The Dark Side of Scaling: Build a $10M Agency or Stay Lean and Profitable?

When agency founders talk about “scaling,” they often assume there’s only one way forward: grow bigger, hire more people, and chase higher revenue.

But is bigger always better?

Not necessarily. For every $10M/year agency scaling with labour and complexity, there’s a lean, highly profitable $2M/year agency running circles around them in terms of margin, freedom and efficiency.

In the last two months, we’ve audited 10 marketing agencies (mostly $50K-$100K in MRR). Nearly all of them said they wanted to scale. But unfortunately, most would crack under the pressure of real growth.

Their challenges shine a light on the trade-offs and realities of scaling.

In this article, I’ll explore two opposing approaches to building an agency:

A) Agencies that scale for growth and size (aiming for $5M-$10M+ in revenue).

B) Agencies that scale for profitability and simplicity (typically under $2M/year).

Both paths have merit, but they come with very different challenges and rewards.

Path 1: Scaling Big—The "High-Growth" Agency

High-growth agencies focus on revenue growth above all else. The goal is to grow, expand headcount and dominate your market. But while scaling to $3M, $5M, or $10M/year sounds great on paper, the realities of this path can surprise even the most ambitious founders.

The biggest challenge? The founder’s transition to CEO.

What This Looks Like:

• 50+ team members spread across delivery, operations, and sales.
• A multi-layered leadership structure (e.g., team leads, department heads).
• Heavy investment in sales and marketing to maintain pipeline growth.
• Services designed for scalability (productised offering or/and multiple offerings)

The Realities of Scaling Past $3M and $5M

1. The Founder’s Transition to CEO Scaling big requires a mindset shift: you can’t do it all anymore.

Most founders hit a wall at this stage because they struggle to identify their Zone of Genius - that one thing they’re uniquely brilliant at and delegate everything else to a leadership team.

Instead of leaning into strategy or innovation, they stay stuck in operations, managing fires, and plugging holes. This leads to burnout and resentment toward their own business.

Example: Rise at Seven | Search-First Creative Agency is an excellent example of a founder getting it right. On our podcast, I interviewed their Head of Operations, Ryan McNamara who explained how their CEO Carrie Rose stays in her Zone of Genius: focusing on creativity and the craft of SEO, PR, and social. Carrie knows “what good looks like” in her field, which has helped them win countless awards for innovation. Meanwhile, Ryan and the leadership team handle the complexities of scaling the agency.

The takeaway? Scaling isn’t about doing more—it’s about doing what only you can do.

Here's a bit where Ryan goes on to explain this:

2. Recruiting World-Class Talent Is Non-Negotiable.

Most founders don't recognise that agency businesses are recruitment businesses.

When agency CEOs complain about team issues or quality slipping, it’s usually because they didn’t set the bar high enough when hiring. Your people reflect your leadership, and scaling big requires great people... and lots of them.

The danger: Mediocre hires will bottleneck your growth, overload you with problems and slowly destroy your culture.

The fix?

Recruiting becomes one of your most critical skills. You’re not just hiring for roles. You’re selling a vision. Learn how to market your agency as an exciting opportunity to attract high-performance leadership talent.

The ability to attract, retain and grow top talent is the difference between success and failure on this path.

3. Your Systems Will Be Tested.

Scaling isn’t just about signing more clients - it’s about ensuring your operations can handle the growth.

When we audited 10 agencies recently, we asked, “Can your systems handle double the clients?” Most admitted they’d be scrambling.

If your delivery processes, tools, or team structures aren’t scalable, adding clients creates chaos, not growth.

The fix?

Build scalable systems before you need them. Automate where you can, document workflows obsessively, and audit everything regularly. Your systems, not you, should be doing the heavy lifting.

This Path Is for You If You Optimise For:

• A big exit in 5-10 years.
• Innovation and creativity at scale.
• Establishing a dominant market presence in your niche.

