How to Start a Social Media Marketing Business

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Quick Reference

It seems as though almost everyone is using social media in one form or another.  Social media marketing is one of the top ways that companies reach customers.  If you are social media savvy and have a marketing background, you could start a social media marketing business.

Business Overview

A social media marketing business helps companies increase their engagement with their target audience by creating and managing social media posts on platforms such as Facebook, Instagram, Twitter, Pinterest, Snapchat, LinkedIn, etc.   Some also assist with SEO and content marketing by creating articles to post online.

Industry Summary

According to Statista, as of 2021, 91.9% of companies with more than 100 employees use social media marketing techniques. In 2013 it was only 86.2%.  In 2019 social media marketing spending in the United States was $17 billion.

Industry Trends

Companies of all sizes are using social media to reach customers.  It is a low-cost way to gain visibility and communicate with both new and existing customers.  Social media marketing should continue to increase into the foreseeable future.

Target Market

Your target market will be small businesses seeking social media management.

Skills, Experience, and Education Useful in Running a Social Media Marketing Business

There are several specific skills that you will need to open a social media marketing business.

  • Experience.  Experience in marketing with a focus on social media accounts is essential.
  • Education.  A degree in marketing will give you an advantage.
  • Business knowledge and experience.  You will need to have a basic understanding of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.

Costs to Start a Social Media Marketing Business

Starting a social media marketing agency can be very expensive, especially if operating as a home-based business. Here are some typical costs you will face when you open a social media marketing business.

  • Website setup $100 –$200 for a basic, do it yourself website, $1,000 – $5,000 for a professional site.
  • A dependable desktop or laptop computer – $500 – $2,000
  • Strong internet connection – $30 – $50/month

Steps to Starting a Social Media Marketing Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your social media marketing business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as your target market, how you plan to reach them, projecting sales and expenses, competitors, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a roadmap to guide your business.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect social media marketing business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity (also called a business structure) refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).  Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

You can operate your business from home.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

You may need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located. Check with your state for specific license and permit requirements for your social media marketing business.  Some other common local, state, and federal registrations an social media marketing business may need include a sales tax permit and an Employer Identification Number.  

Related: Common business licenses, permits, and registrations by state

Step 6: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 7: Get your Marketing Plan in Place

Just like you wouldn’t let your client create a marketing strategy without a plan, neither should you.  Marketing on the various social media platforms should be an area you excel at, but there are other channels, such as being active with the Chamber of Commerce, networking events, and much more.

Having a portfolio and testimonials from satisfied clients to show prospects is also critical in building credibility for a new social media agency. Happy clients also talk to other business owners and help bring in more business.

Related: Low-cost ideas to market a new business

Step 8: Get Business Insurance

A social media marketing business needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 9: Hiring Employees

You may need employees such as copywriters, client managers, customer service, and others will help run your social media marketing business.  Make sure that you select people with appropriate experience and training.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 10: Set up an Accounting System

Setting up an accounting system for your social media marketing business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Social Media Marketing Business?

Generally, you can charge up to $50 – $75 per hour.  If you get enough work to be full-time, at $50 per hour, you would make $104,000 per year.

Things to Consider Before Starting a Social Media Marketing Business

Running a social media marketing business or any business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

Marketing and acquiring customers will be your biggest challenge and an ongoing expense. You will face a considerable amount of competition, so you will need to make yourself stand out in some way.  In the beginning, you will have to pound the pavement to get customers before you start making significant money.

Since there is a lot of competition, some new social media marketing agencies will focus on a particular niche and build their expertise and name around an industry. Being everything to every client can be tough to tackle.

Talk to other small business owners for tips on starting a business and do your homework to determine costs.  Research other social media marketing businesses to see what they offer and what prices they charge.

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