White Paper: From Cottage Industry to Professional Companies
By VBP on May 4, 2026
With consumer demand for advice outstripping supply, many advice businesses are rapidly scaling.
The potential benefits of scale include increased capacity, operational and cost efficiencies, and higher profit margins.
In an increasingly complex, fast-moving environment, scale can be a true competitive advantage.
However, the initial process of scaling up often results in declining earnings before interest, taxes, depreciation and amortisation (EBITDA) margins. This is so common that many believe it’s inevitable. But why is this so and does it have to be?
Fast growing businesses often plateau and even struggle for periods. Sometimes it’s because of market changes but all too often it’s a case of increasing complexity and inadequate resources.
Most businesses begin as small, founder-led practices. In cottage industries, they are kick-started by a handful of clients, mainly family and friends. These personal networks are critical, not just in advice, but in businesses of all sizes, however, reliance on personal relationships can limit growth.
Furthermore, as businesses get bigger and evolve, many outgrow the leadership and talent that established and led them through the early stages. In many cases, founders are not the right people to take a business to the next stage, often because it’s not what they love to do.
We see this play out all the time in other sectors and industries but it’s less pronounced in advice because there have been historically so few businesses of scale.
And yet inside many growing advice businesses, principals are realising this same truth.
They’ve built a successful practice over many years and have ambition to achieve more but, in their heart, many prefer to focus on engaging with clients and mentoring up-and-coming advisers.
That’s the part of their job they enjoy the most - not the day-to-day running of an increasingly complex and expanding business.
As a result, an interesting trend is emerging amongst scaling firms. They are bringing in leaders with corporate experience and skills. These are the types of leaders who are more attuned to running large organisations than small practices.
On the other hand, there are also advisers who love the challenge of evolving into a CEO and learning how to run and scale a business. They no longer have the passion to remain an adviser.
Whichever the case, scaling a mid-tier advice firm requires the owner/s to make a choice to either be a great adviser or be a great CEO. At scale, they cannot do both.
Successful CEOs, be they an internal or external hire, understand that scaling and corporatising requires different choices and skills around operational efficiency, risk management, people leadership and strategy.
A declining EBITDA margin is not inevitable, demonstrated by at least some the many thriving large advice businesses.
What does scale mean?
Having a dedicated CEO, in and of itself, is not the key to scaling and corporatisation.
Many advice businesses have a CEO or General Manager and are still run like a small practice.
At a high level, a CEO’s role is to set and execute an organisation’s vision and strategy; establish and manage the broader leadership team; and make vital business decisions on matters like the allocation of capital and resources, risk management and company culture.
Ultimately, they are responsible for the performance and success of a company.
The biggest obstacle
Arguably, the biggest challenge of scaling is overcoming...
