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 talent 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 talent agency?
Here’s how your annual start-up costs might break down:
Workspace -- $6,000 - $20,000 per year, or more. You need an office big enough to host your clients and exude success. This isn’t the sort of business that should be run out of your spare bedroom. Also, many agents gravitate to cities where rents trend high, such as New York, Las Vegas, and Los Angeles. Here’s an excellent article on typical office rents nationally.
Promotional material -- $3,000 or more. You must present yourself in a professional way, which means you need professionally produced logo and graphic design, business cards and website, as well as professionally shot self photos.
Publicity -- Zero to several thousand dollars a year. You might team up with a publicist to reduce your expenses or do your own publicity. This falls into two areas: publicity for your roster talent and self-promotion of your accomplishments and successes.
Licensing and professional services -- $1,000 or more. Meet with a lawyer and accountant to form your business and write contracts and agreements for talent and performances.
What are the ongoing expenses for a talent agency?
Your largest ongoing costs will be for your office space. You might also spend relatively significantly on event attendance and wining and dining of clients and hirers.
Who is the target market?
Your clientele should be talented enough to be booked at a high enough rate to make them worth your time. Some talent agencies specialize in a certain area of performance, such as folk and country singers, DJs, magicians, comedians, authors, or athletes. Others think in terms of venue, such as by specializing in booking talent for cruise ships or private parties. Others might concentrate on specific demographics, such as child actors or singers.
Your other client type is at the other end of the transaction: booking agents, casting directors or other decision makers in the nightclubs, cruise ships, music halls, comedy clubs, film production houses or wherever else you’re placing your talent. For this segment of your market, credibility is key. You want the hirers to buy into your enthusiasm for new talent and at least give them a try.
How does a talent agency make money?
Virtually your sole source of revenue will be the commissions you charge to the talent on your roster. This typically runs from ten percent to twenty percent of their contracted wage or paid booking fees.
How much can you charge customers?
There’s no set amount except “as much as you can get.” The fees you earn will be dependent on the natural talent on your roster and your location. You can assume that you won’t earn your club performers as much in Peoria, Illinois as they’ll make in Las Vegas. Similarly, representing an NBA superstar in national television spots will command a higher fee than booking a bench player in a local car dealership radio commercial. That said, an agency typically charges 10 to 20 percent of their client’s compensation, so the more your client makes, the more you make.
How much profit can a talent agency make?
According to the U.S. Bureau of Labor, agents, and business managers for artists, performers and athletes made a mean salary of almost $42 an hour, or $87,000 annually. But the top ten percent took home close to $200,000 a year. You’ll also find valuable industry earnings information on this site.
How can you make your business more profitable?
Consider your location. You might start your career in a smaller city, with less upscale talent and venues, but less competition and lower office costs and expenses. As you establish a reputation and figure out how to conduct business in the most productive and profitable manner, you can concentrate your efforts on locations where the competitive pressure is more intense but the talent level is higher and the bookings more generous.
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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your talent 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
Certain state permits and licenses may be needed to operate a talent agency. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
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.
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.
Talent 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 talent 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 talent agency is usually 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 office space:
- 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 talent 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 office space:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your talent 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 talent agency
Press the flesh. Regularly attend the sort of shows in which you’d expect to find raw talent and meet the hiring decision makers. As your roster grows, display their abilities (and your ability to recognize good talent) with video and audio clips posted to YouTube, your website, social media and other relevant sites.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
A good agency’s professional skill set includes integrity, relevance, enthusiasm, and the ability to network effectively, seek out strong talent and know how to market it. As your reputation grows for being able to satisfy the needs of your clients at both ends of your relationship, talent will seek you out and hirers will always welcome your contact.
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 Talent Agency In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
You must have a sense of loyalty, integrity and passion for the careers of your clients. You’ll use your sales skills to attract talent and to convince booking agents, directors, producers, club owners, casting directors or other hirers to schedule their appearances or give them roles.
What happens during a typical day at a talent agency?
Your typical day might include many of the following responsibilities:
- Interviewing prospective new clients and listening to or watching their acts and reviewing their potential
- Making phone calls to convince hirers of the talent on your roster
- Attending shows or acts in support of your talent
- Networking with decision makers at parties and events and marketing your services
- Stroking the egos or offering support and career guidance to your roster, as needed
What are some skills and experiences that will help you build a successful talent agency?
You must have an eye (or an ear) for talent, and the sales ability to get your clients work at the highest wage or performance fees possible. You must also have the ability to groom the talent and help them present themselves in the best possible light and perhaps expand their repertoire.
What is the growth potential for a talent agency?
Since the U.S. Bureau of Labor Statistics in 2016 predicted a “faster than average” growth rate of 10 percent for actors between the years 2014-2024, this is good news for their agents. However, the figure for musicians is a projected “below average” growth rate over this same period, so signals are mixed. Also consider the state of your local economy, because this will help determine how often people go to see concerts, comedy shows, etc.
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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.
What are some insider tips for jump starting a talent agency?
Gain career traction by focusing on an area of expertise. For instance, if you have work experience as a sound engineer or producer at a recording studio, you might use it to launch a career as an agent for musicians or singers. Or start as a booking agent at a comedy club to become an agent specializing in stand up comedians. In other words, use the credibility and the talent discernment that you’ve already gained through work experience to take the next step into agenting.
How and when to build a team
As your business grows, so will your need for employees, alliances, or partnership arrangement with professionals offering complementary services. This could range from chaperones to accompany child performers to salespeople to add to your roster and office workers to answer phones and keep the business running smoothly.