Starting a creative agency is a rewarding artistic journey.
It’s a very exciting prospect to think about your new life, filled with tasks like creating new branding, meeting new people, working on your craft or throwing a fun launch event. And not to burst any excited bubbles, the practical aspects of running a business, especially financial management, can quickly become overwhelming.
As accountants for creatives, we understand the unique challenges creatives face when starting and scaling their agencies, and we’re here to guide you through it all.
In this blog, we break down how to set up a creative agency, touching on everything from nailing down your services to building a strong client base. So that you can transform your creative idea into your dream business.
Sounds interesting? Then let’s dive in…
How to Set Up A Creative Agency
The success of your creative agency relies not only on your skills and services but also on your ability to manage the operational side of the business — particularly in keeping up with your finances.
This is where being well prepared pays off and ensures you can keep up with growth while continuing to make a profit.
If you can answer these three questions confidently you’re well on your way to success.
What Services Will You Offer?
Before starting a creative agency, you need to clearly define the services you will offer.
These could include anything from marketing and graphic design, web development, video production, social media marketing, or content creation.
Ask yourself whether you want to focus on a wide range of creative services, or are you more interested in offering a singular niche service.
Narrowing down exactly what services you want to offer will give you a clear focus and help you establish what is going to set you apart from your competitors.
What Sectors Do You Cover?
Understanding the sectors you’ll work in can help tailor your services to their industry-specific needs. As a creative agency you may likely work with clients from a diverse range of industries, from ecommerce and tech to music and art.
While this may be preferable when you are starting out, as you grow, you should think about what clients you really want to attract. Specialising in a specific sector can give your agency that competitive edge.
Plus, it will allow you to charge more for your creative services as a sector specialty rather than a jack of all trades.
What Are Your Rates?
Proper cash flow management is critical for any creative agency. Setting your rates appropriately is the first step in managing a healthy cash flow.
As a new agency, you’ll be tempted to set lower rates to attract clients, but underpricing your services can lead to significant financial strain down the road.
Start by understanding the value of your services and the time it takes to complete each project.
Then, consider your overhead costs, from software to staffing, and any other business expenses. So that your rates reflect the full cost of delivering quality work. Keep in mind that rates can vary significantly based on the industry, the client, and the complexity of the project.
Having clear, well-communicated payment terms is also essential. Consider implementing a deposit structure where clients pay a percentage of the project cost upfront, ensuring you’re covered for initial expenses.
Regularly monitoring your cash flow and adjusting rates or terms as needed will allow you to grow without experiencing the cash crunch that often comes with scaling a business.
How To Grow Your Creative Agency
Being knowledgeable on what your first steps should be when growing your business will help you get ahead, and more importantly stay ahead. Having a clear action plan will help you to stay on target, meet deadlines, and, most importantly, ensure your business goes from strength to strength.
Implement Working Processes
One of the first steps in setting up a creative agency is setting up effective working processes, including establishing reliable financial management. When you’re juggling between talking to multiple clients, timelines, and projects, you need a strong operational backbone. This will not only improve workflow, but it will also ensure your finances are in tip top shape.
Start by creating an effective bookkeeping system that allows you to track expenses, manage invoices, and ensure you’re on top of your cash flow. Our favourite is Xero and is what we use for our clients.
Here at Raedan our expert bookkeeping services can streamline this process, making it easier for you to maintain visibility over your finances in real-time.
By having an efficient bookkeeping system from the outset, you can avoid playing catch-up when tax time rolls around or having the stress of running out of cash half way through the month due to not keeping an eye on your cash flow.
Trust us when we say investing in accounting and bookkeeping services from the get go will save you time, stress, and potential financial mishaps as your agency scales.
Take on Staff
As your agency grows, you’ll likely reach a point where you need to hire additional staff. Whether you’re bringing on full-time employees or contracting freelancers, having a reliable team can free you to focus on scaling your business. Make sure you hire people whose skills complement your agency’s core offerings.
You’ll also need to factor in the financial aspects of hiring, from salaries and benefits to taxes and legal responsibilities. With Raedan’s accounting services, you can efficiently manage payroll and ensure you meet all regulatory requirements, allowing you to scale your team with confidence.
Build Your Client Base
Building a solid client base is essential for the success of your creative agency. Start by leveraging your existing network and offering your services at a competitive rate to attract early clients. Referrals from satisfied clients can also be a powerful growth engine.
LET’S GET CREATIVE
While we are into crunching the numbers, we’re also all about the creative. So here are some tips we think creatives should focus on when growing their agency.
Know Your Worth
As a creative starting out, it can become easy to fall into the trap of under-pricing your services as you are eager to attract your first clients. But try to resist this urge.
While offering discounts may help you get new clients it’s important that you understand your worth as a creative.
Make sure you undertake thorough competitive research to understand what similar agencies charge and set rates that reflect your skills and expertise.
Prioritise Client Relationships
Your creativity is essential, but so is how you manage client relationships. Consistent communication, timely deliveries, as well as managing and meeting client expectations, will keep them coming back and referring you to others.
Keep Learning
Creative industries evolve rapidly. Stay on top of new trends, tools, and techniques by continually investing in learning and professional development. This will not only enhance your skill set but also set your agency apart as an expert in your field. Plus, you can write training costs off against your tax bill.
Invest in Accounting Early
Creatives often overlook accounting, as they are more focused on the bigger picture than the more boring financials.
But how you take care of the numbers can make or break your business. Set yourself up for long-term success by ensuring your finances are accurate and tax obligations are met.
Starting a creative agency is an exciting venture that requires careful planning and attention to both the creative and business sides of the operation.
At Raedan, we specialise in helping creatives like you get their financial systems in place, ensuring your business is built on a solid foundation.
We hope this has helped you have a better understanding of how to set up a creative agency.
But, if you would like more help regardless, whether you’re just starting out or looking to scale, get in touch for tailored financial support on your creative journey.
