A digital marketing company or agency specializes in improving its customers’ online ranking, reach, visibility, and influence.
The digital technology space is constantly evolving, making success for a digital marketing business dependent on careful planning, building, and operating it on a sturdy foundation.
Here are six key steps to starting and building a successful digital marketing agency.
Determine your business model
Choosing the right revenue model is crucial for your digital marketing agency, as it can significantly impact your financial success and client relationships.
There are several revenue models to choose from, each with its advantages and disadvantages. You can opt for an hourly rate model, project-based pricing, retainer-based pricing, or a combination of these.
As you make your determination, consider which will generate the highest revenues and appeal to your target customers. Other factors include ease of tracking, management, and scalability. You also want to ensure that scope creep doesn’t occur, which can quickly compromise your time, productivity, and the company’s bottom line.
Create a business plan
A well-thought-out business plan will include an overview of your business goals and the strategies you use to achieve them. It should also include market research, product or service descriptions, pricing, sales and marketing strategies, and financial projections (profit and loss, cash flow, margins, etc.).
A business plan can act as a roadmap for your business, but it is also important to help you secure financing for your digital marketing business.
Establish your core pillars
Business pillars are the foundation of your digital marketing agency. The pillars you focus on depends on the type of agency you plan to operate and your target market. Below are examples of core pillars to consider. These should be reassessed as your business grows, evolves, and expands.
- Strategic planning: A strategic plan can guide decision-making, shape goals, drive growth, and build your brand. During the planning process, consider your business mission, values, and vision – and how you intend to achieve your long-term objectives. Planning should include goals for growth, such as employee development, productivity, and sustainability.
- People: Your digital marketing company will only be as good as the team behind it. A company with a strong organizational culture that shares values and a sense of purpose will drive employee engagement, productivity, and satisfaction. To help achieve sustained success, you must recruit, develop, and retain top talent.
- Data and technology: The right technology tools are key to tracking and reporting the performance of your digital marketing campaigns. You can choose to outsource this capability or source it in-house. Cybersecurity should also be a component of your data and technology plan. Robust security measures must be in place to protect client information.
- Finance and funding: This includes all the financial activities that will enable your digital marketing business to start and grow, including raising capital, securing a loan, managing cash flow, and forecasting.
- Operations and legal: Managing your operational and legal obligations is key to success. For instance, how will you handle onboarding new clients? What processes must be put in place to track time, projects, and expenses? How will you manage remote, in-office, or hybrid work models? From a legal standpoint, you must understand your digital marketing company’s legal responsibilities and put structures in place, such as employee agreements, shareholder agreements, and independent contractor agreements, as well as processes to comply with intellectual property laws, data privacy, and other business obligations.
- Innovation: Innovation is the key to success if you want to stay ahead of the competition and grow in this fast-paced market. By encouraging new ideas, promoting creative thinking, and adopting new technologies, you can create amazing products and services, improve operations, and find new ways to make money.
Choose the correct business structure
The right business structure is a major consideration as you start your digital marketing business. Your choice of business structure depends on factors such as liability, taxes, control, and raising capital. Whether you choose to form a C corporation, LLC, or S corporation, each has its pros and cons. For example, LLCs and S corps offer pass-through taxation, while C corps are subject to double taxation. However, venture capitalists and private equity funds favor the C corp business structure for tax and legal reasons.
Consult a legal professional so you can properly evaluate each business structure.
Determine your compliance requirements
The specific compliance obligations for a digital marketing agency differ depending on state and local business requirements, the type of business structure, and whether you have employees. Below are common compliance requirements:
- Register your business with the state: If you decide to form an LLC or corporation, you’ll need to register your business with the state.
- Obtain an EIN: Most businesses, including LLCs and corporations, require an Employer Identification Number (EIN). Additionally, employers are required to provide workers' compensation coverage in most states.
- Appoint a registered agent: If you form an LLC, corporation, LLP, LP, or nonprofit, most states require you to designate a registered agent in the state of formation.
- Register for a state tax ID: If your business sells goods or services, you may need to register with your state's Department of Revenue and obtain a sales tax ID number.
- Report beneficial ownership information (BOI): Small businesses registered with the state, including LLCs and corporations, are required to provide information regarding their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department, unless exempt.
- Obtaining business licenses and permits: Most businesses require licenses and permits to operate, which are issued by federal, state, county, city, and local governments.
For more information, see What are the legal requirements for starting a small business?
Develop a plan to scale the business
Building a team is one of the most important areas to focus on as you plan to grow your digital marketing agency. When you start up, you may want to keep expenses under control by hiring independent contractors or part-time employees.
As your business grows and you hire full-time employees, continue to assess your talent pool. Pay attention to your staff’s career development goals and preferred ways of working. You may find some want to transition to a contractor role or part-time model.
Prepare for periods of high growth or seasonality by ensuring you have trusted full-time employees and a bench of contractors who can step in to take on the additional workload.
BizFilings can help you decide on a business structure
Unsure what business structure is right for your digital marketing agency? Use our Incorporation Wizard Tool. Answer a few quick questions and we’ll suggest which structure may be right for you.
