Table of Contents
If you’re reading this, you’re tired of the fake agency guru garbage on the internet.
You’re looking for the real way to start an agency. Not gimmicky courses and feel-good narratives.
Everything in this post you need to hear. Not all of it you’ll want to hear.
I set up my agency in 2017.
I did most of it wrong, but some things I got right. When I partnered with Cody in 2019, we started over and did it the correct way.
This guide is our shortcut to help you set up your agency right from the start. That’s also why we started our agency growth podcast.
Also, it’s worth it to note that the legal part of this advice is exclusive to the US. If you’re not in the US, the rest of the advice is still applicable.
But first…
Why Are You Starting an Agency?
Any time someone asks for advice on starting an Social Media Marketing Agency (SMMA) or digital agency, I always ask them, “Why?”
Knowing this from the start will shape how you do business and set reasonable expectations on what your goals actually are. It sounds stupid, but you’re either going to waste a year of your life and feel like a loser or spend 5 years growing the start of something great.
Your reasoning could be anything or multiples of (but not limited to):
- I want more freedom and to escape the 9-5 (selfish)
- I want to build something I’m proud of (neutral)
- I want to make a name for myself (selfish)
- I hate working for someone else (selfish)
- I love digital marketing (neutral)
- I love helping businesses (selfless)
- I want to make a lot of money (selfish)
- I want to work from wherever I want (selfish)
All of these are fine reasons if you only have selfish reasons, you’re not going to succeed. In my opinion, you need at least one neutral and one selfless reason.
Otherwise, you’ll hate your life or you’ll have no motivation to get better.
You’re still here, so let’s get started.
Define Your Agency
What are you going to do? What services will you offer? Who will you offer them to? What does your pricing model look like?
These are the things that are going to define your agency. All of these elements should be considered with each other, not independent of each other.
Let’s walk through this together.
Pick Your Niche (or don’t)
The SMMA and general agency space is saturated. It’s going to be difficult to stand out if you don’t pick a specific niche.
It’s one thing to say, “I offer digital marketing services”. It’s another to say, “I am the lawn care digital marketing expert”.
When you pick a niche, you filter out a lot of the competition and also create an opportunity to be an expert in a specific field.
Imagine I was a roofer and wanted a marketing company. Who would I be inclined to go with — a company that says, “we do marketing”? or their competitor that says, “we do marketing for roofers”?
The common concern new agency owners have is that if you narrow your focus to a niche, you miss out on other opportunities.
My counter-argument is if you don’t niche, you get swallowed by competition.
We have a whole list of why you should niche and even how you pick a niche in these two episodes of our podcast:
- Focusing on a Niche (Episode 002)
- How to Pick a Niche for Your Agency (Episode 040)
Pick a niche you enjoy or have a personal connection to. Don’t pick ones you think are going to be the most lucrative or ones some guru told you to pick. The best niches are the ones you’re familiar with or the ones you enjoy.
You also don’t have to niche down. You can be a broad and generic agency. This is just my advice.
Decide Which Services You Want to Offer
If you’re new to agency ownership, I don’t recommend offering everything. Pick a service or platform you want to focus on and get good at that. If you’re already good at something, pick that.
I don’t know what kind of agency you’re starting. If you’re an SMMA you’re looking at social media. But what does that mean? Organic social? Paid social? Are you focusing on a specific platform?
There are tons of services you can decide to specialize in:
- SEO
- Social Media
- Paid
- Organic
- Search Ads (PPC)
- Email Marketing
- UX Optimization (usually for e-commerce)
- Video
- Graphic Design
- Web Design / Building
The list goes on.
For what it’s worth, we started with SEO and PPC with web design / development.
Outline Your Service Deliverables
Once you know generally what you want to offer, you’ll need to think more specifically. If you offer social media marketing, what does that include? Is that just Facebook Ads? Is it just posting on behalf of a company organically? Are you managing all of the company’s social platforms?
If you offer SEO then what does that include? Are you blogging? Are you doing technical SEO? Will you only work on WordPress or will you also work with other Content Management Systems (CMS)?
What if you want to offer SEO and your client doesn’t have a website? Are you going to add website builds to your services?
