Are you thinking about how to start an agency and expand your business beyond a one-person show?
Freelancing can be a great way to make a good income, with some added flexibility that you just won’t get as a typical employee.
But, solo freelancing doesn’t really scale. One person can only do so much. You can only take on a limited amount of work before you just don’t have enough hours in the day to handle it all.
If you feel like you’ve hit a wall, and your income and career growth feel stagnant, you can feel kind of stuck. One of the best ways to get around this problem is to transition from a solo operation into a digital agency.
It’s exactly what I did when I realized I’d hit a point where I no longer really had room to scale.
With an agency model, you can bring on contractors to do additional work, as well as offer services you might not be able to offer by yourself. This can give you the freedom, flexibility, and room for growth that you need to scale your business further.
So, let’s talk about how to start an agency the right way. In this article, you’ll learn proven steps to build a results-driven digital agency — one that sustains itself with repeatable, streamlined processes and satisfied clients.
What is an agency, exactly?
Simply put, an agency is a type of business that provides a service for, or on behalf of, other businesses.
There are many, many different kinds of agencies out there. In this post, I’m talking primarily about what you might describe as “digital agencies.” They often operate as a fully remote agency, with employees able to work from anywhere.
These agile, dynamic B2B businesses can offer any of a range of web-based services for other companies, focused on just about any industry you can think of.
There are marketing agencies, web design agencies, graphic design agencies, and more.
Importantly, digital agencies tend to provide the same kinds of services as many freelancers do. In fact, agencies tend to often be the ones hiring freelancers in the first place.
Chances are, you’ve worked with digital agencies before.
What Makes an Agency Successful? Two factors that will make or break your business
Just like freelancing, the success of your new agency is going to depend on two crucial factors:
Obviously, your ability to deliver results for your clients is of the utmost importance. After all, satisfied clients will be one of your biggest sources of referrals and growth.
Taking the leap from service provider to agency means you’ll have a lot more moving parts to manage. Deadlines and quality will be harder to maintain as you bring in staff and subcontractors.
Following the steps in this article will help you build an agency that can deliver strong results, so you can focus on the other key factor — relationships. Fostering strong professional relationships is equally critical.
This is just as true for independent freelance contractors as it is for digital agencies. It’s all about relationships. That’s where your success or failure is going to lie.
If you’ve been freelancing for a while, you probably already know this. Relationships are everything, whether you’re flying solo or running an agency.
Between initiating client relationships with things like cold outreach, and nurturing your ongoing clients, running an agency does require some people skills. Don’t worry if you’re introverted — these skills are absolutely learnable.
How to Start an Agency in Just 10 Simple Steps
The steps in this article are designed to streamline the process of building relationships that will enable you to build and sustain your agency.
1. Find your niche
You can’t be everything to everyone. Agencies are just like solo freelance operations — you’ll benefit immensely from choosing a niche.
There are tons of opportunities out there in the marketplace, just waiting to be found. Sometimes you choose a niche actively, and sometimes, your niche finds you.
If you’ve been freelancing for a while now, you may even already have a niche that you tend to work in. If so, you’re already ahead of the game, and you can continue working with that industry as an agency.
Here are some tips for looking for a possible niche:
- Look to your own areas of expertise and knowledge. It’s massively advantageous to have a genuine understanding of the industries you work with. For niche ideas, you can look to your personal interests, your hobbies, your career experience, and of course, your existing professional network.
- Look for either a type of industry, company, or product, or a type of specific work that you can do. Let’s say you’re a copywriter. Your niche could be dentists and orthodontists, providing a wide variety of copy and content for them. Or, you could work with a wider variety of industries, but have sales letters specifically as your key niche.
- Don’t go too broad, but you don’t need to be too hyper-specific either. A niche that’s too broad could spread you too thin, but a niche that’s too small and hyper-specific may not bring enough business to be profitable.
- Choose a broad area, then narrow it down from there. For example, with healthcare, you could narrow it down to private physician practices, then narrow it even further to orthopedics or interventional pain management.
Like I’ve mentioned, sometimes your niche finds you, not vice versa. But you may not have time to wait for that to happen.
2. Research your market
So you’ve found a niche. Now, it’s time to do market research.
This is a phase in the process where it’s possible you might find yourself going back to Step 1 to try again. It might turn out that your initial niche idea was too specific, too competitive, or simply not particularly profitable for someone who does the kind of work that you do.
Counterintuitively, don’t worry about whether you’re the first to market. In fact, the presence of competition can be a very good sign.
If people are already working in that space, it means the niche has profit potential. Creative agencies generally aren’t an industry where you find monopolies. Even if agencies in your niche already exist, they can’t take on literally all of the potential clients out there.
So if you see other players in your niche, that can be a great thing. Studying potential competitors can also help you learn how to start an agency in the same niche.
With that said, there are sometimes niches where a saturated marketplace filled with major players could make it hard for a new agency to break through.
