In this article, we take a deep dive into how to start a marketing agency the right way.
The idea of running your own agency is exciting. It offers freedom, creativity, and the chance to build something that is entirely yours. But while the rewards can be significant, success does not come from chance or enthusiasm alone. The reality is that many agencies struggle in their early years because they have not laid the right foundations.
That is why it is so important to approach the process strategically from the very beginning. From structuring your business and understanding the numbers, to building scalable systems and positioning yourself in a crowded market, every decision you make early on will have a lasting impact on your success.
With years of experience helping entrepreneurs launch and grow businesses across a wide range of industries, we have seen first-hand what works and what does not. In this guide, we will walk you through the essential steps to starting your own marketing agency, giving you the practical insights and proven strategies you need to set yourself up for long-term success.
The First Steps
Here are the first steps you should take when starting your marketing agency:
- Market research: Who are your competitors? What’s the demand like in your chosen niche? These insights will inform your strategies and help you identify gaps in the market that your agency can fill.
- Define a niche: If you want a successful marketing agency, standing out is key, and finding a niche is a good way to give you a headstart. Find a specific sector or service you excel at and aim to become the go-to expert in that area.
- Create a business plan: This is your blueprint for success. Your business plan should outline your mission, vision, target market, competitive landscape, financial projections, and marketing strategies. Download our free business plan template to help you along!
Remember, thorough preparation mitigates future risk, and implementing these first steps when you decide to start a marketing agency can save you from a lot of headaches in the future.
Legal and Financial Preparations
Here are the basic legal and financial preparations you need to consider when starting your marketing agency.
Chose Your Business Structure
One of the first decisions you’ll need to make on your journey to start a marketing agency is choosing the right business structure. This decision will impact various aspects, including your tax obligations, legal liabilities, and potential for growth. The common structures to consider are:
Structure | Key Characteristics | Tax Rate |
Sole Trader | Simplest to set up. You and the business are the same legal entity. You are personally liable for all debts. Low compliance cost. | Personal marginal rate (up to 47%) |
Partnership | Two or more individuals share ownership. Each partner is personally liable (including for each other’s actions). Profits split and taxed individually. Requires a partnership agreement. | Partners pay tax on their share at personal rates |
Company (Pty Ltd) | A separate legal entity from its shareholders. Provides limited liability protection. More complex and costly to set up and maintain. | 25% (small business) or 30% (larger companies) |
Trust | Assets held by a trustee for beneficiaries. Can be tax-effective for income distribution. Typically suited to businesses with established profitability. | Beneficiaries pay tax at their personal rates |
Company owned by Trust | A discretionary trust holds shares in a company. Combines asset protection of a company with the income distribution flexibility of a trust. Popular for established businesses and family groups. | Company rate on retained profits; trust distributions taxed at beneficiary rates |
Find out more about establishing the right business structure.
If you want to get started easily and cheaply, then you can first set up as a sole trader and then convert to a partnership or company later. Check out our PDF guide on how to convert from a sole trader to a company, including the potential tax issues.
Tax and GST Basics
Tax obligations are an inescapable part of running any business, and when you’re figuring out how to start a marketing agency, understanding tax basics is crucial. Here’s what you need to know:
- Registering for GST: If your annual revenue is expected to exceed a certain threshold, you’ll need to register for Goods and Services Tax (GST). This involves charging your clients an additional percentage on your services and reporting it to the tax office. Find out more about registering your business.
- Basic tax liabilities: As a business owner, you’ll be responsible for various taxes, such as income tax, corporate tax, and payroll tax for any employees you hire. Learn how to keep up with tax payments.
- Payroll tax and superannuation — if you employ staff, you’ll need to meet obligations under the Superannuation Guarantee and, depending on your payroll size, state-based payroll tax.
- Deductions: There are numerous tax deductions available to businesses, like business-related expenses and home office costs. Make sure to take advantage of these to reduce the amount of tax you pay.
Understanding tax and GST is a complex task, and staying on top of it can help avoid any tax or financial troubles in the future.
Finding Your First Clients
Once you’ve taken care of your legal and tax obligations, it’s time to start building your client-base. The best starting place to find your clients is your existing network. Build upon the relationships you already have and don’t be afraid to ask for referrals. Other ideas to build a client base include:
- Online marketing: Implement the skills you plan to offer to your clients. Use SEO and digital advertising to make your agency visible to potential clients searching for marketing services. Create a useful tool for potential clients and push it out via social media.
- Direct Engagement: Use your network of former clients and directly engage or re-engage with them. Even if they have changed roles or firms, it never hurts to reconnect.
- Freelance platforms: Websites like Upwork and Freelancer can be good places to start, allowing you to build a portfolio and get testimonials.
- Offer free work: Although not sustainable in the long term, offering your services for free or at a discounted rate can be a good strategy for building a portfolio and gaining initial reviews.
The ultimate aim is to build a business that’s not just profitable but also sustainable in the long term.
As your trusted financial and business advisor, JD Scott + Co is here to assist you at every turn, ensuring you’re well-prepared for whatever comes next. Contact us today for more information.
FAQs: How to Start a Marketing Agency
What are the initial costs involved in starting a marketing agency?
Initial costs when you start a marketing agency can vary widely based on the scale and focus of your business. Common expenses include website development, legal fees, software subscriptions, and your initial marketing budget. Once you’re established, you may also pay rent for an office (unless you operate remotely) as well as staff salaries, which usually make up a significant portion of your spending. JD Scott + Co offers comprehensive financial planning to help you map out these initial expenses and create a budget that aligns with your business objectives.
Should I choose a niche for my digital marketing agency?
Choosing a niche for your agency can help you stand out. Finding the right one involves understanding market demand, your skill set, and the level of competition. A thorough market analysis can offer valuable insights into what sectors or services have untapped potential. You can also remain as a generalist marketing agency, but finding a niche can help you to stand out.
Do I need a physical office?
You don’t necessarily need a physical office to start a marketing agency. Many successful agencies operate remotely, especially given the flexibility the digital age offers. The choice often depends on your client base, team size, preferences, and the kinds of services you offer.
How do I ensure I'm compliant with tax and legal regulations?
It’s crucial to consult with professionals for tax planning and legal compliance. JD Scott + Co can help you navigate tax requirements, including GST basics, and advise on the business structure that is best for your specific situation.
How can I attract and retain clients?
Effective networking, high-quality service delivery, and client-focused strategies are key. Utilising online marketing techniques like SEO can significantly improve your agency’s visibility. JD Scott + Co’s business advisory services can help you formulate effective client acquisition and retention strategies.
What are some challenges I may face when scaling my agency?
As your agency grows, you may face challenges in team management, service delivery consistency, and financial management. We offer tailored financial solutions and business advice to help you anticipate and mitigate these challenges, ensuring sustainable growth.
