The million-pound agency - benchmark of success or dangerous distraction?

For years, that £1 million revenue milestone has taken on near-legendary status in the agency world. It’s become a benchmark—a badge of honour, a form of validation.

People get fixated on it. It becomes a symbolic finish line—representing credibility, ego, potential exit value.

But does it actually mean anything? And what are the dangers of being pre-occupied with revenue over profit?

One agency founder I worked with learned this the hard way.

Dan (not his real name) was running a digital agency, mostly doing web and app development.

At around £500k in revenue, his business was in great shape—generating strong six-figure profits, and paying himself a healthy salary. The team was small and efficient, the projects were profitable, and things were working well.

But then, the allure of hitting that million-pound revenue mark started to take over. It stopped being about the health of the business and was more about ambition, identity, and perception. Dan started imagining a future exit—an acquisition maybe—and believed that cracking the £1M mark would make the business much more appealing. That’s when the real chase began.

To accelerate growth, he started hiring faster than the workload justified.

Strategic decisions were no longer grounded in clear thinking—they were subtly driven by pressure to “hit the number.” New team members came on board too early, overheads shot up, and he held onto staff who didn’t have a clear role anymore just to avoid the perception of scaling backward.

Letting people go felt like failure—even when the numbers told a different story.

At the same time, the bar started to drop on what kind of client work the agency would take on. They’d always been disciplined—focused on their sweet spot in terms of project size, margins, and client fit. But with a growing team and mounting costs, Dan started saying yes to work he normally would’ve declined. Low-margin, ill-fitting projects made it through the door if they meant keeping people busy and inching closer to that million-pound target.

That’s where things really began to unravel.

The team started pursuing metrics they assumed Dan cared most about—top-line revenue, team size, perceived scale. They said yes to the wrong clients, for the wrong reasons. One bad-fit project led to another, and before long, profit had all but vanished. At one point, bonuses were paid out for hitting a revenue target despite the business failing to turn a profit.

By the time we first spoke, the agency was haemorrhaging close to £100k a year—despite being within touching distance of that coveted revenue milestone.

Dan was working harder than ever, earning less, skipping holidays, and burning out.

He came to me on the verge of walking away—shutting the whole thing down and just getting a job. It just didn’t feel worth it anymore.

We started by taking things back to basics.

The core of his business was still solid—he just needed to refocus on what was actually important. Together, we identified about £80k in unnecessary payroll, restructured incentives around profit instead of vanity metrics, and audited the client base to work out who were 'good' clients who should be replicated. .

It took a little over a year to get back on track, but he got there..

The turning point? He stopped chasing the milestone and started building a business he actually wanted to run.

By that stage, the idea of hitting £1M in revenue had lost its grip on him. He redefined success on his own terms: a profitable, sustainable business that didn’t run him into the ground. He wasn’t chasing an exit or trying to impress anyone anymore. He was focused on building something that aligned with his goals, his team, and his quality of life.

And that million-pound mark?

It turned out to be just that—a number. A number which nearly derailed a perfectly good business.

It also got me thinking about how many times I've heard agency founders being told that they have to make a choice early on in their journey - do you want a lifestyle business or do you want to build something with a view to exiting? As if that decision will totally change the way you set up and run your business. I blame this mentality for many of the bad decisions founders make - I certainly fell into this trap myself in the early days.

In reality, everyone should aim to have a business which is making a healthy profit, retains it clients and staff, isn't overly reliant on the founder for day to day operations and has steady, sustainable growth.

This is the definition of a business that someone will want to acquire. It's also a great lifestyle business, paying the founder well, while delivering a healthy work life balance and manageable stress levels. So exit or don't, it's a win.