engagement, or is every project a one-off?

Why it matters:

Repetition separates consulting firms that can scale from those that are forever stuck reinventing the wheel.

Repeatable models scale. They create efficiency, enable consulting firms to set up proprietary methodologies, processes, and systems, and facilitate a predictable mode of work for employees.

One-off projects mean constant reinvention and zero compounding momentum. Every project is custom, which means margins are unpredictable and often erode. Growth depends on finding “the next big client” or increasing the headcount.

Furthermore, repetition is how consulting firms reduce variability in outcomes over the long term. It enables consulting firms to achieve predictable results with each client engagement. This outcome-based consulting is both a powerful way to close new deals and is the perfect defence against AI disruption.

However, outcome-based consulting doesn't emerge from a clever template. It results from focus and repetition, running similar projects over and over again. Recognising the same problems across organisations and identifying patterns. Connecting the dots, compounding the insights, and reducing outcome variance. This can’t happen if a consulting firm accepts everything from everyone.

Oftentimes, consulting firms end up increasing their service portfolio to attract more opportunities, which, ultimately, results in them diluting their value proposition.

#3. Retention

Question to ask:

Do clients return and deepen relationships, or do they disappear after the first project (hitting the project wall)?

Why it matters:

Retention instantly shows whether a firm delivers enduring value. The ability of a consulting firm to turn an initial project into long-term partnership signals their ability to deliver on their promise and the trust they are able to build with clients.

It’s also often a sign that the consultancy is deliberate about creating a client success journey, helping clients achieve the ultimate goal through a series of success milestones.

High retention lowers acquisition costs. Low retention typically means that a consultancy is under constant pressure to chase new business.

#4. Reliability

Question to ask:

Does the firm show revenue reliability with a stable pipeline, or is it living with constant ups and downs?

Why it matters:

Reliable revenue makes firms investable, acquirable, and less stressful to run. A reliable pipeline of revenue allows consulting leaders to make medium- and long-term plans, whether it’s in terms of hiring new staff members, investing in technology tools and other resources, upskilling employees, or experimenting with new/refined offerings.

Instability, on the other hand, burns cash, leadership, and culture. It erodes margins and makes it impossible to make any meaningful long-term strategic calculation. Decision-making is reactive, not proactive.

#5. Return

Question to ask:

Is there genuine pricing power and profitability, or just revenue with thin margins?

Why it matters:

Return is the ultimate test of how much client attraction, pricing power and operational efficiency a consulting firm has. Sustainable profitability funds growth, attracts talent, and protects against downturns.

Thin margins signal weakness. These firms are in constant survival mode. Sure, there might be a few ‘rain-makers’, but when the entire business model and its success depend on a couple of charismatic leaders, long-term prospects are quite grim.

Which Growth Levers Are the Hardest for Consulting Firms to Embed?

“Luk, which of these growth factors trip firms up most often?” – a network member on LinkedIn asked me this question. It’s a great question, so I want to address it here in full.

The most commonly missing growth levers are repetition and reliability:

Repetition: I’ve seen too many consulting firms run on the brilliance of founders – outstanding experts or highly-connected networkers. These firms have lots of clever one-offs. There are too few standardised, compounding offers. You’d see every proposal rewritten from scratch, hero delivery, no playbook. No repeatable pattern = no scale. Without repetition, growth gets stuck in “project mode.”
Reliability: Pipelines are on a never-ending rollercoaster ride in way too many firms that I’ve assessed. They would have a couple of anchor clients or a rainmaker, which created the illusion of stability. However, forecasts were hope-casts. Variance killed confidence.

Close behind are return and retention:

Return: It’s common to see consulting firms with thin gross margins despite happy clients. The culprit was often day-rate thinking – pricing based on effort as opposed to transformational value. Senior time gets written off and delivery variance eats the margin. Without strong margins, every downturn becomes an existential threat.
Retention: At first glance, many consulting firms look okay. Digging deeper reveals their overdependency on one sponsor or one use case. Cross-sell and expansion often happens by accident, not by design. I see too many firms stopping at “they liked us” rather than using that as an opportunity to design a client success journey that would provide these clients with ongoing value.

Reputation is the least often the blocker.

Reputation: Many consulting firms that I audited have a good name in a niche. The problem was turning that name into client attraction with repeatable, reliable, high-margin work. Often, consulting firms fail to take their good name beyond one-off opportunities and instead convert it into a pipeline of stable work with a bulk of revenue coming from existing/returning clients. Yes, reputation can open doors, but without the other Rs, it doesn’t sustain organic, high-margin growth.

Here is a quick test that consulting firms can do. Answer these two questions:

Could the consulting firm run its flagship engagement three times this quarter without rewriting the deck?
Could it lose the top two clients and still hit the plan?

If not, the gaps are Repetition and Reliability :-).

In Conclusion

Looking at firms through the 5R lens allowed me and other assessment committee members to separate the ones with real consulting DNA from those running on opportunism.

The firms that thrived showed scalability and resiliency. They were highly profitable due to optimised costs, low client acquisition costs, repeatable processes, and pricing power.

The ones that struggled were held back by structural gaps, be it the lack of optimised, repeatable, scalable processes, unreliable pipelines, or transactional one-off relationships with clients.

So here’s the reflection I’d invite every consulting leader-owner-partner to make: If we were to assess your consulting firm tomorrow with the 5R model, how would it score?

Which Rs are your strengths, and which ones are quietly holding your firm back?

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