Digital marketing is a critical marketing strategy for any business. It involves the integrated use of websites, social media, search engines, apps, and mobile devices to build brand and product awareness and drive the sale of products and services.
If you're interested in starting a digital marketing business or marketing consulting business, read on for a step-by-step guide.
Step 1: Decide if you want to generalize or specialize
In the marketing industry, the debate between being a jack-of-all-trades or a master of one is ongoing.
Generalists understand various marketing disciplines, and their comprehensive knowledge allows them to see the bigger picture and understand how different elements of a marketing strategy can work together to achieve a common goal. In e-commerce, a broader skill set is often regarded as an asset.
On the other hand, marketing specialists have a deep understanding of specific areas within the marketing discipline and can bring specialized expertise to their clients and justify charging higher rates.
Whether you decide to cover a broad range of services or focus on a specific niche, it's crucial to set yourself apart. Consider your business size, goals, target audience, and the complexity of different marketing areas.
Step 2: Create a marketing consultation business plan
A business plan is essential for guiding your consulting business and informing how various aspects of your company, operations, and skills work together to ensure success. For example, understanding market trends, dynamics, and the competitor landscape can help determine if there is a market need for your services and if your idea is viable.
Your plan can also help you make important decisions about your goals for growth as well as potential risks to consider. It can also help you secure funding or bring in business partners.
The basic business plan contains the following elements
- Executive summary
- Company description
- Industry and market analysis
- Competitive analysis
- Organization and management
- Product or service offering
- Sales and marketing strategy
- Startup and ongoing costs
- Financial projections
Step 3: Choosing the right business structure: Balancing legal protections and benefits
The business structure you choose will affect how you run your business each day, the taxes you pay, and how much risk you're comfortable taking with your personal assets. When picking a business structure, it's important to find a balance between legal protections and potential benefits.
The four most common business structures for a digital consulting business are:
- Sole proprietorship: This type of business is owned and operated by one person, with no legal separation between the owner and the business. As a result, the owner is personally responsible for all debts and obligations of the business. A sole proprietorship does not require any state filing.
- General partnership: A general partnership is the simplest type of partnership and is created by default when two or more persons form a for-profit business. In a general partnership, owners have unlimited personal liability for the business's debts, including, but not limited to, the acts of employees. No state filing is required.
- Limited liability company (LLC): An LLC offers limited liability protection (by separating the business assets of the company from the personal assets of the owners) as well as pass-through taxation.
- Corporation: A corporation is a separate legal entity owned by its shareholders, thereby protecting owners from personal liability for corporate debts and obligations.
For more information on business entity structures, read Comparing company types and Compare S corporation vs LLC.
Step 4: Determine the legal requirements for your digital marketing company
Depending on your business structure, location, and the type of consulting you offer, your digital or consulting marketing business may be subject to legal requirements, including:
- Business licenses and permits: Regardless of your business entity type, most businesses are required to obtain licenses and registrations. For a digital marketing consulting business, this may involve obtaining a general business license at the local or state level. In some jurisdictions, if you operate your business from home, you may still need to obtain a home occupation permit.
- Sales tax: While most consulting businesses aren’t subject to sales tax, rules vary by state and can change over time. You may also need to register your business with the Department of Revenue in your state and any other state where you have a nexus.
- DBA filing: If you do business under an assumed name or trade name, you must make a DBA filing with your state or local jurisdiction.
- Hiring employees: There are various requirements if you plan on hiring employees, such as obtaining an EIN and registering with the Department of Labor in your state. You will also need an EIN if you form an LLC or corporation.
- BOI filing: You may need to fulfill other requirements, such as getting a registered agent and filing a Beneficial Ownership Information Report with FinCEN.
- Separate finances: By law, businesses like corporations and LLCs must keep their business finances separate from the owner’s personal accounts. But even if you've gone for a different structure, separating your business and personal finances can still be a good idea because it makes it easier to keep accurate records.
There are also regulations that can impact your business and your clients, including:
- Data privacy and protection regulations: Laws such as the General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA) may apply. GDPR is a privacy law that applies to all organizations that process the personal data of EU citizens, no matter where that organization is based. As a digital marketer, you must be transparent about the data you collect, how it’s used, and who it’s shared with. For example, you must have a valid basis for processing personal data and have explicit user consent. Techniques such as double opt-ins for email collection can help ensure you have the express permission of individuals before collecting or using their data.
- Intellectual property rights: Your business must follow copyright, trademark, and patent laws to protect its creative assets while also respecting the rights of others. This involves ensuring that marketing materials don't violate the copyrights, trademarks, or patents of others, and getting the right licenses or permissions when using protected works.
- Truth-in-advertising standards: The Federal Trade Commission (FTC) regulates overseeing advertising and marketing in the U.S. They can take legal action and impose penalties on companies that break the rules. The FTC wants ads to be honest and not misleading, any specific claims in ads need to be backed up with proof, and shouldn't be unfair.
Consider consulting a lawyer on the best ways to protect yourself and your clients from potential liability issues.
For more information, see What are the legal requirements for starting a small business?
Step 5: Determine your pricing strategy
When you're figuring out how to price your services, it's important to find a sweet spot that lets you run a successful business where you help people yet get paid fairly for your work.
Common pricing strategies include:
- Hourly-based pricing: This is the most common pricing strategy for digital marketing companies during the startup phase. As you come to understand your clients and take on more projects, you can better refine your pricing based on the time it takes to complete work, the skills required, and other variables. This will ensure you are not leaving money on the table or underpricing your services.
- Project-based pricing: An effective pricing strategy for consulting businesses that allows you to tailor your pricing to the specific needs and scope of each project and client.
- Retainer pricing: In this model, a client agrees to retain your services for a set number of hours per month at a flat rate. Many clients appreciate the certainty of knowing what your services will cost each month, and it assures you of a steady cash flow.
- Recurring pricing model: Many digital marketing projects are long-term and are better suited to a variety of recurring pricing models, including subscription-based, retainer-based, and turnkey options.
Whatever you choose, review your pricing structure regularly, especially as your skills grow and services expand. At a minimum, your rates should adjust upwards on an annual basis.
Step 6: Establish your online presence
Creating a strong online presence is crucial for your digital marketing agency. Your website is a key part of your portfolio and should showcase your best work. It's important to ensure that your website is optimized for both desktop and mobile devices and follows best practices for the services you offer. Similarly, your social media presence should adhere to current best practices and demonstrate your ability to connect with a larger audience and engage potential clients.
Step 7: Master trends and customer insights: Be prepared to adapt to change
Digital marketing consultants must stay on top of industry trends. Subscribe to newsletters, attend industry events and webinars, and network with others in your field.
Always have a finger on the pulse of your customer’s challenges, needs, and goals. By understanding your customers, you can create more targeted and relevant service offerings. At the same time, keep an eye on your competition. How are they adjusting to shifting consumer preferences and digital marketing interactions?
