Start a creative agency by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your creative agency. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a creative agency?
The money you spend is heavily dependent on the image you want to portray to your clients. Technically, much of the work can be done with laptops, a few co-founders, and a coffee shop. However, clients will be looking to work with agencies that have a professional look and feel. When holding meetings with clients, it may be helpful to have a dedicated office space.
Should you decide on an office, you'll need a Certificate of Occupancy (CO). The price of this will vary based on where you open. The CO simply states that the office is safe for those inside and meets building standards, and can be obtained by the landlord owner should you choose to rent.
What are the ongoing expenses for a creative agency?
Owners should prepare for the following expenses:
- Rent/license renewals
- Office electronics/equipment
- Employee salaries
- Website costs
- New technology investments
- Networking expenses (e.g., client lunches, etc)
Who is the target market?
The target market of a creative agency is any company that wants to improve their reputation, connect with customers, and boost sales. Generally (but not always), it’s small to medium businesses that hire creative agencies as they may not have the capital to hire full-time employees. Some creative agencies carve out a niche for themselves, such as only taking on food-related clients.
How does a creative agency make money?
Creative agencies may charge for their services with flat fees on a per project basis. Creative agencies may also choose to charge by billable hours, where everyone involved on projects has their own hourly rate. While fee-based projects may be more attractive to clients (because they’ll know immediately how their budget will be affected), billable hours eliminates the chances that the agency will underbid for a project.
How much can you charge customers?
It all depends on the scope of the project. Much of a creative agency’s billing is trial and error as companies determine just how much work it actually takes to finish a project. Creative agencies can charge as much as $5,000 a month.
How much profit can a creative agency make?
Because you’re not selling a product, you can keep the overhead low. With fifteen clients at an average of $2,000 a month, your agency could be pulling in as much as $25,000 a month (assuming equal profit share.)
How can you make your business more profitable?
Creative agencies can expand by offering advertising services or different marketing services. For example, instead of simply creating the content, creative agencies may want to do public outreach events on behalf of the company.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Creative Agency Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your creative agency is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a creative agency. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Creative agencies should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example of one such services agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your creative agency when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Certificate of Occupancy
A creative agency is generally run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a creative agency.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your creative agency will be in compliance and able to obtain a CO.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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How to promote & market a creative agency
Advertising an agency generally comes in the form of online ads or even physical flyers. If you’re aiming for businesses around town, then you’ll need to establish a local presence by networking at local events. For more national campaigns, you’ll need to invest time and money in SEO tactics to start getting your name out. Until you can generate word of mouth business, being seen in search engine searches will be your best way to spark interest.
How to keep customers coming back
Creative agencies should be aiming to give companies a unifying theme when it comes to their marketing techniques. Keep clients coming back by presenting a strategy that they can implement in every department. Aim to increase the client’s revenue by increasing public awareness of their brand amongst their target demographic.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Creative Agency In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is good for those who spend all day long coming up with ideas. The best entrepreneur will understand that most ideas can not (and should not) ever be brought to fruition, but will still value the process of brainstorming. Also, anyone hoping to get into this business should be comfortable with presenting their work and interacting with a variety of people.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a creative agency?
Each creative agency will have its own rhythm, but most will have the following basic duties:
- Networking with potential clients
- Creative duties (e.g., writing, drawing, etc.)
- Pitching/selling relevant upgrades and new services
- Completing brand books
- Researching target demographics for clients
What are some skills and experiences that will help you build a successful creative agency?
It is not strictly necessary for owners to have any formal skills and experience, though it may be difficult to get started without them. An MBA or a marketing degree may give an owner a head start when it comes to building the business. Even ambiguous degrees like English, Art, or Psychology may be beneficial though, provided you also have some type of real-work experience in a marketing department.
What is the growth potential for a creative agency?
Creative agencies that prove their worth have a lot of room to grow — and small businesses can use all the help they can get. Creative agencies set themselves apart by showing their clients that their work is different, memorable, and effective at communicating a message to the public.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a creative agency?
The best advice successful owners give is to make sure you have something different to say. You need to convince the client that skimping on creative work is actually cheating the business rather than saving them money. Those in this business say that it’s far less about your official qualifications and facilities and far more about how you interact with clients and the ideas you present.
With every piece of new business won, you want to push change whenever possible. Your goal is to find the integrity behind each new product and service of a company, and tie that message into the rest of the branding. Also, be selective about who you choose to work with. You can’t benefit the local economy if you take on projects you’re uncomfortable or unfamiliar with. All clients you do take on should also be expected to sign a contract before beginning the work which states your company's terms of business.
How and when to build a team
It is not recommended that you start a creative agency without at least a few core employees as you'll need a variety of skills to round out the business. It also helps to have others to brainstorm with. Put together a small team to start with. You’re looking for those who share the same mission, but who have different talents that complement the rest of the team. You’ll also need someone organized to be able to take care of the more practical matters of business.