Business leaders reveal the cash flow pressures, hiring missteps and cultural shifts that emerge when SMEs scale from five to 20 employees this week.
This week’s edition of Let’s Talk asks five business leaders and advisors to share their experiences: What bottlenecks appear most often when SMEs scale from 5 to 20 people?
The leap from a small, agile team to a mid-sized operation is one of the most challenging phases of business growth. What works with five people often breaks down completely at 15 or 20. Informal communication becomes chaotic. The founder who once knew every detail suddenly loses visibility. Systems that felt unnecessary become critical.
We spoke to business leaders, advisors and growth specialists who’ve either navigated this transition themselves or guided others through it. Here’s what they had to say about the systems, leadership approaches and mindset changes needed to scale successfully without losing what made the business work in the first place.
Kim Owen-Jones, General Manager Customer Acquisition, MYOB
“For many SMEs, growing from five to 20 employees is a critical turning point. It’s where complexity ramps up and three priorities emerge: margins, people and systems.
MYOB’s November Bi-Annual Business Monitor suggests that while revenue and business confidence often stabilise at this stage, costs continue to rise. Operating expenses and wages increase, putting pressure on profitability. Around one in three scaling SMEs (33%) report tighter profit margins, reducing their ability to hire, invest in training or absorb the inevitable missteps that come with growth.
People management is often the next challenge. Hiring the first wave of employees is exciting, but it also brings new demands. Wage expectations, HR processes, compliance and performance management can quickly become time-consuming, pulling founders away from strategic priorities and day-to-day operations.
Systems are the third bottleneck. As businesses shift from informal to more structured ways of working, many find their existing tools no longer keep up. Around 16% of growing SMEs say they will be increasing investment in IT systems and processes in the next 12 months to support business growth.
The opportunity lies in how businesses respond. SMEs that prioritise visibility across cashflow, productivity and people – and adopt digital tools that simplify rather than complicate – are better positioned to scale with confidence. By addressing these pressures early, businesses can build stronger foundations and grow into more resilient, high-performing organisations.”
Michael Haynes, SME Business Growth Specialist, Listen Innovate Grow
“As CFO Advisory firms and B2B Tech companies scale from 5 to 20 staff, three bottlenecks show up fast: (1) inconsistent lead flow and a “leaky” pipeline, (2)pricing/packaging chaos that fuels scope creep and margin erosion, and (3) client concentration risk where a few anchor clients carry too much revenue.
Practical Go to Market (GTM) fixes start with going deeper on your Ideal Client Profile and target buyers: who they are (roles + influence), their top priorities, and—crucially—HOW they buy (self-research, peer referrals, ecosystems, risk/credibility checks). Use these insights to build a predictable, Buyer-Driven GTM Strategy: clear positioning, repeatable offers, and a consistent engagement + referral engine-based on delivering A-I-R—Advice Insights and Recommendations.
Next, tighten your product/service strategy: tiered packages, explicit service levels, and “what’s included” boundaries aligned to buyer value drivers. This reduces custom work, shortens sales cycles, and protects capacity.
Finally, protect and grow anchor clients with proactive account plans (including success metrics and expansion plays), while running industry/market analysis to identify adjacent segments, partner channels, and new use cases—diversifying revenue and reducing concentration risk.”
Elise Balsillie, Head of Thryv Australia and New Zealand
“Growing from five to 20 staff members, businesses may cross an unseen threshold. Work increases linearly, however, complexity does not. It compounds.
This is where the most common bottlenecks emerge and they are rarely about motivation or capability. They stem from systems, roles and decision-making models that were never designed to support more than a handful of staff.
The first bottleneck is decision flow. Business owners remain the centre of every approval, escalation and judgement call. What once felt hands-on becomes restrictive, slowing momentum and creating frustration for teams waiting on direction.
The second is operational sprawl. As responsibilities are distributed, information may fragment across tools, inboxes and staff. Without shared processes, work is duplicated, follow-ups are missed and customer experience becomes inconsistent.
Visibility is the next pressure point. Leaders lose real-time insight into performance, workload and risk. Small issues remain hidden until they surface as delayed payments, missed opportunities or customer dissatisfaction.
