Start a marketing 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 marketing 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 marketing agency?
Since you are providing a service rather than a product, initial start-up costs for a marketing agency can be kept at a minimum. To get started, all you need is your talent, a computer, a marketing strategy, a website, and some printed materials. Once your business starts to pick up, you will want to start rent an office space and begin building your dream team.
What are the ongoing expenses for a marketing agency?
Your biggest expense as a marketing agency owner is payroll. A marketing representative with one to three years of experience will set you back almost $50,000 annually, not including payroll taxes, fees, and benefits. An employee with more specific skills, such as a copywriter or web designer, will expect upwards of $60,000 per year.
Additional ongoing expenses include rent/mortgage, utilities, staff healthcare benefits, technology/software maintenance and upgrades, marketing, occasional travel, and insurance.
Who is the target market?
In a broad sense, your new marketing agency’s target market is any business, small or big, that requires assistance in identifying who their target market is and how best to reach them. If you tried to reach everyone, however, it will prove difficult to reach anyone.
Sit down and take a moment to consider who your ideal client is. What is their business model? Do they offer a service or product? Do you want to work with local companies or organizations across the United States? What industries can you confidently represent? Do you prefer to work with small companies or pitch to Fortune 500s? Define your niche and perfect your skills. You can always broaden your target market as your talent team and portfolio grows.
How does a marketing agency make money?
A marketing firm makes money by charging clients for developing and managing their marketing campaigns. Typically, the agency will pitch their ideas to a potential client, often with several agencies vying for the contract. The client then enters into a contract with the agency whose pitch they most relate to.
How much can you charge customers?
Your contract with each client will vary, depending upon their specific needs and the services you provide to them. For example, social media management costs anywhere from $400 to $1000 per month, depending upon the number of posts and which platforms are used. Email marketing ranges from $300-$500 and SEO costs $750 to $2,000. Before setting your price list, research other marketing agencies, and their fee schedules. While it may be tempting to set your prices lower than the average, business owners are cautioned against doing so. Selling yourself short may gain a few extra clients in the beginning, but you will spend the rest of your days trying to catch up.
How much profit can a marketing agency make?
Marketing contracts that cover multiple services yield between $4,000 and $30,000 per month. If you started with just two contracts at $5,000 per month, with you as the only employee, you would bring in $120,000 in your first year. Investing your profits back into the company would allow you to add team members and expand the scope of the services you offer.
How can you make your business more profitable?
The quickest, most effective way to increase your agency’s profits is through the services you offer. Create a well-rounded team of talent, and the sky is the limit. Additionally, many agencies now offer their clients financing options. This not only helps them sign additional contracts, but they also earn a commission off of each financed proposal.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. 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.
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 marketing 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 Marketing 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.
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.
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 marketing agency
Your marketing strategy is a direct reflection of your work. You wouldn’t hire a hairdresser who had a terrible haircut, would you? Before presenting yourself to the public, build a brand that accurately represents what you stand for. Once you have done this and identified your target market, it’s time to start marketing yourself through your website, social media, printed materials, and television and radio ads - whatever methods will best reach your ideal clients. The most important thing is that you become a master at telling engaging, relatable stories. As business starts to pick up, you will need to start a portfolio, sharing your work and client testimonials.
How to keep customers coming back
Marketing isn’t just a one and done type of service. Every business that seeks to remain relevant will need to invest in marketing for its entire lifespan. Therefore, your work with each client is critical, not only for their long-term success but also for your own. Listen to your clients, identify their needs, and deliver results.
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 Marketing 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?
The ideal candidate for this business venture is well-balanced, possessing proven marketing experience and strong business acumen. She/he is passionate about helping others achieve their goals and is ready to turn their visions into reality.
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 marketing agency?
A marketing agency owner is responsible for managing the agency, ensuring their staff stays on schedule, bringing in new clients, and producing client marketing campaigns. A typical day includes the following:
- Checking emails - following up with clients, answering questions, and identifying potential issues
- Brainstorming, individually and as a team, to develop creative concepts and marketing campaigns
- Collaborating with various departments
- Present pitches
- Conduct market research and analyze data to identify weaknesses in current marketing strategies
- Search for new client leads and follow up with prospective clients
- Administrative duties
What are some skills and experiences that will help you build a successful marketing agency?
Managing a successful marketing agency requires marketing knowledge and real-world experience. Many entrepreneurs have a degree in marketing or a related field. Strong business acumen would also prove beneficial. Start-up business owners who lack the necessary degree and/or experience are encouraged to consider taking classes at their local community college. The American Marketing Association (AMA) is also an excellent resource, helping its members remain abreast of current and emerging trends, offering training and certification programs, as well as sponsorship opportunities.
What is the growth potential for a marketing agency?
With global digital marketing spending reaching a staggering $306 billion and overall marketing spending hitting $1.3 trillion, the marketing industry shows no signs of slowing down. Increased marketing spending and improved technology offer agencies a unique opportunity to break through barriers and expand their reach internationally.
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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 marketing agency?
When first starting out, many new marketing agency owners are tempted to take on every new project that crosses their desks. It’s important to keep in mind, however, that the results you produce directly affect your brand. If you take on a client that doesn’t align with your vision and mission, your work will show this, doing both you and your client a disservice.
How and when to build a team
Many new marketing entrepreneurs start as a one-man team. As you start to build a name for yourself, however, you will want to start making calculated decisions regarding your staff. Consider your strengths and weaknesses, what services would prove a most valuable addition, and hire accordingly. Remember, successful businessmen make the most money when others are making it for them.