Pretend you have a client and they’re paying for what you want to do on a monthly basis. What does that look like?
Now outline those as your deliverables.
Make Sure the KPIs Make Sense
Key performance indicators (KPIs) are how clients will judge you. They may not call them that, it’s simply what they care about. In the lawn care world, it’s leads. We need to drive our clients leads.
We’re not going to be able to do that with organic social media posts. If we want to do social media marketing but understand that the primary KPI we’re selling is leads, then we will likely need to offer a paid social service.
If you were dead set on doing organic social media management, then perhaps the KPI you should align your sales strategy with is organic reach, post engagement, and follower count.
You will need to make sure that the KPIs you want to sell are KPIs your potential clients see value in. Otherwise, you’ll have to go back to the drawing board.
There are some nuances to this rule — such as being a graphic design agency.
Establish Your Pricing Model
This is one of the hardest things to do for new agency owners. Usually, people will gravitate to the high-ticket, value-based pricing. They’ll charge $2,500/mo for social media management or SEO because someone told them they could.
There are different pricing models and they work for different types of agencies and consultants:
Hourly-Based Pricing
You determine an hourly rate and however long you spend doing that from tracking your time, you multiply the hours by the rate and that’s what you charge. This is most common with independent consultants, lawyers, and accountants.
Productized Service
This is a service where the deliverables are clearly outlined each month or for each project and is priced based on a fixed hourly rate. You don’t charge for more or less, but the original pricing is based on whatever you determined your internal hourly rate.
Example:
We spend 5 hours per month doing SEO and the things we do for SEO are x, y, z. We charge the client $500 / mo which means our internal hourly rate is $100 per hour. If we spend 6 hours on that client, we don’t adjust the pricing. We either need to spend less time on the client or adjust our productized service pricing.
This is the model our agency uses.
We also have an entire episode on how we productize our agency services (Episode 033).
Value-Based Pricing
This pricing model is simply a fixed price based on the perceived value of the service. Lamborghini uses value-based pricing. Those cars aren’t actually worth what they’re selling them for but the market is willing to pay it because of its perceived value.
Another way to look at value-based pricing is by charging the amount you think it would bring your client in value. In a productized model, I might charge $200 for a landing page that I expect to take 2 hours. In a value-based model, you could say that the landing page will generate the client $30,000 in sales so you’re going to charge $10,000 for it.
It didn’t take you 100 hours to create, but in your head, the value is still worth the cost.
In the service industry, this is a harder sell unless you are very well-known (like Gary Vaynerchuck or Grant Cardone).
This is where most new agencies fail. Sure you can get clients at $2,500/mo but with your lack of experience, they won’t last. You need to consider two things with pricing:
- Are you seriously worth what you’re charging?
- Does the business model and market actually support your pricing?
You can figure this out along the way, but if you’re just starting out, I recommend doing things for pretty cheap or free just to cut your teeth.
You may know how to execute a service, but have you done it as a business owner yet? Aside from the service itself, you’ll need to also learn client relationship and operational skills facilitating that service from a business owner’s perspective.
If you want to dive more into learning how to price your services, you can check out these two episodes of the podcast:
- How to Price Your Agency or Consultative Services (Episode 004)
- How to Price Your Marketing Services When You’re Just Starting Out (Episode 046)
Lead-Based Pricing
This is where you charge your client per lead you generate. It operates on a post-pay model. That means you do the work upfront, generate the leads, then count the leads at the end of the month and bill accordingly.
I don’t like this model.
Clients will complain about lead quality and not want to pay for all of the leads. It’s also not very scalable. It can be a good way to get your foot in the door of the industry, but please don’t stay here.
Profit Sharing
This is also not something I recommend.
It’s when a client only pays you a portion of the sales they have generated from the leads you delivered. This is the most ideal for the client and not for the agency.
For starters, it’s risky. You can spend time and money and get no return if your client is bad at sales. It’ll also turn you into a sales consulting agency instead of a marketing agency.
Clients can also lie about the sales they closed. They can close the sale and tell you otherwise. You can use a tool like HighLevel to track leads and sales but I have yet to run into a client that doesn’t use their own CRM separate from any agency-based CRM like GHL.