I have seen businesses navigate this stage more effectively when they treat structure as an enabler, not a constraint. Clear ownership, connected systems and shared visibility remove friction and restore pace. Sustainable growth depends on reducing complexity before it compounds further.”
Tracy Ford, People Capability Consultant, Concept HR Services
“When a small business grows from 5 people to 20, the way work gets done has to change.
At 5 people, the owner can answer questions, make decisions quickly, and keep everything moving.
At 20, that same approach turns the owner into the bottleneck. Everyone still goes to them for answers and approvals, and the owner keeps stepping in because they care, they know everything, and it feels good to be needed.
So, they appoint a Team Leader.
But then the Team Leader becomes the second bottleneck.
Why? Because the team doesn’t change their habits, the owner doesn’t push back, and the Team Leader often lacks the skills or authority to lead. If they can’t approve anything, they just escalate back to the owner and become a middleman.
To fix this, start with role clarity. The owner needs to define responsibilities, accountability, and performance expectations.
Then communicate the change to the team so everyone understands how the structure will work.
Next, give the Team Leader real authority, with clear decision-making boundaries and implement three steps:
- Weekly one-on-ones for priorities and coaching
- Leadership training and development
- Owner redirection when staff go straight to them
That last one changes behaviour and removes the bottleneck.”
Brad Eisenhuth, CEO, The Outperformer
“Scaling is a critical turning point where the hustle that got you started can become the bottleneck holding you back. Proof of this is our State of Australian Business Performance 2025 report, which revealed that while 77% of owners feel confident, only 14% are achieving consistent results. This disconnect between perception and reality usually stems from three specific scaling bottlenecks:
- ‘What’s Next?’- reactive behaviour where everything is urgent, and you’re only focused on the next day or next week. You need to move from ‘reactive’ to ‘systemised’ by standardising functions and building communication rhythms for planning and improvement cycles, or you’ll be constantly putting out fires.
- Accountability – Focused on requiring the team to get work completed, instead of achieving results or outcomes and critical progress. This permeates from hiring ‘doers’ and not ‘outcome owners’, and is a result of poor role or system design.
- Cashflow – Rapid growth inflates overheads, often leaving the business with no oxygen (cash) to fund necessary decisions or healthy investments because of past loose spending.
Overcoming these requires deep diagnosis, not cookie-cutter coaching. You must build systems that allow your people to own outcomes, ensuring your business generates sustainable profit, not just noise.”
Scott Burridge, Partner – Accounting and Business Advisory, Findex
“When SMEs scale, the most common bottlenecks shift from “doing the work” to “managing how the work gets done.”
The first is Owner Dependency. The business still runs through the owner like an overloaded power board. Decisions, client relationships, and approvals remain concentrated with the owner. Delegation and documenting what “good” looks like allows the business to keep moving without the owner in every room.
In small teams, direction lives in the owner’s head. As the team grows, that unspoken vision turns into mixed messages, with people rowing hard but in slightly different directions. A clear, regularly communicated vision helps teams make better decisions without constant oversight.
The second bottleneck is a lack of structure. Without clear roles, priorities, and accountability, productivity decreases, and frustration rises. Role clarity, KPIs, and regular check-ins can make a big difference.
Cash flow is another common bottleneck. Headcount grows faster than revenue consistency, and suddenly, the bank balance feels like it’s on a treadmill. Regular cash forecasting and pricing reviews are essential as the business grows.
Finally, people management becomes a surprise bottleneck. Strong individual performers are promoted into leadership without a manual. Investing early in management capability helps avoid turning a growing team into an organisational “Home and Away”.
Greg Wilkes, CEO of Develop Coaching
“The jump from five to twenty people isn’t growth, it’s a rebuild. And most SMEs don’t see that coming.
The first bottleneck is the founder. At five people, you’re the hub. At twenty, that breaks. Decisions stack up. Everything waits for you. You become the constraint without realising it.
Next comes role confusion. Early hires are generalists. As headcount grows, no one’s clear who owns what. Jobs get half-done, duplicated, or missed entirely. Accountability gets fuzzy, fast.
Then systems creak. What worked on WhatsApp, spreadsheets and memory collapses under volume. More people means more handovers, more errors, more rework. Without basic processes, productivity goes backwards before it goes forwards.
