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Apr 30, 2026
Consulting and Consolidation: The Business of Agencies in 2026
Consulting and Consolidation: The Business of Agencies in 2026
00:00
20:58
Transcript
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[gentle music] This episode of Agency Focus is brought to you by agree.com. Stop chasing invoices. DocuSign gets you a signature, agree.com gets you paid.
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One platform built for people who run businesses, not paperwork. Go to agree.com/upgrade to book your demo and claim your $500. That's agree.com/upgrade. Hi, Steve. Hey, man. Introduce yourself. I'm Steve Guberman.
0:52
I run Agency Outside. I work with agencies so they can build a better business and have something worth value, and maybe do acquisitions and have a better life. Nice. It's like, what, what is it that you do here?
1:03
[laughs] What would you say that we do here? Say that you do here. [laughs] And we're beautiful Miami for Agency Hackers, which is always interesting. Heck yeah. This is gonna be interesting, man. I'm pumped, yeah. Yeah.
1:14
Um, we were in New York on the fir- like, one of those. Yeah I like how they're running them. It's, it's just he's got different formats that I don't think most events follow, so- Yeah...
1:27
maybe, maybe it's the British way of thinking about things, but- [laughs]... the British Invasion is what I call it. Yeah Well, they had the, they had the karaoke one. That was cool. I wasn't there. Yep. How was that?
1:35
I didn't go to that. I went to the comedy night one. Oh, like, I mean, that kara- the comedy one? Yeah, yeah, yeah. I didn't go to that. It was, it was fun. How was that? Yeah.
1:40
It was, like, actual agency folks, like copyright, art director kind of folks who were like, "I wanna be a..." Some of them were really freaking funny. Yeah. But yeah, it was fun. It's fun. Yeah.
1:50
So we did, like, an AI thing first. Um, had a couple of speakers and shows and tells- Yeah... and then broke off, and then like an hour later met up for comedy night. Nice. Yep.
2:01
Um, switching gears, or same gears, but what do you think the state of agencies is in 2026? Man. [laughs] I just, like- So-... throw it out there... Q1 is done. Yep.
2:12
Um, Q1 seems to have opened, not floodgates, but opened, like, the regulation gates of business starting to move again. Most of the agencies that I spoke to or work with, they saw from Q4 last year into Q1, like- Yeah...
2:25
actual movement of contracts and, and getting some, like, really good business on the books. Yeah. I think the projection hopefully will be that it continues.
2:34
Um, I do think that, like, the uncertainty between wars and governments and AI is, you know, for a- for agencies at least, is causing a lot of unrest and concern. Yeah.
2:46
I don't know about for their clients, like, because again, I'm seeing a lot of business moving, sales cycles, like- Yeah... normalizing, not compressing, but normalizing. Yeah.
2:55
Um, and then, you know, with, with AI integration, hopefully agencies are finding efficiencies and readjusting teams- Mm-hmm... and things like that. Yeah, yeah.
3:05
I mean, the biggest talk about AI right now is that, right? Yeah. Like, figure out what are we doing? Yeah. You know, and the, the chances of efficiencies, but, like, is there efficiency? Like, there's...
3:17
We know there's efficiency to be found, but where? Yeah. You know? Yeah.
3:20
So- So I think that's what we're gonna see a lot of in '26, and I think beyond '26 we're gonna see, like, a massive consolidation of agencies probably that we haven't seen in either of our careers- Yeah... at all.
3:30
Interesting. Like, we saw a large expansion of agencies during COVID 'cause so many people got laid off, and they hung up their own shingle- Yeah... and they became...
3:38
We, we talked about it last night, "I'm a fraction of whatever now"- Yeah... or "I'm, I'm launching an agency." Most of those didn't survive, right? Those were a blip. They maybe got jobs. Yeah.
3:46
Some survived, but I would say by and large, most did not stick around 'cause they realized, "Oh, shoot, I don't wanna run a business. Let me go find another job."