You either have to have a deep trust with clients on this model or have 100% access to their main CRM and / or their books.
Don’t recommend.
Pick Your Name… Wisely
A lot of people want to start here for some reason. Your name can either be nothing but a name or it can be a huge asset. It can also cause big problems later on down the road.
You have three realistic options:
1) Niche-specific name
If you do SEO for roofing companies, then your name could be “Roofing SEO Pros”. It’d be pretty hard to not choose that company if you were a roofing company looking for SEO.
The positive side of going with this route you can have a deeper foothold in a specific niche and a headstart when just starting. The downside is that the foothold is muddy and sticky. It’ll be difficult to pivot away from roofing or do more than SEO if you’re only known as the roofing marketing company that does SEO.
Maybe that’s what you want and that’s totally fine too.
2) Niche-related name
Our agency is called Evergrow Marketing. We primarily do PPC and SEO for landscapers. Evergrow has two meanings — it can be related to lawns and landscapes that are ever-growing. It can also mean we help businesses continually grow with our marketing.
We have established a way to pivot to other adjacent industries if we choose to.
If you worked with construction companies, maybe you chose something like Blueprint Growth Agency.
The downside to this method is you have to be better at branding and SEO than the first naming method if you want your brand to be synonymous with your niche.
3) Your name
You can always do the age-old practice of naming your business after you. I definitely thought about Hundley Marketing. Chances are very few people have brand names that are the same as your own name. Law offices and Dental practices do this a lot.
What I don’t like about this model is that it’s harder to sell. If you are attached to the brand and you eventually want to leave the agency life and sell your agency for $10m+, your buyer is going to want to make sure people don’t expect you to be part of the brand.
It also puts your face on the brand so a bad reflection on the brand is a bad reflection on you and vice versa.
We did a podcast episode on the differences between having an agency vs a personal brand.
Legality & Avalability
When you’ve decided on a name, you’re going to want to make sure it’s available to use.
USPTO Check
First, check the United States Patent and Trademark Office. Plug the name you want into here the USPTO search feature. If an exact match comes up as “Live” or “Pending”… maybe pick a new name.
There’s more to this but I won’t go into it here.
State Business Filings Check
If you’re clear there, check your state’s business filings.
The easiest way to do this is by going to Google and typing in “{your state} secretary of state business search”.
I’m in Minnesota — this is theirs.
I just punch in the name I want and if nothing comes up, I’m golden.
Bizee also has a pretty handy tool for this.
Domain Check
Finally, check to see if the domain is available. This is the most important part in my opinion.
Most people are familiar with GoDaddy for domains but we recommend hover.com. They keep things simple and don’t upsell you.
Type in the domain you want and see if the .com version is available.
You always want the .com version. You technically don’t need it, but it is the most official and recognizable top-level domain (TLD).
Don’t settle for any other TLD if you don’t have to.
Cody wrote a good article on his personal site about what to do if all of the good domains seem to be taken.
Most domains are between $15 and $20 per year. If you find a “premium” domain, then you’ll have to shell out some money. My example above is priced at $5,055 for the initial purchase but $17.99 per year to renew.
You shouldn’t run into this with yours.
If every variation of the domain you want is taken and you’re like me and not willing to settle for anything less than a .com TLD, pick a new name.
I went through about 5 different iterations of our agency before I settled on Evergrow Marketing.
Operational Fundamentals
If you’ve followed through up until this point, you’ve already done more than the majority of agency owners and freelancers. Now we’ll take it a step further.
You’ve established your identity.
Now we need to make the identity a reality and create an operational plan.
Get Your Website Domain
Remember that search we did to see if your domain was available? Well if it is, get it. Don’t hesitate. Once you have it, no one can take it from you unless you don’t renew it.
You don’t even need to set up a website at this point.
Just purchase your domain. Again, we recommend Hover.
Protect Yourself Legally (or not)
This is not something I did in 2017 when I started. When Cody partnered up it was the first thing we did.
For starters, you don’t technically have to set up an LLC. You can operate as a sole proprietor in the United States without any legal barrier. The downside is that if anyone were to sue your business then your personal assets could be seized.