Look around, do your research, and use your head.
Look at what your competitors are doing
Take a look at other agencies in the same or similar niches.
- What does their pricing tend to be like?
- What do clients praise in their testimonials?
- What’s their branding like?
- What specific services are they offering? (Or not offering)
This will show you what’s working for other people. You can then emulate some of these elements, as well as finding places where you can offer your clients something that other agencies don’t.
What are potential clients looking for that you can offer?
You can also look around at places like Reddit, forums, and social media to try to find relevant conversations among the kinds of people you might take on as clients.
What are they looking for when they’re shopping around for a digital agency? Do they already know that a digital agency is something that could help them, or do you need to introduce the idea to them first?
Is there something they’re looking for that you can offer, that either isn’t already out there, or is hard to find? What are their relevant pain points?
3. Identify your ideal client
This brings us to step three: figuring out to whom, exactly, you’re going to want to market your agency’s services. Before you think about how to get your first clients, you have to know what type of clients you want to attract.
Who is your ideal client?
This is where you can start constructing customer personae: idealized representations of key types of client that are a good fit for your agency’s services.
Look at competitors and see what kinds of businesses they’re working with. Look for conversations among people who might need your services.
- What do these people or companies look like? Small companies? Large enterprises? Solo endeavors?
- Which people within the company would you be working with directly? Would you be talking to the owner or CEO, or to someone in a subsidiary department like marketing or sales?
- Do these people already know that they can benefit from your agency’s services? Or will the concept of working with an agency not have occurred to them yet?
- What are their key problems and pain points? What can you do to help them?
- What are their budgets like?
- What might be the most effective way to reach the right person to talk to within the company?
You can use questions like these to construct a set of customer personae that can help you hone in on the right clientele. Then you can think about how to start an agency that will best serve your ideal customer.
4. Name Your New Agency
So you have a promising niche, you’ve done some market research, and you have a good idea of what your ideal client looks like.
After laying this groundwork, it’s time to really start building up the agency itself as a brand. The first step in this process is to choose a brandable business name.
It can take a little time to zero in on the perfect agency name. You can do some brainstorming and collect a list of possible names, or words to include in names, that seem to fit what you envision as your agency’s unique brand.
You’re going to want a name with an available (and affordable!) URL.
Domain squatting is an age-old practice dating back to the ancient days of the 1990s. Some domains are up for sale, but at truly ludicrous prices. At this point, it’s not worth trying to pay someone thousands for a domain.
Many other possible domain names you come up with will already be in use, too. There are only so many words, names, and TLDs out there, and after something like 25 years of people buying and using them, it can be hard to find something that isn’t already taken.
Do you need to have a .com?
Ideally, you’re going to want to find a .com domain name. Unfortunately, this is quite often easier said than done.
If your name idea’s .com URL is already taken by someone else, you can also use an alternative TLD like .co, .ly, or .io.
Whether this is wise or not can depend on your audience. Some demographics are far more likely to trust a site with .com in the name, while others — like younger, more tech-savvy people — won’t look twice at a .co or .io.
The .io and .ly domains tend to work best when the letters are part of the brand name, like bit.ly or agar.io. However, this isn’t always the case with many successful brands.
So what about some of the more colorful TLDs that were introduced more recently — things like .marketing or .fashion? The jury’s kind of out on this — you’ll hear different things from different people about whether or not you can safely use a TLD like that.
However, especially if the word in the TLD is already part of your agency’s name — let’s say, Big Fish Marketing with a URL of bigfish.marketing — these may be viable options.
5. Figure Out Your Business Model
Once you’ve settled on a name, you’ll want to figure out what your actual business model is going to look like.
How are you going to price, package, and sell your services?
There are two main types of fee structures that digital agencies use in negotiating rates: the client retainer model, and the productized services model.
With a retainer pricing model, your client pays you a set amount of money (usually per month), and you provide an agreed-upon set of services in return. This gives some flexibility to adjust the services you’re providing and the strategies you’re using.
It’s a more boutique and tailored approach, where you can focus on the specific and unique needs of each individual client. It tends to work well for agencies that take on a smaller number of clients at relatively high price points.
In the productized services model, you’re presenting and selling your services just like you would a physical product. You might offer a set of tiered “packages,” for example, offering a particular set of services each month at set prices.
This model tends to work well if you want to take on higher numbers of clients, with some variance in how much different clients are paying for in a given month.
For example, for a content marketing agency, you might have some clients paying $500 per month for two optimized blog posts, and others paying $3,000 per month for a more intensive content strategy. These prices can be much higher, depending on the size of your clients and scope of your services.
So which model makes the most sense for you? Honestly, it usually depends on your niche and your clients, so you’ll need to take a look at your market research — and your competitors’ pricing structures — to decide which seems like a better fit.
Both models can be scaled, to a degree that could never be possible for one individual solo freelancer.
6. Build a Website
Every company needs a website, including your agency. For a digital agency, your website is a critical piece of your branding. It’s going to be the face of your brand.