3:53
But isn't that, like, isn't that just the na- nature of agencies, right? Like- The ebb and flow, yeah... well, no, like, like you get a, a craftsperson start an agency- Yeah... right?
4:03
Like, craft, I mean, like developers- Designers... and designers- Yeah... whatever, right? The craft of it, and all of a sudden they're like, "Uh, uh, uh, and now I have a business. Now what?" Yeah. Right?
4:10
Like- That was my story. I was like, "Oh, I w- I can do it better than everybody else, but I'm a designer, and now I gotta run a business? I don't know how to do payroll. What, what is all this P&L nonsense?" Yeah.
4:18
[laughs] So, but I do... So I think that's a natural progression of it, but I think there was such an influx of new...
4:23
I remember a stat, like, I don't know, '24, something like 2024, there was, like, 6 million businesses were registered in the first few years of COVID, something crazy like that. Yeah. Like, some crazy influx.
4:33
So, so but anyway, that was, uh, we saw the tail out of that. Yep. Now what I think we're gonna see in the next year or two is just a lot of agencies dropping off, age- aging out, scared shitless of, of AI- Yeah...
4:47
and just consolidation. But you think the other, the other side of it's true too because people are getting laid off. Yeah.
4:52
You know, companies and stuff like that, like, that's a natural progression of, "Okay, now I gotta start a business 'cause I, I don't know what to do with this." Go into a trade. Go do anything but open another agency.
5:02
[laughs] I don't... Yeah, I don't, I don't know. I think, um, I don't wanna say, like, the industry as we've known it- Yeah...
5:10
is completely un- unearthed and different, and so I don't know that launching something now, it's gotta be so different. Yeah. I mean- It's gotta be a completely different animal. Yeah.
5:19
I mean, I said I don't wanna do one from scratch. Yeah. You know, I just left one. I mean, I sold one, I- Yeah... left one, but I don't wanna do one from scratch and- Yeah... here we are doing consulting things. Yeah.
5:30
You know? Yeah. Um, which is kinda always weird. [laughs] Yeah. But y- so you're not, like, necessarily you're running a business- Yeah... but it's, like, on your terms. It's- Yes...
5:39
probably a lifestyle business, and if it grows bigger than that, cool, you can expand it. Well, let's string on the lifestyle business. Yeah. Because, like, I hate that term. Why? I love it. I hate that term. Okay, why?
5:51
It's just, it just makes it, like, oh, it's, uh... I- it makes it like a small, like... Our businesses are, yeah, they're small. We're consulting. I don't think it's a lifestyle, it's just a business. Yeah.
6:03
This is what we do. Okay. I just never, like, it, to me, and I, I think it's just because, like-Maybe because of my schooling at some point, the business school side of it, like long time ago- Yeah...
6:13
they're like, "VF leads major businesses," and lifestyle is like, you know, just somebody doing a little thing, like, in their hobby type thing. Okay. Like, to me, it was always like pushed like a hobby, you know?
6:23
Interesting. All right.
6:24
So I never saw it like that, but I guess that makes sense where, like, a, a p- one of my hobbies, if I were to start tying flies in my spare time and selling them for two bucks a piece, that's a lifestyle business.
6:33
Right. Right. I define this as, like, a lifestyle business for me- Okay... because I know I don't wanna work more than a certain amount of hours a week. I know I don't wanna grow bigger than a certain...
6:41
Like, I don't wanna have employees. Yeah. I wanna be able to go fishing on Mondays or Fridays. I wanna go snowboarding. Like- Yep... so I guess that's how I've p- pretty much defined it since I launched it. That's fair.
6:51
Um, but yeah, no, I, I think that makes sense where if you build a business out of a hobby, that's more of a lifestyle business. Yeah. Yeah. Yeah, yeah. I mean,
6:58
technically I've been doing businesses forever [laughs] so- Yeah... it is a hobby. If somebody asked me- Yeah... like, "What do you do as a hobby?" I'm like, "Build"- Launch businesses... "businesses." Yeah.
