How to Start a Marketing Agency

Start a marketing agency by following these 10 steps:

1. Plan your Marketing Agency
2. Form your Marketing Agency into a Legal Entity
3. Register your Marketing Agency for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Marketing Agency
6. Get the Necessary Permits & Licenses for your Marketing Agency
7. Get Marketing Agency Insurance
8. Define your Marketing Agency Brand
9. Create your Marketing Agency Website
10. Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

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.

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. 

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your marketing agency is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

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.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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.

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.

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. 

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.