How to start an agency (step-by-step guide)

Want to learn how to start an agency?

Whether it’s for content development, logo design, or other areas of digital marketing, starting a new agency is never easy.However, with the right steps and tools, you can get off the ground a lot faster!

To help you out, we’ll cover everything you need to know about starting your own agency in this article. We’ll also share a few helpful tips to find your first few clients!

Table of Contents

What is an agency?

An agency is a company that provides specific services to other businesses. Most agencies either offer a single service or a variety of services, like:

How to start an agency in five steps

Here’s a step-by-step guide on how to start an agency:

1. Determine your niche

The first step in starting your agency is to determine your niche.

Why?

Identifying a niche helps you understand:

• The industry you work in.
• The activities your agency performs.
• The type of clients you should have.

It’s best to choose a niche that you are familiar with. For example, if you’re well-versed with social media, you could start a social media marketing agency.

The benefits?

• You will have a shorter learning curve which helps you focus on other aspects of growing your business.
• Potential clients will trust you more if they know you have experience and expertise in the field.

2. Decide if you’re going remote or not

This is one of the most important business decisions you will make. It will determine your cost structure, your talent acquisition strategy and much more.

While some agencies find it easier on the pocket to have a completely remote team, others need to have a physical office.

Some advantages of going remote are:

• It involves fewer costs as you don’t have to pay rent and other office overheads.
• It’s great for productivity since employees can work flexibly.
• You can recruit employees from a global talent pool as you’re not location-limited.

Remote teams are a great alternative for small businesses and agencies. However, once they start to expand, most business owners feel the need for a physical office.

The decision ultimately depends on:

A. How the team functions best

To know what works best for your agency, you could start with a full-time in-office team and let your employees work from home a few days a week. This way, you can find an arrangement that suits your needs.

B. The type of services

Creative agencies like marketing agencies and digital agencies can have remote teams before they mostly cover online marketing. As everything is web-based, you don’t need to physically be present.

However, other agencies could struggle by going remote.

For example, real estate agencies can’t have agents working from home as they’ll have to visit properties to prospect them.

3. Decide a suitable business model

The next step to setting up a new business is to decide how you want to handle your billables. Here are some ways to do this:

A. Flat-rate

This means offering your services at a monthly or yearly rate. This way, your client doesn’t have to pay you for hours worked or the number of projects you work on. All they have to do is pay a flat sum to avail your services.

The easiest way to determine a flat-rate for your services is to analyze client needs and the amount of work you’ll have to put in to get the job done.

However, this business plan might not work when clients decide to scale up. While you’ll be doing more work, you’ll still be paid the same! To avoid this, always revise contracts before you renew them. You can easily find an agency contract template online to get started.

B. Commissions

Here, you only get paid after your clients make money off of a sale.

For example, if your SEO agency optimizes a client’s webpage, you can get a portion of the revenue they generate from that page.

However, this model comes with a few issues:

1. It’s not applicable to all services. For example, there’s no way to get a commission for designing a website banner for a client.
2. It’s hard to bill your clients without closely keeping track of their sales. For example, if you are a marketing agency, you need to know exactly how much revenue your strategies generated to get an accurate commission.

C. Hourly rates

This business model is perfect for new businesses.

Here, you bill clients for the time you spent working on their projects at a fixed hourly rate.

While manually keeping track of the hours you spend on work can be taxing, you can use time trackers to help you out. As they automatically track the hours worked by your staff on each project, billing clients on an hourly basis becomes simple!

4. Hire a small team at first

Employees are a crucial part of running any agency.

As you’re only starting out, it’s best to hire a small team of employees. This helps you complete client work without having to manage a large team.

Start by filling out the core jobs that every creative agency needs, like:

• Web designers who are familiar with modern concepts like responsive web designs. Remember, most clients and customers will likely engage with you through your website, fine-tuning this is essential.
• Marketers who can analyze data and create campaigns to engage potential clients or customers.
• Individuals who have the required skill set to perform the services you are offering. For example, you need content writers if you are a content marketing agency.

Once you have enough clients, you could hire more employees to grow your agency.

5. Find your first clients

The next step is to find clients for your business.

But how do you find them?

Here’s how:

1. Networking

When you’re looking for clients, you’ll have to network extensively to find as many potential clients as possible. People need to know about you and your agency before they consider hiring you, right?

So how do you go about this?

A. Online networking

Start by creating a LinkedIn profile for your business. Describe the service you provide and mention any previous experience that you or your employees have in the field. Also ensure that your company has a website that clearly explains what you offer..

Be sure to add your company’s profile and website to all your online profiles and social media accounts and ask your employees to do the same.

Then, reach out to your current contacts – letting them know about your services. Since these people know you or may have worked with you before, they’ll be more willing to work with you.