7:06
I mean, been doing this for 25 years now. Yeah. I think. I think I'm out. Yeah, probably. Yeah. How long have you, how long have you been in business? I launched my first business 40 years ago, Bart. Wow.
7:21
I was pulling around lawnmowers and car wash- Yep... kits and- Yeah... selling... My parents would go to, I think it was at the time it was BJs, and they'd buy like a tub of gum or- Yeah...
7:29
lollipops, and I'd sell them for... You know, I knew what markup was at 10 years old, and like, you know, what's my net profit? Like, so yeah, I've been launching businesses since I'm like 10. The hustle, man. Yeah.
7:39
Yeah. The hustle. The paper routes, the st- Yeah... you know, shoveling snow, doing all those things, man. Yeah.
7:43
Although paper routes, I found a loophole, somewhat illegal, but I realized the, the papers that I was delivering was, like, the free ones, and so I could just dump them in the dumpster and they would still pay me.
7:53
[laughs] So it, it really... So if the person who owned that paper route company is watching, I'm sorry, probably owe you some money, but yeah, I was a- [laughs]... I was a dumb kid. Um, yeah.
8:05
I mean, you gotta learn things, right? Like- Yeah. Yeah, yeah... that's the thing. Um, what's the, what's the current business? Um, like, what are you... What's the, what are you going after or hoping?
8:15
So, uh, the core is I work with agency owners and leadership teams. Typically, they're around a million up to 10-plus million. Um, so it's a wide range.
8:24
Specific DNA of a founder that I wanna work with, like, they've gotta have a sense of humility and open-mindedness and willingness to do the work that we're talking about. Yeah.
8:31
I don't wanna, like, onboard a client and then they're like, "Eh, I don't wanna do this work." I don't wanna waste anybody's time.
8:35
I wanna help them get better balance in their business, get them out of the day-to-day, help them, like, really develop a set of goals that mean something to them. Yeah.
8:42
I talk a lot about copycat goals and like, "Oh, I saw this guy hit seven, eight figures. I wanna do that," or, "I... This guy o-..." You know, "This, this lady launched a multinational agency. I wanna do that."
8:51
It's like, no, figure out what matters to you and your family- Yeah... and your team and their family, and then let's set a, a path forward on that. So that's the core of it, and then doing a lot of M&A advisory.
9:01
Uh, so a lot of founders will come to me, "Oh, you sold your business. I wanna sell mine." We get under the hood, it's like you got a lot of work to do before you're even close to selling. Yeah.
9:08
But along the way, as we get the owner out of the day-to-day and we get them to a place where, oh, the business is running really well, this is just what a good business runs like- Yep...
9:17
now I've got time in my day, we can either focus on programmatic M&A to grow the business- Mm-hmm... so they've got an enterprise value- Yep... for exit or, you know, take them to an exit. Yeah.
9:26
So that's, that's exciting stuff. I- What do you, what do you see in, like, a good company, like a good agency, that 1 to 10 million, that small, and going from like 0 to 1 and then 1 to 5- Yeah...
9:36
and, like, what's the progress? Like, what are you seeing in- As far as? How good... Like, what, what a good business looks like. Uh, like very low client concentration. Mm. Deeply niched in a couple of verticals.
9:49
Um, super operational, like, like, um, SOPs out the wazoo. Um, really strong leadership team. Mm-hmm. Owner is out of the day-to-day. Owner is not responsible for even, like, direct sales.
10:03
Maybe they're, maybe they're on the hook for some net new business, but- Yeah... they can go and take a month off and the business keeps growing. That's, like, an ideal business. Nice. Yeah. Nice.
10:12
And, and now you got to layer, they're also, like, AI-enabled. They're selling AI solutions. They're, like, using AI for efficiencies, you know? What- So that should go to their bottom line- Yeah... also.
10:23
I mean, it's AI stuff, like there's efficiency stuff, and then selling it- Yeah... like, if you're into AI and- Yeah... pushing that. Yeah. How much are you seeing it, or is there good agencies that are doing it?