There are a few different business filing types but if you’re reading this then you only need to care about two at this point:
- LLC
- Sole Proprietorship
You have 4 options for this step:
- Do nothing — operate as a sole proprietor.
- Risky, in my opinion.
- Find a lawyer to set this up for you.
- That’s what we did for Evergrow but it can be expensive — like $1,000+.
- Register your LLC yourself.
- Requires a little bit of thinking but you can do it through your secretary of state’s website.
- This is what I did for a side business my fiancee and I started. It cost us about $155 for the Minnesota filing.
- Go through services like LegalZoom
- This is going to be the easiest. They even have free plans where all you have to do is pay the state filing fee. Be careful though — they love to try and upsell you things.
Another term you’ll want to get familiar with is DBA (Doing Business As).
You can be a sole proprietor where you don’t have your LLC set up and still operate under a DBA like “{Your Last Name} Consulting”. Keep in mind, if you do operate under a DBA, you still may need a business license to operate legally depending on your state or local area’s requirements.
If you set up an LLC, your DBA can be different.
Evergrow Marketing is our DBA but our LLC is registered under Evergrow Marketing, LLC.
If any of this seems daunting… just go through LegalZoom.
Get Your EIN
If you got your LLC, get your Employer Identification Number. It’s basically a Social Security Number for your business. You can apply for it on the IRS’ website for free.
This is going to make a step later much easier.
Create a Business Plan (or not)
This is also something you don’t technically need but all of the college professors say you do.
You don’t. But it helps.
It doesn’t have to be a 12-page dissertation or a 20-page slideshow.
For us, it was really simple.
We told ourselves that we wanted the business to make $500,000 in one year. Based on how we have our services and pricing set up, how do we get there?
How many clients does that equal at our pricing? How many people do we need on the team to facilitate those clients? What is our primary client acquisition channel?
Walk yourself through these steps and you’ll have a business plan.
Make sure the goal isn’t too far out there. You’re going to run into challenges you didn’t address in your original plan.
What a business does to go from $500,000 to $1,000,000 is completely different than what someone does to go from $100,000 to $500,000. That’s why we didn’t start our initial business plan at wanting to achieve $10m in annual revenue.
We couldn’t comprehend what challenges we’d run into at that size.
Get a Business Bank Account
If you want to be legitimate, you need a business bank account.
It honestly doesn’t even have to be a “business” bank account. But it should be an account that is entirely separate from your personal finances.
It’s harder to get a business bank account if you don’t have an EIN.
This is the step that makes having an EIN easier. When you apply for a business bank account through either a local credit union or a bank like Capital One, they’re going to ask you for an EIN. If you don’t have that then your application might get denied.
That’ll cause you to have to open up a personal bank account which isn’t a big deal, but the business features like sending ACH payments won’t be available in personal bank accounts.
Business bank accounts usually have fees associated with them. Capital One charges $15/mo per account. If you have $300 in a savings or $2,000 in a checkings account, they waive that account’s fees.
When I started Evergrow, I didn’t have an EIN or LLC. All I had was a business phone number and my website.
First National Bank of Omaha accepted that and they also didn’t have any monthly fees.
So my advice here is just do some research.
Determine How Clients Will Contact You
Speaking of having a business phone number — clients need to contact you and you need to contact them.
It sounds silly to bring this up considering you already have a phone and an email address.
But do you want your personal cell phone number to be all over the internet?
When you register your business, do you want your personal phone number and personal email to be associated to it for anyone to find?
Agency Email
I strongly recommend getting a second business line and a business email. To start, you can get a free Gmail account with an email address of {yourbusiness}@gmail.com.
If you want people to take you seriously, I recommend setting up a professional Google Workspace domain email.
Having an email like {yourname}@{yourdomain}.com would legitimize your business in front of potential clients. It’s only $6/mo.
Agency Phone
When I first started, my personal cell phone carrier was Verizon. They had a plan I could add to my phone for about $40/mo where I had my own business number that routed through my personal device.
I had two numbers that called the same phone. I think it was called “OneCall”.
Now, we use Google Voice.