WordPress.org is absolutely the gold standard for building professional websites. I’d definitely recommend against going with a service like SquareSpace. You’re much better off with WordPress’s customizability, flexibility, and SEO friendliness.
Whether you DIY your site or hire a web designer depends on your starting budget. If possible, it’s a good idea to get your site built by a professional.
But if that’s not in the budget, you can DIY it. There are hundreds of thousands of WordPress tutorials out there for just about anything you might want to do with your site.
You can get fantastic themes from places like StudioPress and Themeforest. While there are some slick looking free themes out there, I recommend a paid theme if possible, since you’ll have access to far more support from the theme’s developers.
Many themes are designed to be easy to customize, so you can adjust things like colors and layouts.
Once you have a theme, you’ll need a handful of core pages:
- Home page. This one goes without saying. A good home page should be intuitive to navigate, have a relatively clean-looking visual design, and feature great copy that will resonate with your ideal client.
- About page. This gives a little information about who you are, and what your agency is about.
- Contact page. Make it as easy as possible for interested parties to get in touch with you ASAP with a contact page.
7. Hire Your First Staff
One of the biggest reasons you started an agency in the first place was so that you can bring in other staff, handling a larger and more varied workload than you ever could solo.
You may do a lot of the work yourself to begin with, as you did when you were branding yourself as a freelancer. However, as you scale, the need for extra hands on deck will only increase.
There are two main types of staff: employees and contractors.
Employees vs Contractors: Which makes more sense for you?
For a fledgling agency, the answer to this question is almost always going to be “contractors.”
To qualify legally as an employee, certain criteria must be met. There are also more tax and legal requirements involved in hiring employees.
Chances are, you don’t need someone full time quite yet. Working with contractors gives you the flexibility you need starting out, as well as de-complicating your tax concerns to keep your agency agile and lean in its initial growth phases.
You almost certainly know what a contractor is. If you’re freelancing, that’s the same model that you’re using. It’s ideal for bringing on part-time help as needed.
Some of the most popular places to look include marketplaces like Upwork, subreddits like /r/forhire, and places specific to a particular type of work, like ProBlogger’s excellent freelance writing job board.
With that said, one of the very best ways to find great freelancers to work with is to ask around in your network for referrals.
8. Find Your First 10 Clients
There are all kinds of strategies and resources you can use to start finding your first clients. As with many things, there’s a lot of variance here, depending on the specifics of your particular agency.
Some agencies get most of their new business from Google searches, focusing on SEO and content strategy. Others might find that social media, paid ads, or cold outreach are the most effective.
This is another place where your market research and competitor analysis will come in handy. How do other, similar agencies seem to be getting their clients?
You can experiment with a couple of different options at first, but once you get a feel for what’s probably going to work, you’re going to want to hone in and focus on that channel. Rather than spreading yourself too thin trying to use every marketing method you can think of, your resources are better spent focusing on one channel that brings results.
9. Develop your systems and processes
There will be a number of core systems and processes that will keep your agency business running smoothly, and early on, you’ll need to start planning how you’re going to approach them.
Relying on established, repeatable processes will help you start an agency that delivers consistent results.
Some key examples include:
- Sales. What is your sales process going to look like? How will you go about bringing in and closing leads? Have a process for how to get more clients on a regular basis, not just when you hit a lull.
- Proposals. You’ll need clear, detailed project proposals that inform new clients of exactly what you’ll be doing for them.
- Client onboarding and offboarding. Each new client will need to be set up and integrated into your workflows. Develop a client onboarding questionnaire for new projects, and when clients leave, have a process to wrap things up neatly for them.
- Pricing and billing policies. How will you go about billing clients and collecting payments?
- Workflow management. What will your agency’s day to day workflows look like, and how are you going to track them?
- Delivering work. How are completed projects delivered to the client?
- Handling client disputes. Disputes happen. How will you manage and address them?
- Finding and retaining talent. What processes will you leverage to find contractors when you need them, and how you can keep the best people on your team?
These are the nuts and bolts of how to start an agency.
10. Review, refine, and repeat
As you go, you’ll start figuring out what works and what doesn’t. You’ll get a feel for effective ways to get clients, the best ways to package your services, and how to best manage your projects and workflows.
You’ll find yourself refining your processes over time, iterating what works and dropping what doesn’t work. This process will continue for the entire life of your agency, as you continue to grow, to scale, and to thrive.
Your path to starting a digital agency starts today.
If you’ve hit a wall with solo freelancing, creating an agency could be the way over it — and there’s no better time to start than now.
It’s surprisingly simple to transition from freelancer to agency. Launching a digital agency can have a low up front capital investment, with enormous profits down the line.
If you’ve already got a niche and some clients, you’re way ahead of the game.
With some fresh branding, a new website, and solid procedures in place, your agency can grow and scale far beyond what was ever possible for you as a freelancer.