How to Start an Agency: A 3 Step Small Business Guide

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This is the first article in a two-part series about how to start an agency. The second article dives deeper into how to start a social media agency, specifically.

It’s impossible to deny the fact that starting a new business is exciting. 

And it’s easy to get caught up in that excitement. But it’s just as important to take a step back and make sure that you’re creating a solid foundation to properly support this new venture.

To be more specific, before you take on a single client, you’ll want to start chipping away at tasks related to:

If you’re wondering how to start an agency, we’d suggest figuring out these critical pieces first.

Here’s how:

Table of Contents

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How to start a business with no money

One of the greatest parts of starting an online business — like a social media marketing agency — is that you can keep initial expenses to a minimum. You don’t necessarily need to pay rent or hold inventory: you can bootstrap regardless of how much money you have access to (even if it’s $0).

As your business grows, so too can your spend on tools and services that make your life easier — freeing up the time you’d otherwise spend on workarounds. With more time available to do your best work, you can then increase your billable hours and the money your business brings in. 

Of course, if you’re just getting started, settling for the free version of a tool can work until you can get enough client work to justify increased business expenses.

While going through necessary agency startup tasks in the following sections, we’ll also be sharing ideas that can help you figure out how to start a business with no money: suggesting options with features that can scale up as you grow.

#1: Create important company branding pieces

What do you love about social media marketing that you can do better than anyone else? This might be a particular service, a specific industry you serve, or a mix of these things.

Once you’ve found your niche, it’s time to think about your company’s branding. Your brand helps to distinguish your agency from the competition and makes it easier for potential clients to keep you top-of-mind.

Part of developing your brand will involve creating or commissioning the following:

Note that none of these things are negotiable if you want to be successful as a digital agency. You will need them all sooner rather than later, so do yourself a favor and get ahead on them while you’re still in the initial launch stages.

Also, these pieces build on each other. If you have to prioritize, start with the logo and headshot(s). 

If your business is entirely digital, headshots help to humanize your brand and create trust over the internet. A picture of your face on a solid background, taken with your phone camera, is better than nothing to start. 

Note that a lot of networking events offer free or affordable access to basic professional headshots, so Google events in your area if you want to take care of this piece while also taking the opportunity to practice your elevator pitch.

Branding Tool Recommendations

Canva for basic branding and graphic design needs (freemium). It’s not as hard as Photoshop to produce a professional and compelling end result. Plus, Fanbooster integrates directly with Canva now.

WordPress for your company website (free). WordPress software is open-source, which means you have a lot of control in terms of where you host your business website (and as a result, how much you’ll pay for hosting). This also means you can customize it to your exact needs thanks to plugins and themes (free and premium options available) created by members of the community around WordPress.

#2: Keep your records straight

When you start a business, there are basic administrative and financial systems you’ll need in place to prevent absolute chaos come tax time. If that’s not enough to motivate you, consider this: organized records will also help you to understand your revenue performance at-a-glance.

Bookkeeping Tool & Service Recommendations

In learning how to start an agency, know this: 

You’ll absolutely need a tool that can track anything that may be relevant during tax day — especially income and expenses. 

For me, this tool is Quickbooks (paid). Other popular options include Wave (freemium) and FreshBooks (paid). 

At minimum, you can opt to do your own bookkeeping to save a few bucks, then hire a Certified Public Accountant (CPA) to do your taxes at the end of the year. Even if we can’t make any definitive statements, it seems fair to assume that hiring a CPA can reduce your chances of an IRS audit — they’re in a better position than you to understand common audit triggers. 

At any rate, since the tax code in just about every country is notoriously complicated and changes frequently, the fact that you’ll want to set aside some money for a professional to handle this aspect of your business administration cannot be understated.

#3: Protect your business from legal issues

Even if you’re just a one-person agency at this point, running a legitimate business means paying your salary through a payroll processing tool. The government appreciates you creating a clear distinction between business and personal funds. 

Using a payroll tool can also help small, one-person businesses keep on top of taxes. Instead of risking a large bill at the end of the year, you’re paying a large chunk of self-employment tax dues with every paycheck.

Another benefit of using payroll processing tools is that they generate a W2 form for employees associated with the business. For a self-employed business owner, this form can come in handy for proving income when attempting to get loans for big-ticket items like a car or house.

Changing gears, another important aspect of your company’s legal strategy is always making sure that you have client contracts signed by both sides. Specifically, send contracts that clearly define the scope of work, inclusions, and exclusions. In the modern age of doing business, having the ability to get an eSignature is key.

If you’re not sure what to include in your contracts with clients, check out this contract clauses resource from AND CO.

Legal Compliance Tool Recommendations

Gusto (paid) for full-service payroll processing. Learn from my mistakes: I used Quickbooks’ self-service payroll processing service initially, but ended up being late to process forms and payments the system had made me think I’d paid. It’s better to use a service that handles important things automatically, which is why full-service payroll is worth the investment (and is not that much more expensive than my previous Quickbooks solution).

AND.CO (freemium) offers a suite of useful administrative tools for freelancers with functionality that includes: time-tracking, invoicing, proposals, contracts, and creating subscription payments. These integrations work together nicely but it’s their contracts tool that really shines. It offers a simple and customizable template for making sure you’re always protecting your best interests — no need to overthink things.

Final Thoughts: Start an agency with the right preparation

Now that you’ve read the first part in our series about how to start an agency, it’s time to take action.

Sign up for some free trials to play around with the tools that sound like a good fit for your business and ask around to get recommendations for professionals who can help you with these important aspects of business branding and administration. 

What would you add to our guide about how to start an agency?

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Fanbooster delivers a powerful suite of social media scheduling, publishing, reporting, and monitoring tools. Save time and money with the most affordable social media management software on the market.
start an agency

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