Here’s What You Need to Know About This Path:

1. Systems for scale are mandatory. From client onboarding to team communication, every process must work at scale. Scaling big means building operational structures that can handle volume without sacrificing quality.
2. The shift from Founder to CEO is essential. You can’t stay stuck in the weeds. To succeed, you’ll need to focus on your Zone of Genius and let your leadership team handle the day-to-day.
3. Recruitment becomes a core skill. Scaling isn’t just about clients - it’s about people. Without a high-performance team, your growth will hit a ceiling.
4. Expect complexity at every turn. The more clients, people, and processes you add, the more moving parts you’ll need to manage. Scaling big isn’t just about growth—it’s about managing the complexity that comes with it.

Here’s What You’ll Likely Need to Sacrifice/Re-think:

• Profit margins: Growth means slimmer margins, especially as you invest in talent, systems and operations.
• Redefining creative freedom: Scaling isn’t about losing creative freedom. It’s about shifting it. The more you operate in your Zone of Genius, the more freedom you’ll have to focus on what you’re great at.
• Personal time: There’s no such thing as “work-life balance” when you’re scaling past 3, 5 or 10M. The early stages demand relentless focus, long hours and personal sacrifices.
• Control: With a larger team and more moving parts, you’ll need to let go of micromanagement and trust others to execute.

This is Path 1.

It’s bold, exciting, and full of potential.

But it comes with trade-offs. If this is the path you’re considering, understand what you’re signing up for.

Path 2: Staying Lean—The Highly Profitable Agency

Some founders just want a business that’s lean, highly profitable and doesn’t eat up their entire life.

What This Looks Like:

• A small team and/or a network of trusted contractors.
• A very well-articulated high-ticket offer with a very defined ICP.
• Systems and processes that emphasise high efficiency and strong culture.
• Minimal overhead, with the founder staying on top of strategy but free from daily bottlenecks.

There's a whole new wave of digital agencies that take this path. Just yesterday I had lunch with the founder of a performance marketing agency with a team of 6 people.

His goal?

Get to $150k MRR, replace himself with a managing director and start building DTC brands. He sees the agency model as a stepping stone to other ventures and investments.

Here's another example of one of the agency clients we worked with a couple of years ago who successfully actualised Path 2. I messaged him last month to find out how he's doing...

The Realities of Staying Lean

1. The 50%-80% margin myth

In private conversations, I hear many founders talk about achieving 50%-80% gross margins. And while this is possible - some of our clients managed to achieve this, the full picture is often overlooked.

In most cases, founders are still heavily involved in operations and the business depends heavily on them.

When I ran my performance agency, we consistently hit 60% gross margins. But if I stepped away, the entire business would have stalled. I was at the centre of everything... making key decisions, managing clients and solving problems left and right.

It wasn’t until I brought in a fractional Head of Operations (now my co-founder at Big Growth Group ) that the agency began running smoothly without me being in every meeting and Slack thread.

Lesson: High margins are only meaningful if the business can function without you.

2. Client expectations still apply.

Operating lean doesn’t mean fewer client demands.

In fact, it amplifies the importance of managing expectations. With a smaller client base, any misalignment can have a significant impact on your business.

The risk: Overpromising or unclear offer/deliverables can lead to churn, and losing even one key client can hurt more when you have fewer of them.

The fix?

First, align your ICP with your offer and the deliverables.

Second, be deliberate about who you work with. A strong qualification process, clear communication and premium pricing help ensure every engagement is aligned with your capacity and strengths.

3. Founder dependency

Lean agencies often rely heavily on the founder for strategy client relationships and high-level decision-making. While this gives you control, it also limits your ability to step away.

Example: Founders who thrive on being hands-on may enjoy this for a time, but it’s critical to build structures that allow the business to operate without you for long periods.

The fix?

Build a lean, high-performance team you can trust. Document processes thoroughly, automate where possible and delegate tasks that don’t require your expertise. This keeps the agency running smoothly while freeing you to focus on your Zone of Genius.