It’s pretty easy to set up and you can do it no matter what carrier you’re with.
The starter plan is $10/mo.
Oh yeah… it also has web calling so you can dial and text super easy from your computer.
Trust me. It’s worth it.
Required Tools & Software
This is usually where all of the gurus get you started.
They don’t care about your success — they’re just trying to sell you a tool or earn their commission on it.
Before you read any of this, just know that tools don’t get you more sales.
These are the tools you either need or need to consider.
Computer
Don’t try to do this from a phone. That’s just stupid.
If you don’t have a reliable computer, you can get Chromebooks for pretty cheap. They’re like $200.
They’re not the fastest or beefiest things so make sure you don’t have to download a bunch of software. Probably not ideal for video editors or graphic design agencies…
Website Host and Builder
We’re this far into the 21st century and I’m not going to take you seriously if you don’t have a website. Your prospects won’t either.
You have a domain, now put it to use.
Most website builders have an intuitive way to set up websites with no-code builders and even connect the domain you just bought.
Wix
If you’re new to website building, I strongly recommend Wix Studio. It’s everything you need in one platform for $19/mo as a no-code builder. Plus, it’s built for agencies. If you want to build websites for your clients, you can build them Wix Studio websites and manage them from one dashboard.
Wix is what I started the Evergrow website with back in 2017. Not Wix Studio. Just vanilla Wix.
With Wix Studio, your hosting and website builder are bundled into one.
Check out the episode where we interviewed the Head of Wix Studio.
WordPress
This is the most widely used content management system (CMS). There is a large learning curve. It’s not intuitive at first, but with the right plugins and visual builders, it’s as easy as drag-n-drop.
Let’s be clear first.
When I say WordPress, I mean the CMS — not WordPress.com. These are two different things.
When I say WordPress, I mean going and paying for managed WordPress hosting. You can get it from BlueHost, WP Engine, or HostGator and then install WordPress as a CMS under that hosting plan.
The WordPress native builder sucks. So you’re going to want a theme with a visual builder baked in that makes editing the site easy and drag-n-droppable.
For that I recommend Divi. It’s also a good solution for agencies looking to create multiple websites for clients. There is a lifetime option of $249. All of the other builders charge a monthly or yearly subscription.
If you want our full WordPress tech stack and recommended tools and plugins, check out our tools page and filter by WordPress.
Payment Processor
Clients will want to give you money. How are you going to get it?
Do your due diligence. There are tons of payment processors out there that don’t cost any money.
We started with Wave, then moved to PayPal Business, and now we’re happy with Stripe.
All of these are fine options and don’t cost anything to set up and have an account. They only take a percentage of each invoice.
Usually, it’s about 1% for ACH bank payments or about 3% for credit card payments. That’s how they make money.
We went with Stripe because of four main reasons:
- We wanted to accept international payments without issue.
- We needed the ability to set up recurring monthly invoices for monthly services.
- We wanted the lowest possible percentage taken out on ACH payments
- Stripe only takes out 0.5% and caps it at $5 per invoice.
- We wanted the interface to not suck.
- Paypal sucked. It was so hard to track down which clients had paid which invoices.
CRM
You’re going to want a CRM (Customer Relationship Management) system. Most gurus are going to try to get you on HighLevel (GHL) — because they get a fat commission check from you when they do.
You don’t need that.
A CRM system could literally be a stack of sticky notes.
It’s just a way you’re going to keep track of your leads, client information, follow-ups, contact points, etc.
We used Hubspot’s free CRM for years before upgrading. It has tons of features that are free and by far the best free CRM out there in my opinion.
You can add company information, contacts at the company, notes on companies and contacts, create deal pipelines, set reminders, log calls and emails, and a ton more.
Eventually, when you do feel you need to upgrade, you won’t have to start over. All of that data you’ve been entering into Hubspot will still be there and you won’t need to migrate to a different one.
My favorite thing was using Hubspot’s form feature and creating a form to embed on our website. When someone filled it out, all of their information was mapped into a new customer profile in Hubspot. Yeah, this was all free.
If you’re considering becoming a Calendly user to book appointments, Hubspot has a calendar feature in it as well that functions the same way.