10:34
So how much am I seeing it? Not enough. Yeah. Yes, there are good agencies doing it. [laughs] Um, I, I've identified...
10:40
I'm probably not unique, like it's not my uniqueness, but there's like four stages of how agencies are integrating AI- Mm-hmm... or not. First stage is, you know, they've been in business 20, 30 years.
10:49
They've already reinvented themselves two, three times. They don't wanna do it again. So they're like, "I'm not doing this. Maybe I'm using ChatGPT instead of Google." Like, that's it. Yep.
10:58
The, the next level is, like, they're all curious. Leadership is, like, helping the team start to be curious about it. They're breaking things. They're testing things.
11:06
Third level is they've, like, um, really leaned into it internally. Yeah. Only internally. We've optimized some, some, some, uh, processes. Maybe we're going from Figma to code using AI or, you know, something- Yeah...
11:19
along those lines.
11:20
Fourth level is where people need to be, like, looking towards and getting to, is selling AI solutions to their clients, finding out what their client pain points are instead of saying, "Oh, we can, you know, smash that nail with this WordPress hammer."
11:31
Like, "Let's build a, a tool for you that is- Yeah... A- AI enablement for you." So really good industries for that are industrial, manufacturing.
11:40
They are so slow to adopt that you can, you can, um, optimize them with such little effort where...
11:47
Like, when I had my agency, w- we did, we worked for a company that we saw literally an invoice get printed, touched by six different people, scanned in, printed again. Like- Really...
11:57
25 people touched this thing, and this was long before AI. Yeah. You know? Yeah. So think about in that sense, like how do we i- improve efficiencies on some of these industries? AI is a great tool for that.
12:08
It's, it's still amazing to me. Like-That's the game. Yeah. Right? It's the solution to automation or whatever that is. Yeah. Without AI, we've tried to do that- Yeah... and none of them wanna do it. Right.
12:16
And like now they're even farther behind. The AI makes it a little easier, but- Yeah... yeah, it's been [laughs] it's, it's watching is interesting. Yeah.
12:23
But yet, you know, agencies that I think gonna win are gonna niche down, actually niche it down. Yep. Like very particular and be in that knowledge base, you know?
12:34
I think actually the agencies that are gonna win have already been niched down. Yes. It's... And I'm not, I'm not gonna say it's too late. It's never too late. No.
12:41
But, you know, I've been preaching niche down since- Mm-hmm... since I was told to niche down, and I was like- Mm-hmm... oh, what an unlock. I wish I'd done this sooner.
12:49
And so if they already have that, like deep institutional knowledge and empathetic level understanding of their- Yeah...
12:53
clients in that industry, all the better to be like, "Hey, you know, we can build you this blah, blah, blah, blah using AI." Yeah. I mean, niching down like just makes your efficiencies go better, right? Yep.
13:05
You're not only you can go after so many clients, but also, like, your marketing's better, your sales is better, your P&L is better. Everything. Right? Everything is better- Yeah...
13:14
um, because you, you're just that ef- more efficient a little bit. Yeah. Um, and the argument I've been having for a few weeks now with a lot of new people is like, "Well, we do everything." Yeah. No, you don't. Yeah.
13:26
You can't. Right? Like, you have... It's, it's funny when you look at agencies that have been around for a while- Yeah... they have niches. They just don't like... It's like, go pursue it. Yeah. Go after it, right?
13:38
Like- And if they say they do everything, like there's a core bunch of things that they probably do well. Mm-hmm. And then they're just like, "Yeah, we'll try that. We'll try that. We'll try that."
13:45
And every time they veer out of that like core service delivery or even vertical, they're losing money. Absolutely. Like, it's okay to say no to like, can you do whatever, video production? Sure, we'll give it a shot.
13:56
I'll find a friend. He's got a video camera. We're gonna go on a shoot. You're gonna lose money. Stop doing that. Yeah. Right? Stop that nonsense. Um, I mean, if, if you're...
