Many people looking into how to start an agency see large, established firms and think to themselves, “I could never do that.” But the reality is, almost all of the prestigious studios we know and love started with just one or two people. The way they got to where they are today was just by taking baby steps time and again over the long haul.
Launching and sustaining a business takes a lot of patience and effort, but it’s also incredibly rewarding. Personally, I work longer hours than I did before I started my agency — even if I don’t like to admit it — but the creative freedom and sense of ownership I have in exchange is worth it. Not to mention, working for yourself is a pretty sweet deal: your schedule, clients and projects are completely up to you.
Of course, you’ll have to save up for it first — I recommend saving enough for five months’ worth of expenses, plus whatever tools and equipment you need to start. You may also want to earmark some money for consultants who can help you navigate complex topics like marketing strategy and finances.
But once you’ve reached that goal, you’ll be in a good position to begin taking concrete steps towards opening your own design agency. To help turn your business from daydream into reality, we’ve put together a checklist of tangible actions for you to take — read on below.
Tips on How to Start an Agency
1. Develop Your Business Plan
Business plans can encompass a lot of different things, from financial projections to organizational structure and more. Exactly which elements are necessary will vary a little bit from company to company, but I think all business plans should clearly state your services offered, target audience and mission/vision statement, with an emphasis on how you want to position the company. This plays a huge role in defining who you are as a brand and how you stand apart from the competition. It’s also helpful to address the unique skill sets your agency can offer and who you’ll do it for.
While a good business plan should be thorough and polished, you don’t need to get too hung up on perfection, especially if there are other aspects of your business that you’re anxious to work on. It’s not worth waiting years to move forward with your business just because your intro deck isn’t picture-perfect.
2. Assemble Your A-team
No person is an island — we all rely on others at some point or another to get by, and that’s especially true when it comes to starting your own business. Whether they’re friends, family members, former coworkers or LinkedIn contacts, you likely have people in your network that would be happy to chat about your new venture and lend their expertise.
While there are tons of different fields that can be beneficial for you to learn about, I suggest that you prioritize finding professionals in the legal, finance and business consulting industries. Reaching out to other agency founders or creative directors can be really helpful, too. Before I launched my business, I cold-contacted a few different creative directors I admired to get their thoughts on how to start an agency, and I was pleasantly surprised with how eager they were to share their experience and advice. Most of them started out in a similar fashion, so they were happy to help.
3. Create a Budget
For a lot of creative entrepreneurs, their agency is their baby, and it’s understandable that they’d want to keep spending more to make it the best it can be. But doing that is an easy way to burn through your resources, and maybe even have to close as a result. To avoid this, a budget is essential.
You can reference the sheet below as an example, but at a high level, you just need to make a list of all of your recurring expenses and then decide your salary. Make sure to keep this separate from your personal budget — intertwining the two can lead to lots of confusion later on.
4. Make It Official
There are a lot of fluffy thought-leadership pieces on how to start an agency out there that can basically be boiled down to tired clichés like “take risks,” “believe in yourself,” etc. But what I found most helpful when I was preparing to open my agency was really practical, actionable advice — the nuts and bolts aren’t exactly glamorous, but they’re very helpful, particularly if you’ve never started a business before. Requirements vary by state, but I’ve listed a few of the nitty-gritty tasks I had to complete in order to launch in California, as well as some links to guide you through them:
Set up your business structure
Register your company name (if it isn’t already taken)
Get your EIN (Employer Identification Number)
Get a PO box, if you don’t already have a business address
Set up a bank account
Once you tackle all of these steps, make sure to securely save all of the documentation and information associated with them.
5. Find Your Clients
It’s often said that your friends and family are your first clients, and that is, for the most part, true. But you don’t have to rely on them exclusively in the early days of your business. Get your portfolio and website in top shape, then try…
Uploading your contacts in a CMS: There are plenty of client management softwares, or CMSs, that are affordable for small businesses. We use Hubspot. Upload all of the relevant contacts you have, create some email templates and use them for outreach.
Developing a marketing strategy: One of the investments I chose to make early on was hiring a marketing strategist for a consulting project. It was money well spent — she helped me find out who my target audience was and how I could most effectively reach them.