There are tons of other free CRMs out there too that have loads of features. Take a look at:
- Monday
- FreshWorks
- ClickUp
- Technically a project management tool but they promote themselves as a CRM too.
Project Management Software
Speaking of project management software…
This isn’t really something you need either. So don’t go out spending a bunch of money on one.
This is simply a tool to manage your existing client work. If a CRM helps you manage client relationships, project management tools help you execute the work you have sold them.
You can create checklists and templates of tasks that need to be worked on for each client to keep you on task. You can also create timelines of tasks to help stay on track.
Again, this could just be a whiteboard in your office.
We use ClickUp. They have a free plan and the amount they give away for free is insane. It feels like stealing from them. Our friends over at Service Lifter still use the free version of ClickUp and are a $2m SEO agency.
We pay for their Business Plan ($9/mo/user) because I wanted the multi-step automation feature to streamline monthly task automation.
They also have an integration with Hubspot to autogenerate tasks… and it’s FREE.
Other popular, free, project management tools worth looking into are:
Agreement or Contract Tool
Another thing you don’t actually need but would help legitimize things and protect you.
When we first started we used Concord. They had a free plan that worked well for us and allowed clients to e-sign. They’ve since gotten rid of that free plan.
Other ones you might be familiar with are:
But honestly… you can draft up an agreement in a Google Doc, save it as a PDF, and then ship it over to your client. You don’t need any of these. These just make the signing process easy.
You don’t even need an agreement. You can do “handshake” or verbal agreements. These just help protect you when outlining your scope of work.
PSSST…
Hubspot has an agreement / contract feature built into the free CRM called “Quotes” that has a 100% e-signature feature.
Digital Storage
If you signed up for Google Workspace, you already have 30GB of storage. If you went with the $12/mo plan you have 2TB. That’s more than enough storage to keep client information and assets around.
This isn’t as important as everything else recommended here but you may need something to share larger files and collections of files to your client and vice versa.
Getting the storage that comes with Google Workspace allowed us to cancel our Dropbox service.
This also isn’t something you need right away. It can come later.
If you’re a graphic designer or a video agency, you might just want to invest in Adobe Creative Cloud.
Required Software to Deliver Your Service
REQUIRED software.
Not software that helps you. Only pay for software you actually need to deliver your service. For graphic designers, this might be Adobe Illustrator.
For video editors it might be the paid version of DaVinci Resolve.
If you’re doing SEO, PPC, or Social Media — I can tell you right now that you don’t need any software. All of the platforms you’ll be working with have free tools that can accommodate the work.
Focus on earning money before you invest in these tools.
We own a multiple six-figure SEO and PPC agency and don’t pay for a single SEO or PPC tool.
Reporting Tool & Ability to Track KPIs
Remember that term, “KPIs”?
You’re going to need to report on those.
We covered just how important reporting and KPIs are for agencies in Episode 044, “The Importance of Establishing and Tracking KPIs with Your Clients“.
How you do that is up to you. When I first started Evergrow, I literally just took screenshots from Google Analytics and Google Ads and pasted them into a PowerPoint. It was a lot of manual labor but I only had two clients. It would have been a stupid business decision to invest in a reporting tool if I didn’t have the clients.
Remember, clients pay you to do the service, not to report on it.
Reporting on it just proves your value.
We’ve seen agencies 10x our size have the crappiest reporting.
A free reporting tool you can dive into is Looker Studio. It’s a Google-owned tool. I have to warn you that it’s a monster so don’t expect it to be easy to learn and set up.
We currently use Agency Analytics for all of our clients. I highly recommend it.
It starts at $79/mo with 5 client accounts (so roughly $16/client).
Client Acquisition
Congrats! If you’ve made it this far, you’ve set up your business. Now it’s time to start getting clients!
That’s a whole other topic in itself. But if you want to learn more about client acquisition, you can start here:
This is Just the Beginning
Remember, this is just the beginning. There’s so much more to starting and scaling your agency. We weren’t even able to cover client onboarding, process documentation, client retention and value, hiring team members, and more.
We’ll keep writing these posts but for now, subscribe to the podcast to learn more about growing an agency the right way!
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