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Growth Opportunities in the UK management consulting sector

How can your Management Consulting Firm smartly use Debt Capital to grow?

With the right strategy and resources, there is currently a lot of growth opportunities in the management consulting sector. One way that small businesses can leverage these opportunities is by using debt capital to expand their operations. 

In our latest blog, we look at the current sector landscape, the winds of change and the opportunities they create, plus how debt capital can be a strategic source of funds to reinvest and grow your business. 

Sector Landscape

The global management consulting industry continues to grow, driven by The Big Four – Deloitte, EY, KPMG, and PwC – accounting for close to US$200b in revenues between them in 2022.

But the industry is far broader in terms of management consulting firms, some of which only undertake ‘pure’ management consulting work, and others which sit as part of larger firms that undertake other consulting areas such as IT systems development.

The UK management consulting market – which includes England, Scotland, Wales and Northern-Ireland – is worth around £15 billion, making it Europe's second largest consultancy base. Growth has been strong in recent years, ranging between 6% and 10%.

So despite facing a period of economic, political and technological change and disruption, the thousands of management consulting firms across the UK continue to enjoy growth and forecast this to continue in 2023.

The UK will see continued competition from the DACH region in Europe (Austria, Germany, and Switzerland), but the sectors future looks positive.

SME Capital Inflation Blog Images-3

Change and trends

Management consulting firms provide a broad range of services, business growth strategy advice to implementing large-scale IT and change management. The role of the consultant goes deeper than implementation advice, from coaching individuals and teams to providing expert hands-on advice in specialised fields. 

However, the one-size-fits-all model employed by many of the larger firms has started to fall away. 

Tailored solutions

A shift to creating tailor-made solutions, with consultants expected to know the operational reality of their customers, and offer adapted services to meet those demands, are benefiting the smaller businesses out there who are more nimble to create this value add model.

Off-the-shelf solutions that are not specific to a client’s situation and needs, despite being ‘tried and tested’, are no longer the go to. 

Now, when going through a consulting firm selection process, clients expect personal, tailored services, or they will look elsewhere.

Big data and digitalisation 

The integration of big data and automation into the management consulting process is another challenge for firms. Digital consulting is a large part of work in today’s sector with consultants required to work on vast amounts of data and analytics, and to introduce new technologies and platforms into organisations. 

Technological development is disrupting many traditional business models with firms not only having to make sure they have the qualified individuals in place, and can attract the right talent into their business, but also having to respond to new regulations around data. 

The general view is that the sector has been slow at adapting.

Clients have data and technological problems they need solving, so the expectation now is that consultants will have this enhanced level of understand digitalisation. 

The opportunity for Managing Consultant businesses at a SME level is that they can move quicker to set themselves up as an adapted digital data and technology player in the industry, attracting the right talent and growing out in this direction. 

Consulting is very much on the front line of these developments.

There is no room to fall short. 

Industry know-how

As data, regulation governing this, and digital technology drives more complex client requirements, it is agreed that traditional ‘generalists’, who have historically thrived in consulting, now need to become far more industry specific than before. 

Industry know-how and becoming a specialist in key areas offer the best opportunities for businesses moving forward. 

Consultancy firms that have historically competed are now working together on client projects and there will be continuing convergence within and outside the industry as firms co-operate and merge expertise and niches, in order to better serve their clients.

As clients look for integrated solutions to their management and IT requirements, many consultancy firms are also entering into alliances with software suppliers, telecoms or communications firms in order to provide a broader range of services and extend their global reach. 

So how can Management Consulting SMEs fund these growth plans or M&A strategies?

Many businesses look at raising funds through equity financing, giving away a part of their business to an external investor or venture capitalist in exchange for capital. 

But an easier route to funding growth or M&A activity is Debt Capital.  

Debt capital is money that is borrowed by a company and must be repaid, with interest, at a later date. The principal and interest repayment plan are typically specified at the time of the loan. Debt financing can come from a variety of sources, including banks, credit unions, alternative lenders, and online providers.

Debt capital lending provides small businesses with numerous opportunities for growth and expansion—including those within the management consulting sector. 

Taking on debt capital can help SMEs finance growth strategies that take advantage of the opportunities in the sector.  With the right debt capital injection, businesses can scale-up and get growth-ready. 

Debt finance can cover the costs of buying equipment, investing in technology, hiring more staff and/or acquiring businesses that fit into your broader portfolio strategy to expand your operations. 

Historically provided by banks or other financial institutions, but more recently provided by alternative lenders like SME Capital, a lender provides the capital needed for a company to grow and succeed in return for an agreed loan, repaid with interest.

So, if you are looking for funding opportunities to help take your management consulting business from the ground floor to the penthouse, and would like to discuss how we can help fund your growth plans, please feel free to get in touch with us at SME Capital.

About SME Capital

SME Capital was founded to support the growing number of SMEs who face difficulty or frustration in accessing capital through traditional methods. We understand the importance of real and trusted relationships in the SME lending market and have dedicated Regional Directors based across the UK. By combining traditional lending expertise with the latest in data analytics, we are supporting established UK SMEs with their long-term objectives and business ambitions.

March 2023

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