Agency Management

No Limits to Growth: A Practical Guide to Starting Your Agency

August 23, 2023
IN THIS BLOG

Freelancers or employees who have good experience in the digital space will most likely wake up one day and start thinking of ways to expand their services and maximize their income potential. However, there is a limit to what an individual can do, and a time comes when you need to scale up freelancing and unhook your time from working on projects yourself to building a team.

Do you find yourself in that place? Of course, that’s why you are here. And the first question raised in your mind must be about how to start an agency.

You know you have the talent. But do you have the expertise and necessary tools to materialize your dream?

How solid your plan for starting an agency depends on how well you have researched the market and competition in your services field. Before we lay out a step-by-step process on how to start your own agency, let’s first understand what is an agency.

TL;DR:

  • Starting an agency can be a way to grow your income potential by expanding your services.
  • It requires detailed market demand and gap research to make your mark with a unique selling proposition.
  • Careful planning for marketing and operational budget ensures financial stability.
  • You can simplify the processes like project and time management and expense tracking by implementing automation tools like timegram.

What is an Agency?

An agency is typically a service-based organization that provides specialized services or expertise to clients. It operates on behalf of clients to achieve specific goals, often in marketing, advertising, creative design, or consulting. Businesses hire agencies for their expertise and rely on them to execute tasks or projects.

In the digital landscape, various kinds of agencies cater to different business needs. Digital marketing is an umbrella term including services such as search engine optimization (SEO), pay-per-click (PPC) advertising, social media marketing, email marketing, and content marketing. These agencies drive traffic, build brand loyalty, and generate leads or sales for their clients.

Here is more about what they offer:

  • Web design and development agencies specialize in creating and developing visually appealing websites that are user-friendly and optimized for search engines. Their goal is to ensure a seamless online experience for visitors and clients.
  • Social media marketing agencies manage and optimize their clients' accounts to engage with their target audience and increase brand visibility. They also tap into the audience of social media (Instagram, Facebook, and other such platforms) influencers to reach a bigger audience on behalf of their clients.
  • Content marketing agencies focus on creating valuable and relevant content to attract and retain a target audience. As industry experts, they use blog posts, articles, videos, and other content formats to drive organic traffic and establish a client base. 
  • Creative services agencies provide expertise in graphic design, branding, and enhancing visual identity. They help clients create visually appealing assets (website design, logo design, etc.) that align with their brand and messaging. Their primary goal is to enrich the overall aesthetic appeal and communication effectiveness of their clients' propositions.

So Who Will Need Your Services, and Why?

As a digital agency, you will often work with multiple clients simultaneously. Though you can offer numerous services, initially, your core focus should be on providing specialized solutions in the areas you are most confident about.

Identifying a marketing niche and defining a specific target audience helps you position yourself as a specialist in a particular field, making it easier to attract clients looking for specific services.

But how do you do that? 

Find the growth opportunity!

Before starting your own agency, spend some time in thorough market research and analyze the market demand for your niche to identify the average income level and potential growth opportunities.

Studying the competition helps you gain insights into what other players offer, their pricing strategies, unique selling points, and the gap you can fill. In other words, find problems that only you can solve!

Knowing your market demand lets you distinguish your agency and develop competitive pricing and service offerings that stand out from their alternatives.

You might be tempted to take up various niches and think you can handle them because most digital marketing services are interrelated, or you have some experience in each. But if you take our word, the world is moving towards specialization. We suggest you pick 2 to 3 compatible categories to develop yourself as a successful agency.

Whether you have decided to work for e-commerce, healthcare, technology, or any other business, concentrating on your best skills allows you to offer innovative solutions tailored to meet the unique demands of your target audience.

Create a vision: a story that will drive your objectives and your team!

You cannot have an effective plan to gain traction for your agency without a clear vision that underlines the value of your services. What is it actually that you are offering to your clients, and what inspires you and your team to this calling?

There is always a story behind successful agencies that keep their teams focused on their values. Think why and what you are working for!

Understanding the target audience is equally vital. Knowing their preferences, pain points, and behaviors allows you to craft targeted marketing strategies that resonate with potential clients and their business targets.

What You Need to Know Before Launching Your Agency

As a freelancer, you are a one-person show with almost everything under control.

But before you start an agency, think about how managing a team (or a network of freelancers) will be a completely new experience that requires an entirely different approach to handling your processes!

Here are a few things to take care of before you launch your agency business:

Where is your team?

