If you’re considering a startup in the promising field of digital marketing, there are a few things you’ll need to know before taking the plunge. Consider these four ideas as you begin your business adventure.
1. Create a Separate Entity
When you’re starting your company, the line between personal and business assets can be blurry. It’s easy to dip into your personal account to pay for small expenses or think your own belongings are not at risk if something ruinous happens to your new company. However, to protect yourself from liability, it is important to define your business separately. It isn’t too difficult to set up an LLC or SCorp, both of which give legal security to your personal property.
Forming an LLC or SCorp makes your business legitimate in the eyes of the government. They offer tax benefits as well. While you’re on the subject of number crunching, it would be advisable to find some good accounting software. Cloud accounting is a good choice if you want something that can grow with your business. Also, consider hiring a professional tax preparer who understands the ins and outs of business taxes. Leaving preparation and filing to the experts may save you time and money in the long run.
2. Develop Your Skills
Obviously, before you start up a digital marketing business, you will need to know about digital marketing. Keep in mind that taking classes or obtaining a degree in any subject is a beginning, but not the big picture. In other words, you have a newly honed set of skills, but that’s just a piece of the pie. Working for a company before building your own will give you a more thorough understanding of how digital marketing works in the world.
Running your own business will require not only digital marketing skills themselves but also the ability to:
- Manage client relationships
- Handle various accounts
- Learn what types of businesses need digital marketing
- Work in tandem with colleagues and possibly supervise them
- Negotiate with clients and vendors
- Learn proper tracking methods
- Deal with the pressure of multiple deadlines
If you have been in the workforce for some time already, you may have already developed some of these skills. If you are just out of college and eager to begin your own company, consider running it on the side while you gain experience at an agency. An added benefit is that you can enjoy the security of a steady paycheck as you build your business.
3. Specify Your Niche
In the beginning, the temptation is great to work for anyone and everyone. After all, you’re trying to build your business, so why not cast your line into the whole ocean?
First of all, the pool of digital marketing agencies is big. Hundreds, if not thousands, of fellow marketers are out there looking for work just like you. Choosing your industry, and specializing in it, will give you a clearly defined niche that can attract clients in your area of expertise.
Developing a niche will prevent starting from the ground up each time you take on a new client. You’ll be able to jump into a project armed with knowledge and experience. You will know your client’s target market, what type of messaging works for them and what they expect to spend on a campaign. Industry jargon will be familiar to you. It all adds up to a shorter learning curve.
Specifying your niche offers advantages for you, but it also works well for your client base. Businesses will look favorably on a marketing company that knows their industry. They will have an added layer of trust in you because you speak their language. You know what a campaign in their industry looks like, and what works — as well as what doesn’t. In other words, you are offering your clients peace of mind and the chance to build their campaign with few surprises.
4. Set Up Your Business Model
Constructing a pricing model is something you’ll need to do before you begin billing clients. There are several models to choose from. In digital marketing, these are some of the most popular: flat retainer, hourly, percentage of spend and commission-based.
A flat retainer is a simple pricing model. You determine what your efforts are worth, and you and the client agree on a flat monthly fee. One advantage of this method is simplicity. Your client knows what to expect to pay, and you don’t have to itemize time and expenses each month. A disadvantage arises if your workload changes significantly over time. If you choose a flat retainer business model, you can set your fee for a specified time period and renegotiate later, allowing you to account for any major changes.
An hourly billing model may be considered if you’re spending lots of one-on-one time with your client. However, you may find down the road that this model creates a wide variance in what you charge. Most clients will want an estimate before committing to a campaign, and it might be hard to anticipate how many hours you will spend on it. Some will take a long time to set up, and others will be less time-consuming. As the project gets rolling, clients may question the number of hours you spend on certain activities. If you want consistency in what you advertise to potential customers and what you expect to earn, a different model may be best for you.
Percentage of spend bases your fee on the amount the client spends on advertising. Typically, agencies charge around 10%, but that figure may change based on the client’s budget. This model is good for clients that have a fairly large and reliable budget from month to month.
Commission-based models earn the trust of your clients because they pay you based on what you help them earn. This model works best with clients that sell products, so you have a clear picture of their earnings. Calculating your commission-based fees may be more abstract for other types of businesses.
Your journey into the digital marketing industry can be exciting. Thoughtful preparation will put you on the course for success.