Cashflow is another pressure point. Payroll lands weekly or monthly, but income often lags. Growing teams amplify timing gaps. Profitable on paper, stressed in the bank.
Finally, management capability. The skills that make a great doer don’t automatically make a good manager. New managers get promoted without training, and performance dips quietly until it hurts.
The common thread? SMEs try to scale output without upgrading structure.
The fix isn’t hiring faster. It’s clarity. Clear roles. Clear decision rights. Simple systems. And founders stepping out of the weeds before the weeds choke the business.
Scale isn’t about more people. It’s about better design.”
Trent Bowes, Production Manager at Revolutions Print
“The most common bottleneck is dependency on one singular person, whether that be the owner or someone in management.
At five people, this person may be involved in every decision. If you continue operating like this when you get to 20 people, this creates a clog where this person becomes a single point of failure and will slow down the entire team.
At Revolution Print, we focus on moving from ‘doing’ to ‘leading’ our team, giving them the responsibility and empowerment to make their own decisions.
Jeff Bezos explains the framework “one door and two door decisions”, which is used for distinguishing between irreversible decisions (one-way doors) that need careful, slow consideration and reversible decisions (two-way doors) that can be made quickly and iterated upon.
Most of the ideas and decisions that our team discuss will be two door decisions, meaning that we can trial ideas quickly. If they deliver value, we adopt them.
Through The Inkers program, the Visual Media Association’s industry led program for emerging leaders, I have seen how shifting focus from day-to-day operations to strategic leadership helps remove decision bottlenecks early and empowers teams to make better decisions.”
Maria Kathopoulis, CEO & Chief Marketing Officer at UNTMD Media
“The biggest bottleneck is not talent. It’s decision-making velocity.
Harvard Business Review found that companies scaling past 10–15 employees without formal decision frameworks experience a 30% drop in execution speed. Founders remain the bottleneck. Everything routes through them.
At this stage, communication breaks, roles blur, and priorities multiply. Revenue grows, but systems don’t. The result is firefighting.
The fix is clarity. Clear ownership. Clear metrics. Clear escalation paths. Every recurring decision should be owned by a role, not a person.
Another hidden bottleneck is data fragmentation. Teams operate in silos, reporting manually, reacting late. Businesses that centralise data into one operating system outperform peers by 20% on profitability, according to Bain.
Scaling doesn’t fail because of ambition. It fails because businesses rely on memory instead of structure.
Systems scale. People burn out.”
Melissa Foord, Account Manager, Scott
“Bottlenecks appearing in the workplace after a growth phase? This is entirely normal when SMEs scale from 5 to 20 people but there are ways to manage and overcome the effects. Communication breakdown can occur. When teams are small it is very easy to rely on verbal ad-hoc communication but when a team grows, so does the hustle and bustle. People are busy and in the process it becomes harder to verbally communicate with everyone.
If the style of communication does not shift with the scale of growth, things can and most often will start to go pear shaped. Conflicting priorities can arise or often people “didn’t know something has changed”. The key is to close the informal to formal gap. Regular written meetings or updates (plans, decisions, metrics) and a clear ownership of projects will alleviate any miscommunications.
Hiring quality dropped? Look at whether the scale has meant that urgent hiring has taken place. When hiring in a rush to keep up with growth you may find that key hiring tools have not been at the forefront of the recruiting process. The scale may have added pressure on the available resources. A lack of defined standards, structured interviews and a sound onboarding process are all a recipe for draining time, money, morale and momentum while weakening the team. Every hire is a force multiplier – or a drag. Hire right, or pay for it every day. The standard you hire is the company you build!”
Catie Paterson, Director, Blue Kite HR Consulting
“Scaling from 5 to 20 people is a pivotal stage for any SME—and it’s where hidden bottlenecks often surface. The most common? Communication breakdowns. As teams grow, informal chats and quick decisions give way to confusion and mixed messages. Suddenly, what worked at five people creates friction at twenty.
Another frequent bottleneck is role clarity. In small teams, everyone wears many hats. As you scale, not redefining roles and responsibilities can lead to overlaps, gaps, and frustration. Leaders often underestimate the need to formalise processes, resulting in inconsistent performance and missed opportunities.
A third challenge is culture drift. The values and energy that fuelled early success can get diluted. Without intentional effort, it’s easy to lose the sense of belonging and shared purpose that makes small teams thrive.