It has to be the most crucial of your concerns while planning how to create an agency. Build a talent pool by proactively approaching potential candidates through LinkedIn and other platforms, and take your time to complete the initial hiring process.

Finding the people who are the right fit for your agency and retaining them is half the work done before starting an agency. Start with a small team and make a flexible hybrid work policy to include the best professionals across time and space limits. 

What are your SOPs?

It is easier to address issues as they come up when you are working alone. As a team, creating a workflow requires establishing transparent processes and guidelines. Your clients will also be interested in how you keep track of their projects.

The two key areas that need to be well defined are work procedures and record keeping, i.e., how tasks will be carried out and what method/systems will be implemented to track progress. Depending on the scale of your agency, a training process can also be a part of your SOPs.

What is your role in the agency?

Defining the roles and responsibilities of every team member within your agency will clarify who does what and establish a clear understanding among team members about their positions and work expectations. You can be flexible here because as the agency grows, your roles will evolve according to the developing skills of your team members. 

Do you have a support group?

In the business world, you are nothing alone. Join networking groups, masterminds, and seek advice from experienced agency owners. Connect with industry professionals for coffee or virtual meetings to gain insights and avoid common pitfalls.

What if it doesn’t work?

Begin your agency with a clear end goal yet keeping unforeseen scenarios in mind. You might rethink your long-term involvement in the agency or be ready to merge, create partnerships, or take a clean break and hand it over to any prospective buyers. Knowing your options allows you to make informed decisions in the future!

Starting Your Agency: Step-By-Step Process

How we wish that running a successful digital agency was all about creative ideas and skilled professionals!

In a way, it is. Meeting the practical requirements is not an uphill task: you just have to complete every step professionally and carefully. Here is a step-by-step guide on how to start an agency business:

Step #1: Create a Website

After registering your agency as a sole proprietorship or an LLC (Limited Liability Company), you will need to set up the website for your agency. 

Creating a compelling website is critical as it will be your primary online representative. It's often the first interaction potential clients have with your brand, so this is your place to shine. Focus on the following key elements during this process:

User-friendly design

Your website must be optimized for multiple devices, as many users now access the internet from smartphones and tablets. A visually appealing and user-friendly layout with straightforward navigation will engage visitors and help them easily find the information they need. 

Relevant and SEO-rich content

It should be a valuable resource providing relevant content showcasing your digital marketing expertise. Incorporate keywords strategically to improve search engine visibility and attract potential clients searching for services like yours.

Clear call-to-action (CTA)

Include a solid and clear CTA on your website to guide visitors towards taking desired actions, such as scheduling a consultation or requesting a quote. A compelling CTA can significantly increase conversion rates.

If you lack the skills or time to build a website, consider hiring a reputable web design agency to create a professional and functional site. Make sure the professional you hire understands your business, its unique value proposition, and your aesthetics!

Step #2: Create an Online Presence

Most of your rapport will come from the work you have already done and the network that you have built with your experience as a freelance professional or an employee.

But if you are starting from scratch, how do you proceed?

First, create your agency’s social media accounts on all the platforms where you can gain the attention of prospective clients. With every piece of content you circulate, provide links to your website where you clearly state your USP and the services you offer.

Differentiate yourself by offering competitive rates or even offering your services for free if you are a beginner. You can earn the results delivered to the first few clients as the testimonials to market yourself!

Look for job postings on freelance platforms like LinkedIn and Upwork for your agency. You will, however, need referrals to land contracts on these platforms. Spread the word with people you have worked with in the past and ask for referrals. 

If you think you are not getting much success with these methods, you can always go for paid advertisement by spending some budget on getting your profile in targeted local ads.

Step #3: Implement a Pricing Model

Once you start getting contracts, you will need a pricing structure for how you charge your clients.

Factors to consider when setting prices include the agency's expertise, the value it provides to clients, the complexity of projects, and the competition in the market. Carefully pricing your services will ensure your agency covers its costs while making a reasonable profit.

Monitor gross and net profit margins regularly to identify trends and make informed business decisions. A healthy profit margin will allow you to invest in growth initiatives, reward employees, and deal with unplanned expenses.

The first option is offering your services at a fixed monthly or yearly rate, simplifying client payments. For this, you must analyze client needs and the effort required for the project work to determine the appropriate flat rate. Create flexible contracts to accommodate any change in scope.

Or, you can get paid based on client sales generated from your services. While effective for some services, it may not apply to all niches and requires accurate tracking of client sales for billing. The profit is not always guaranteed!