14:03
Listen, if you need money in and you need to take a project- Right... but the but is, um, make sure you have an off-ramp. Right. Right? Right.
14:11
It's like that whole idea is like, don't- make sure you don't get stuck on it. Unless that becomes a thing- Yeah... then yes, go full into that and stop that. Yeah. But like, what do we do? [laughs] Yeah.
14:20
Well, the other exception is, all right, I think, I think there's a viable market space and we wanna- Yeah... start getting into video production. Right. So let's, let's find a couple jobs and test the water. Yeah.
14:28
See if there's money to... So like, not, not that you can't say yes to- Right... things outside the vertical, but do it strategically. Yeah. I, it's just, yeah, it's always tricky. Yep.
14:37
Watching this stuff is interesting, like from I guess the consulting part now. Like, it's a funny moment. [laughs] Yeah. 'Cause you come from an agency, so do I, and it's like, what's the...
14:49
I guess my question is, what is your, and this is my own curiosity of, how do you pull the like, "Hey, I've done it this way, so you should be doing it this way"? Yeah.
15:00
Instead of like, okay, they have a different way of doing it, and I'm gonna twist it a little bit or pull on that string, but not like force my way of doing it with them. Yeah. I don't say should.
15:09
I don't wanna shit all over anybody. Yeah. Um, but I will say this is, this is how I've done it. Yeah.
15:14
This is how I've done it and it worked or it didn't work, so like the gestalt, uh, practice of shared experiences only and what has worked and what hasn't worked. Also, what I've seen.
15:22
I, I talk to 15 to 20 agency owners every single week. I've worked with not as many as like the Carl Sakas's and the David C. Bakers of the world, but over 100 agencies I've worked with so far. Yeah.
15:32
So, like, I've got some good knowledge of like what's working, what's not, and also like let's test the waters. If this is how you think it'll work for you, cool, let's build a plan around it. Yeah.
15:41
You know, I'm open to trying new stuff, um, but let's do it strategically. Yeah. There's no, there's no one way to do anything. There's a lot of wrong ways to do shit- [laughs]... obviously, but- Yes...
15:50
we, most of us, as, as entrepreneurs and as, like, right brain thinkers, we're like- Yeah... I'm gonna try it. If it doesn't work, lesson learned. Cool. Try it, you know, fail fast. Right.
15:59
Are you working with anybody like overseas or just all US-based? Mostly US. I've got a couple of internat- like, I think three international that I have worked with, and then one US-based, but the founder lives overseas.
16:12
Okay. And I think, and I was talking about it last night actually, I just think there's like a cultural difference that I don't know that I, on an empathetic level I can fully connect with. Yeah.
16:20
And I, and that to me, that's really valuable. Yeah, no, that's, that's why I'm asking. Yeah. Right?
16:24
Because, like, I'm European and kind of know the culture and stuff like that, but I've lived longer, like all my business side of me is here. Right. And like, I know how to run a business this way. Yeah.
16:34
And it's funny because, like, culturally, I get it. Um, but business-wise, I'm like, there's just a different way... And whatever the, like whatever you think capitalism, whatever that is- Yeah...
16:45
and like over-capitalistic stuff, but like, there's just a different way of bu- running businesses here. Yeah. And that's why the growth is different here, right? Like- Good, but they all wanna come here. Right. Yeah.
16:54
Right? It's just the, the pursuit is just different. Yeah. Right? And like it's a hustle and like all that, and I get it, but like, you love it- Yeah... you know? Um, which is tricky to do business, I think, overseas.
17:04
Yeah. And what I, what I also noticed is, uh, companies are very European trying to come into this market- Yeah... and then like try to establish themselves here that don't have local people is interesting.
17:16
Very, very tough. Yeah. Very tough. I was, uh, and my perfect example of this is like I was interviewing at some point in between the stuff for agency out of Europe, and they said no because I lived in Connecticut.
