Start a literary agency by following these 9 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 step guide to starting your literary agency. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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 long it will take you to break even?
- 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 literary agency?
If you are willing to start simple, then there are very few costs involved in opening a literary agency. For example, many agencies start with the owner as the sole agent, and that agent typically works from home. This is because it is very easy to correspond digitally with various editors and writers through things like email and Skype. Thus, you could open your business for less than $5,000. Almost the entirety of that money can go towards designing a professional website and advertising your services via newspapers and trade publications. Other forms of advertisement (such as social media) are essentially free, and there is no special licensing requirement for opening your business. You should also print some professional business cards to give to the various clients, potential clients, and editors you will meet.
What are the ongoing expenses for a literary agency?
Functionally, there are almost no ongoing expenses if you work from home. You may periodically have business lunches with clients and editors (which can later be written off via taxes), but just about everything can be done from the comfort of your home, and most of your best advertising will be done via online venues, just as most of your communication will come from email. Effectively, the only job-related expenses each month will be business lunches, gasoline for business-related travel, and the cost of hosting your website (which should be less than $250 a year).
Who is the target market?
You will have a diverse array of clients, but the best ones will always be those who react well to criticism. A major part of your job is discovering the most marketable angle of clients' work and recommending changes, and clients who are receptive to these ideas are much easier to work with.
How does a literary agency make money?
Most literary agents make money by working on a set commission. Therefore, whatever payment their clients eventually get from a publisher, an agent would typically get about fifteen percent of that amount.
How much can you charge customers?
As mentioned before, you can charge your clients up to fifteen percent of whatever they get for the sale of their book, though you may go as low as ten percent. This commission model creates a natural writer/agent synergy as you are both invested in getting the highest payment for the book possible!
How much profit can a literary agency make?
Your exact profit will be dictated by the number of clients you have, the number of sales you make, and the amount of money those sales make. Some veteran agents guess that between $50,000 to $75,000 is the average salary, but successful sales (particularly sales that may eventually translate to major Hollywood movies or television shows) can propel your business into a six-figure income. Regardless of the profit, the virtually non-existent overhead means that most of what you bring in translates to profit for you!
How can you make your business more profitable?
Make sure you are familiar with how to sell and market books as electronic texts; this allows for another revenue stream regarding the books you sell. Make sure your marketing of your own business emphasizes your close and personal relationship with authors; this allows you to distinguish yourself from major agencies that may make their authors feel like virtual strangers. Finally, don't be afraid to steer your agency towards the most profitable genres: if mysteries and romances are the hottest sellers, make sure you are actively seeking those books out rather than trying to market a dynamic new genre of a book that has no proven sales value to publishers.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your literary agency is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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?.
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.
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.
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
In most states, it is necessary to obtain a literary agent license. Certain state permits and licenses may be needed to operate a literary agency business. 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.
Certificate of Occupancy
A literary 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 an office 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 literary 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 an office 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 literary agency will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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.
How to promote & market a literary agency
As mentioned before, it is vitally important to promote yourself via a professional website and a social media page. To a lesser extent, you may advertise your services via things like local papers, but many of your clients will not be local. Instead, you should make sure you are visible in various agent databases such as AgentQuery and QueryTracker, and you should also be visible on sites like Writers' Market. These sites make it easier for writers to find agents, so it's important that your name is on there.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
In addition to the promotional methods mentioned above, you may consider specializing in certain writing niches. For instance, establishing yourself as predominantly focused on science fiction and fantasy novels may help you gain more clients in a particular field. You may also tweak your commission to be more competitive: with fifteen percent being an industry standard, your willingness to work for less (but not much less) than that can help you instantly stand out. Retention takes care of itself: get your clients published and paid well, and they will always come back to you rather than risk starting over with a new agent!
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Literary 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?
It should go without saying, but this is a business for those who love literature. This is not only because you will be doing so much reading, but so you can understand the literary market into which your clients are trying to publish. It's also a good job for those who like to help others, as you will essentially be your client's only advocate in the intimidating processes of publishing and selling their work.
What happens during a typical day at a literary agency?
In no particular order, your daily activities include discovering new clients as well as communicating with the clients you have. You will also have meetings with editors from different publishing houses that may eventually buy the works of your clients. The job also involves writing things like pitch letters for these editors and submitting formal copies of manuscripts to them. You will also be in charge of reading your client's’ books so that you are prepared to properly market them to publishing companies and the public.
What are some skills and experiences that will help you build a successful literary agency?
Prior experience as a writer can help you in dealing with writers. Similarly, formal education as an English major or a related field can help you pick out some of the best submissions from authors. Finally, if you already have relationships in the publishing world, it can help you hit the ground running when it comes to helping your clients.
What is the growth potential for a literary agency?
The growth potential for this business is modest, with a projected three percent growth projected between 2014 and 2024.
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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 literary agency?
Spend as much time around publishers and publishing houses as you can to get an idea of how they work. If you are not already an expert in marketing and technology, study everything you can: it will help you stay on top of your own game and better represent your clients. Finally, study the literary marketplace whenever you can: it is vitally important that you have your finger on the pulse of emerging trends (and, conversely, that you know when a once-hot trend has become yesterday's news).
How and when to build a team
Team-building for a young literary agency can be tricky. Working by yourself is a major key to having almost zero overhead and retaining the entirety of your profits. However, if you have more texts coming in than you can reasonably read and represent each week, you may consider taking on a partner or establishing a small team.