B. Offline networking

Another great way to find clients is by physically going out and meeting people. A great way to do this is to get on Eventbrite or Meetup.com and attend relevant events happening around you.

These are forums where various startups and founders network and share business ideas, experiences and propositions. It’s a good way to build connections with people who can either:

• Become a client
• Refer you to someone in your network who could become a client

2. Marketplaces

Freelance marketplaces like Upwork and Freelancer are another simple way to find people in need of your services. Simply respond to job postings on these sites to find an opportunity for your agency and get to work!

While these marketplaces are great to find tons of work opportunities, they only work if you already have some prior work experience.

Remember, these are people who have never worked with you before – they’ll want some proof of work you’ve done in the past!

3. Referrals

Once you have an existing client base, ask them to refer you to their networks.

This is one of the easiest ways to quickly find new clients as you’re not doing all the hard work of finding them yourself!

Also, as these are businesses that your clients already know, they’re probably more trustworthy and you won’t have any issues working with them.

4. Local Ads

Placing local ads on Google AdWords and Facebook can be a quick way to get leads who are looking to work with someone nearby. For example, you could target keywords like “web designer in South London” in AdWords or target business owners in the south London area.

Start by budgeting a small amount of money and trying out different variations. If you start getting leads, you can increase your budget.

Four tips to remember when running your own agency

While starting an agency can be hard, with the right tools and processes, things get much simpler.

Here are four tips to help you run an agency easily:

1. Use the right tools

Whether you run your agency remotely or from an office space, using the right workplace software can streamline your business operations to boost your profit margins.

Here are some tools that can help you out:

A. Communication tools

Effective communication is a crucial element in meeting client demands, analyzing work progress and collaborating on projects.

Luckily, messaging tools like Fleep and Slack let you instantly communicate with your employees. You can also share project updates and files to keep everyone on the same page.

Additionally, video calling tools like Zoom and Skype are perfect for detailed discussions for specific projects and weekly meetings. They also help with team-building activities to make any remote staff feel part of your agency.

B. File management tools

As you could be working on multiple projects simultaneously, you need tools to help your employees collaborate on files and store them online.

File management tools like Google Drive and Dropbox let you store and share files and collaborate over them seamlessly. As these are cloud-based software, you can keep track of all your project files remotely.

C. Performance tracking

One of the biggest problems faced by companies is maintaining employee productivity.

Without monitoring your employees, you won’t know:

• Who’s working on what task and for how long.
• If someone is passing off idle hours as hours worked.
• What websites and apps they access during work hours.

Luckily, performance tracking tools like Time Doctor make employees monitoring a breeze.

What’s Time Doctor?

Time Doctor is a powerful productivity software used by large companies and SMBs to monitor employee performance.

Here’s how it can help you manage your agency staff:

• Project reports — Know who worked on what project and for how long.
• Timesheet reports – Track the time an employee worked during a given period.
• Web & app usage report – Identify what websites and apps were accessed by each employee during work hours.
• Distraction management – Helps your agency staff avoid distractions with pop-up alerts.
• Inactivity timer – Ensure that your employees don’t pass idle time as hours worked.
• Payroll management – Easily bill your clients or customers for tasks completed within Time Doctor.

2. Keep your best clients happy

While getting new clients is important to scale your business, keeping your current ones happy is just as essential.

Why?

Happy clients turn into loyal clients and loyal clients can increase your agency’s cash flow and bottom line through additional projects.

Additionally, they can give client testimonials and refer you to their network, bringing in new business for your agency.

3. Implement proper workflows

Once your business is up and running, you need to have efficient systems in place to manage processes.

For example, if you run an advertising agency (ad agency), your employees should know client preferences when it comes to their project deliverables. They should also know what the client doesn’t like, how to clarify doubts and how to present the final product.

The benefits?

• As your employees will know everything about a specific task or project, they can complete it quickly.
• As everything has been clarified, there’ll be fewer mistakes – saving you tons of time and money.

And when you’re not wasting time and money on correcting repetitive activities, you can focus more on growing your agency!

4. Keep your employees happy

Your best business asset is your employees, right?

If you keep them happy, they’ll be at their most productive and give your clients their best.

To keep your employees happy, you could:

• Give them the flexibility they need to maintain a good work-life balance.
• Provide incentives for good work.
• Encourage open communication and maintain a feedback culture to resolve any issues they might be facing.
• Have a collaborative work environment to make them feel part of a team.
• Promote diversity to have an inclusive work environment.

Remember, the more appreciated your employees feel, the more productive they’re likely to be!

Conclusion

Starting your own business can be a lot of hard work.

But it’s not impossible.

Use the steps and tips we covered here to get started immediately. With the right strategy and processes in place, it won’t be long before you start your own successful agency!

Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.