The solution? Prioritise clear communication, define roles early, and be deliberate about culture. Investing in your people—your greatest asset—ensures your business can spread its wings and soar through every stage of growth.”
Riaza Manricks, Leadership and Performance Coach, Reimaging Business
“One of the biggest bottlenecks when SMEs scale from 5 to 20 people isn’t systems, strategy, or even cash flow. It’s leadership.
At this stage, founders often underestimate just how much people leadership the role now requires. Suddenly you’re no longer just doing the work; you’re part firefighter, part childcare worker, part therapist, and occasionally the “bad guy.” You’re managing emotions, mediating misunderstandings, putting out spot fires, and still need to keep the business moving forward.
Setting clear expectations and actually holding people to them becomes critical and uncomfortable. Coaching and mentoring take time. And feedback isn’t just praise anymore, it has to include the hard conversations most leaders avoid.
At the same time, culture doesn’t magically scale itself. Founders have to be intentional about behaviours, values, standards, and how people treat each other. The foundations you set now determine whether people love coming to work or dread it.
Growth doesn’t break businesses, weak leadership does. The jump from 5 to 20 people forces founders to grow faster than their teams. Those who step up create momentum but those who don’t become the bottleneck themselves.”
Morgan Wilson, Founder & Director, creditte accountants & advisors
“At five people, everything runs on proximity. Decisions are fast, communication is informal, and the founder is across everything. At twenty, that same approach quietly breaks. Roles blur. Accountability softens. The founder becomes the bottleneck without realising it.
We see three issues come up repeatedly.
First, decision congestion. Too many approvals still flow through one or two people, slowing momentum and frustrating good staff.
Second, process debt. Systems that “worked well enough” at five people can’t handle volume, handovers, or mistakes at scale. Errors increase, rework creeps in, and margins quietly erode.
Third, financial fog. Headcount grows faster than clarity. Owners hire ahead of systems, not ahead of insight, and suddenly cash feels tighter even though revenue is up.
The fix isn’t complexity. It’s clarity. Clear roles, simple decision rules, and numbers that show what’s really happening. Growth only works when the business structure grows with the team.”
Shoraye Khatter, Founder, Blue Moon Marketing
“Scaling from 5 to 20 people is the ultimate “filter” for entrepreneurs. At five, you operate by osmosis; you’re a family in the trenches. When you scale to twenty, you need to have a system or a blueprint in place.
The first bottleneck is always The Founder. You are the biggest ceiling on your business. If every decision (from coffee beans to client strategy) still runs through you, you haven’t built a business; you’ve built a high-stress job. You must shift from being a “Chief Doer” to being a “Chief Architect.”
The second is Communication Debt. The informal chats that drove your early success won’t scale. Without “battle-tested playbooks” and clear systems, silos emerge, and momentum dies. You’re no longer managing people; you’re managing the systems that manage the people.
Finally, you hit the Specialist Gap. The generalists who helped you survive the chaos often lack the depth to own a department. To scale, you must stop hiring for “hustle” and start hiring for “expertise.”
It is important for SMEs to build a system that can run without you. It is always important to level up, or you might get left behind.”
Les Moir, Founder, Business Consultant & Digital Employee Specialist, ROI Intelligence
“This is the moment a business discovers it has outgrown founder-led momentum and earned the right to mature.
At five people, the founder is the system. Decisions are intuitive, client relationships are personal, and progress is driven by proximity. That model works because volume is low and complexity is contained. As the team moves toward twenty, the business crosses a quiet threshold. What once felt like leadership now becomes dependency.
The bottleneck that appears is not capability, ambition, or demand. It is structural. The founder remains the central decision-maker, the quality controller, and often the client safety net. Delegation starts to strain, handovers multiply, and client experience becomes inconsistent, not because people don’t care, but because clarity has not yet replaced closeness.
This is where business maturity begins. The shift is not about stepping back, but stepping up into design. Systems must move from being implied to explicit, especially around how clients are responded to, progressed, reassured, and retained. When that happens, the business stops relying on key people and starts compounding through structure.
Businesses that recognise this moment early unlock their next phase of growth. Those that don’t remain successful, but constrained by their own leadership.”
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