17:28
It kind, like that. Yeah. And they're like, "Well, you're an hour and a half from Manhattan." I'm like, do, do you realize you have to take an hour to go from New York City to New York City? Right.
17:37
Like, just understanding of the world here- Yeah... is different, right? Yeah. Um, so that's always tricky. Yeah.
17:42
Yeah, I ask 'cause it's kinda like I've had conversations with some trying to get into the US market, and it's like- So I've done that a number of times. Yeah. There's like maybe four or five. I'm working with one now.
17:53
They set up HQ in Atlanta. Um, they're French-based, but they've got 60 or so people globally, all remote. Um, and they wanna break into the US. So six million dollars in, in the European market is awesome.
18:06
You know, they could easily break into the US and find two, three million dollars in their verticals.Um, not easily, but- Yeah, yeah, yeah... there's a path, there's a path forward there.
18:15
Um, so I've done that a handful of times where it's like, "Hey, we're really strong in the APAC market or in, in EU or whatever. We wanna take that into the US," and they are almost always well-niched.
18:25
They're not generalists- Yep... which is super important. Like- Good... don't show up on our, on our shores, like, "I'll do all the things for all people." There's enough of that nonsense. Like- No...
18:34
own your vertical and, like, dig into it here. Where do you think, like, most of the world, where do you think some of this stuff is going to right now? As far as what?
18:43
Like, we had, most of our development team when I had my own agency was in Poland, right? Yep. Huge, you know, Eastern Europe being- Yep... very, very educated, you know, very engineer-minded. Like, it was great, right?
18:54
Smart people in that area. Very smart people. Yeah. Um, so that was easy.
18:58
I'm talking about, like, where do you see sort of people outsourcing that stuff or- Nearshore, yeah, either, like, South America, like, um, Brazil or I've got a handful of clients and friends with agencies that their entire dev team is in that Eastern European region.
19:12
Yeah. Um, Bulgaria, I got a guy who's got 40 people in Bulgaria. That's huge. It's huge. Um, some of the bigger dev shops are still leaning into India. Like, there's a lot- Yeah... of really smart people there.
19:21
Talent is really s- it's, you know, pulled together. Most of our stuff at the last agency that I sold too was in Argentina. Okay. Yeah. A huge, huge moment there. Yeah. So yeah, that's been interesting. Yeah.
19:33
I don't know the stats, but I imagine the unemployment rate has, like, completely been obliterated or close to obliterated in, like, the South American regions with, since COVID because we've just tapped into so much offshoring and nearshoring and VAs and automation talent and people like that.
19:49
Yeah, I mean, if you look at, I mean, even the numbers, right? Like, I think, you know, even at 25, 30 bucks an hour, that's still double what they were making before. Yeah.
19:58
Oh, you're getting really brilliant developers for 10 bucks an hour. Like, it's mind-boggling. VAs out the wazoo, you know? It's just the biggest, the biggest thing is understanding culture. Yeah. Right? Yeah.
20:09
Like, very understanding what culture looks like, what it is and how it works- Yep... and which is tricky because then you have to have management here- Yep...
20:17
that understands it and not just, like, throw stuff over the wall. [laughs] Yeah. Well, there's a number of agencies that I know of.
20:22
I'm sure there's hundreds if not thousands where, like, their core leadership team is here in the States- Yeah...
20:26
and then they've built their, like, creative and ops team in the Philippines or Brazil or Argentina- Nice... or wherever. Yeah. Uh, and it works really well and, you know, it's great for financial efficiencies.
20:35
It's great for, you know, if you shift outside of South America and you go to, like, East Europe or India, whatever, like, you can have 24-hour coverage- Yeah... if you needed it for your agency. Yeah.
20:44
So there's a lot of really cool ideas on- Heck yeah... reconstruction of teams. Cool, Sam. Yeah. Thank you, sir. Thank you, brother. Appreciate it. Uh, let's enjoy some Miami time. Heck yeah.
20:53
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