Attending events & networking: My company set up shop in a women’s coworking space called The Wing. It’s been a great place to connect with people, which has directly led to a few different projects for us. Find out where your audience is and go talk to them — face-to-face interactions are powerful!
Asking for referrals and reviews: Reach out to your former and current clients to see if they’d be comfortable leaving you a review, or even putting you in touch with organizations they know are looking for an agency. To incentivize them, you can offer referral discounts and promos.
Once you do find a potential client, try to set up an in-person or phone meeting with them to find out what they’re looking for, what their budget is and how you might be able to address their needs.
6. Establish a Workflow
Beyond deciding what you’ll do for your clients, you need to figure out how you’ll do it — this is something I wish I would have focused on more when I first started my design agency. A few things to consider:
What will the general process look like — how many meetings, and how many rounds of feedback? What will meetings/feedback rounds entail, and how will they be held — conference call, video chat, in person?
How will you communicate with clients in the interim — email, Slack, phone?
How will clients pay (card, check, direct deposit, etc.) and how will you invoice them — will they pay a portion up front and the rest upon completion, or pay a weekly retainer?
Tip: Holding off on giving the final files to a client until they’ve paid you in full has really worked well for me!
What exact services and deliverables will clients receive? They should never be surprised by how much you’re billing them or what they’re getting in return.
Will you have subcontractors, and if so, how will you manage them?
How will you empower clients and get them excited about your work?
As you’re outlining this process, think about ways you can make it more efficient, such as email templates, platforms that would be useful, a list of potential freelancers for you to call if needed and so on.
7. Get a Feel for Taxes & Expenses
Finance is difficult enough as it is, but when you become a small business owner, things get even more complex. Generally, it’s a good idea to work with a professional who can help you get everything in order, but it’s still valuable to understand some basic principles. Here are a few things I’ve learned along the way:
Taxes change: Rather than paying once a year, those who are self-employed usually pay estimated quarterly taxes. The exact percentage you’re charged will fluctuate, but around 30% is a pretty safe bet, so make sure to account for that when budgeting and forecasting.
Document your employees: Always have employees and subcontractors fill out a W-2 or W-4 form, depending on whether they’re part-time or full, and give them a 1099 form or W-9 at the end of the year.
Log your expenses: Keep track of everything you spend, whether in a spreadsheet or accounting platform, and make sure to use tax categories so that creating profit and loss statements and filing your taxes at the end of the quarter is a cinch.
Watch your spending: A lot of financial advisors will tell you that increasing your bottom line isn’t just about earning more — it’s also about spending less. Work on getting your business up and running before you think about investing in things that can wait, like full-time employees or social media management.
8. Adapt & Maintain Your Competitive Edge
At this stage, you might feel like it's too early to think about long-term business performance, but it’s something that can really help you out down the line. Establishing KPIs (key performance indicators) and OKRs (objectives and key results) early on will give you a baseline to measure success and hold you accountable for continual improvement. If you don’t log these things in the beginning, you won’t be able to understand what’s working and what needs to change later on. Here are a few things I found important to measure:
Revenue
Profit
Number of clients
Hours worked
Hours billed
Followers on social media
You may also want to add KPIs specific to ads or marketing, like the number of ads you created for your business and the number of posts you shared on social media.
As you craft your OKRs, don’t be afraid to get ambitious — you don’t have to (and in fact probably shouldn’t) achieve all of them. The team I was on at Google aimed to achieve 70% of their OKRs — if you achieved 100%, the consensus was that you weren’t setting them high enough.
Starting your own agency is complex and takes a lot of work. It’s understandable to feel overwhelmed or bogged down by the details, but if this happens, try to remind yourself of what you love about design in the first place. Go to galleries and museums, buy magazines if the cover catches your eye, look up the latest work of the designers you admire, watch and attend conferences. Often, that can give you the motivation you need to push through. As someone who’s been in your shoes before, I understand what a big task you have ahead of you — but I also know that the creative freedom, flexibility and sense of ownership you get from starting your own business makes the effort completely worth it.
Want to learn more? Check out a recording of this presentation and read the Q&A from our session!
Anastasia Salazar Ltd. is an independent design studio for tailored branding and digital designs. Reach out to learn how we can help you fuel growth and maximize your brand’s impact.