The third option is ideal for new businesses: bill clients based on the hours spent on their projects at a fixed hourly rate. This way, you’ll be able to recover costs with some profit margin which is a concern for a new agency. Time trackers can simplify this process by automatically recording hours worked by your team!

Step #4: Set Up an Expense Tracking System

A digital agency must establish a sound financial system by setting up reliable accounting software to track income, expenses, and invoices.

Web-based accounting solutions offer user-friendly interfaces, automation, and real-time access to financial data.

You cannot understand the agency's spending patterns and identify areas for cost optimization without tracking expenses. Categorize expenses into various buckets, such as payroll, software subscriptions, marketing, and operational costs, to gain better insights into cash flow and financial health.

Set a Budget for Marketing and Operational Costs

Budgeting plays a vital role in controlling expenses and planning for growth. Allocate funds to different departments or projects based on their importance and expected returns. 

As mentioned before, marketing is a critical area for digital agencies, and allocating a sufficient budget for marketing initiatives will drive your agency's lead generation and client acquisition.

Operational costs include rent, utilities, software subscriptions, and office supplies. Forecasting and budgeting for these expenses help maintain financial stability and avoid unexpected financial strain.

Implement the Right Set of Tools

If all of this sounds overwhelming, here is a helpful tip: save your time, cost, and effort by creating a set of tools for automating these processes and other team operations, then sit back and focus on your business objectives!

So what are some critical tasks you must automate? And what are the tools available for them?

Communication and collaboration

Since digital marketing agencies are most likely to have remote or hybrid work arrangements, communication and collaboration tools have become a necessity. You will lag in your targets if everyone in the team is not in the loop with every development (or the lack of it!)

Zoom and Slack are excellent for instant messaging and video conferencing within your team or with clients. Multiple communication channels become essential for effective collaboration when working as a dispersed team from different time zones. 

For a services agency, Trello can be a simple yet effective collaboration tool for sharing and categorizing tasks and projects according to their work progress.

Project management and time tracking

In the competitive agency market, time and project management is the key to delivering your contracts on time with quality results. You need to have an agency management software to help with your day-to-day operations. It is easier said than done. Not if you have timegram!

team productivity reports

An efficient, automated time tracking tool like timegram allows you to see individual, team, task, and project progress against deadlines at one glance. It enables you to assign tasks, manage team capacity, and automatically generate performance reports based on timesheet data, all in one place.

You can also analyze the productivity patterns through its insights feature and utilize this knowledge for better resource allocation

Financial reporting and billing

As a new agency business, you will track all work-related activity to track and manage billable and non-billable hours accurately, and again, timegram can be your free virtual assistant in your budgeting endeavors! 

Its revenue and costs feature helps you track expenses by calculating estimated vs. actual time spent on tasks. You can automatically convert the billable hours into invoices and export them in PDFs. 

In the services business, your most valuable resources are time and people. timegram’s straightforward financial reporting will provide you with a comprehensive overview of assets and liabilities, enabling you to improve your team's productivity through data driven adjustments.

You can identify cost-saving opportunities, high-margin projects, and clients that contribute significantly to the agency's overall profitability. It also helps you forecast future revenues and expenses based on historical data and budget your marketing and operational costs more efficiently.

Conclusion

You are now ready to get things moving with our comprehensive and step-by-step guide on how to start an agency. Our final word is that creating an agency and making it successful is undoubtedly challenging, but with creativity, careful planning, and the right tools, you can turn your passion and expertise into a thriving business.

The key to success lies in how unique and targeted your solutions are and how exceptional their experience is to your clients! 

Take timegram, for example: it is the only privacy-first time tracking software that encompasses all your project management needs, promotes transparency and accountability, AND follows a strictly non-surveillance policy!

Find out how to automate the processes discussed in the blog and give your best effort and energy in designing creative solutions for your clients.

FAQs

Can I start an agency with no experience?

Yes! You can start an agency without prior experience with dedicated self-training and commitment. It could be challenging, but thorough research about digital marketing channels, essential tools, and practical strategies can prepare you to pursue your goal.

Can an agency be one person?

A single person often operates small agencies. They might not even have a team on their payroll but work through a network of freelancers. 

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Sidra Ali Shah

About the author

Sidra is a research scholar and a philosophy nerd who fell in love with language at a very young age. She believes it's words and their combinations that make the world go round. In her free time, she likes to brainstorm with her children.

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