4. The Growth Ceiling

Lean agencies typically cap their revenue between $1M and $2M. Fewer clients and a smaller team naturally limit how much you can grow without introducing new complexity.

To maximise growth, stop thinking like a traditional agency and start thinking like a media business.

Content isn’t just a nice-to-have.

It’s the backbone of your entire go-to-market strategy.

Position yourself as the authority in your niche by consistently creating content that educates, inspires or challenges your audience. Think newsletters, podcasts and thought leadership content... not just client pitches.

Your content isn’t just marketing. It’s your biggest leverage point for attracting high-value clients who already trust you before the first call.

Discover how I applied this to my businesses to generate $1M in sales from LinkedIn alone: What $1M in LinkedIn Sales Taught Me About Content, Branding and Social Selling.

The Biggest Trap: Comparing Your Progress to Others

What’s important to get absolutely clear is what you optimise for: What are your goals? Why does your agency exist?

One of the most common traps for founders is comparing their progress to people walking a completely different path.

• The high-growth founder envies the margins and freedom of lean agencies.
• The lean founder feels inadequate next to peers scaling to $10M.

Every path comes with trade-offs.

Instead of chasing what others are doing, focus on what success looks like for you. Be honest with yourself:

• What kind of business do you want to build?
• What kind of work do you enjoy doing?
• What are you willing to sacrifice to align your business with your life goals?

The clearer you are about what you optimize for, the easier it is to ignore the noise and build something that works for you.

This Path Works If You Value:

• Freedom. You want less complexity and more control over your time.
• Profitability. You’re focused on keeping margins strong, not chasing revenue for the sake of it.
• Focus. You’d rather work with a few great clients than juggle dozens.

What You Need to Know:

1. Fewer clients, more value. A lean agency thrives on working with a select few clients who genuinely value what you offer. Delivering exceptional results justifies charging a premium.
2. Keep it simple. Simplicity is your biggest weapon. Forget about building bloated systems or fancy hierarchies. Instead, focus on processes and tools that keep your business running smoothly without unnecessary complexity.
3. Don’t be the bottleneck. Just because you’re close to the work doesn’t mean you should be the bottleneck. Build a team that can take over key tasks so you can focus on the things you’re best at.
4. Specialise and dominate. Running lean enables you to stay laser-focused on your niche. When you specialise, you can charge more, win better clients and create a reputation that attracts the right opportunities.

What You’ll Likely Need to Sacrifice:

• Market reach: Lean agencies prioritise depth over breadth. You’re unlikely to serve a massive market but you may build a reputation that allows you to take on global brands as clients.
• Opportunities: You’ll need to say no to deals and clients that don’t fit your focus, even if they seem lucrative in the short term.
• Redundancy: a smaller team means less room for error. Losing one key team member can feel like a major blow.

This is Path 2.

Staying Lean. It’s a path that prioritises profitability, focus, and freedom but comes with clear trade-offs. If you value simplicity and want to build a business that aligns with your lifestyle goals, this might be the perfect choice.

About what we do:

At Big Growth Group we help build scalable and self-sufficient agency businesses that let founders step away from daily operations and focus on strategic growth. We’re not just consultants who leave you with a list of ideas. We’re also Growth Operators who get in the trenches and work alongside you to deliver real, measurable results.

Are you an agency founder? Want to break free from operations and scale past $1M more easily and strategically? Apply for Strategy Consultation here.

Resources for agency founders:

• When your biggest client sends that email: "We need to talk."
• But what if what you do isn’t directly tied to lead gen, sales or revenue-producing activities?
• In the past 2 months, we've done 10 agency audits - mostly $50-100K in MRR. Here's what see across the board...
• "My COO and I got into an argument about the churn rate."
• And if you want no cookie-cutter advice, no hype... Just bold, polarising insights to help agency, consultancy and b2b service owners break through the $1M mark and beyond then watch the Big Growth podcast on YouTube or listen on iTunes or Spotify.