Table of Content

    Do you want to start advertising agency business?

    In these times where people buy benefits instead of products, it has become really significant to advertise the services whether you are a small business or a larger one. To let people know why they should choose your products rather than the same product of another company, you have to advertise in the best way one can.
    Do you think that you have the mind to advertise in the best way one can? If no, then here we are ‘Albert Advertisers’ with the professional minds to feature your brand.
    The sample business plan envisaging how Albert Advertisers will be started is given here for anyone who wants to know how to start an advertising agency.

    Executive Summary

    2.1 The Business

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    Albert Advertisers will be a registered and licensed advertisement company located in Austin, owned by Albert Finney. The business will be based on advertising and marketing small and large businesses in Austin by traditional means of making billboards and by using digital and social platforms.

    2.2 Management

    If you have decided to start an advertising agency, you should then make a detailed advertising agency business plan with a special focus on how you will be managing your business. Albert Advertisers will be managed by Albert himself. He will hire the perfect minds after rigorous testing to ensure the best and unique ideas for advertisement. Besides, he will hire IT Experts, Painters, and Web Developers to convert your dream of attracting a large audience into reality.

    2.3 Customers

    Our customers will be the owners of online companies and entrepreneurs of large and small startups based in Austin. Besides new startups, we also expect previously running businesses to avail our services whenever they have to market their new products.

    2.4 Business Target

    Enlisting the targets, you want to achieve in your marketing agency business plan, will help you in making a defined strategic plan to achieve them. Our target is to be the most popular advertisement agency in Austin and to earn a profit margin of $10k per month by the end of the first year.

    Advertising Agency Business Plan - 3 Years Profit Forecast

    Company Summary

    3.1 Company Owner

    Albert Finney will be the owner of Albert Advertisers. Albert is a Bachelor in Advertising and Digital Media Design from the University of Oregon and has a two-year experience of working as Advertising Manager. By the mix of both his ideas and management skills, Albert is confident that soon he will be able to be prominent and distinct in the market he is going to serve.

    3.2 Why the Business is being started

    Albert has always been passionate about starting his own business. His degree and his interests toward digital marketing persuaded him to start a marketing company. This will be a source of earning a profit while using his dedication and skills in this profession.

    3.3 How the Business will be started

    Due to his prior experience as an Advertising manager, Albert knew well how to start a marketing agency. If you are new to this business and want to know about how to start a marketing company, you can take help from this sample business plan. Albert will hire a team of experienced web developers, painters, artists, billboard designers, and general assistants to advertise others’ business. A place will be taken on rent and necessary equipment like computers, advertising flags, banners, paint, brushes, boards, and accessories will be bought. Albert has decided to provide a comfortable and learning environment for his team and also to make a complacent place for the customers to sit and see our advertising projects. The startup summary is as follows:

    Advertising Agency Business Plan - Startup Cost The detailed start-up requirements are given below:

    Start-up Expenses  
    Legal $55 300
    Consultants $0
    Insurance $32 750
    Rent $32 500
    Research and Development $32 750
    Expensed Equipment $32 750
    Signs $1 250
    TOTAL START-UP EXPENSES $187 300
    Start-up Assets $220 875
    Cash Required $332 500
    Start-up Inventory $32 625
    Other Current Assets $232 500
    Long-term Assets $235 000
    TOTAL ASSETS $121 875
    Total Requirements $245 000
    START-UP FUNDING
    START-UP FUNDING $273 125
    Start-up Expenses to Fund $151 875
    Start-up Assets to Fund $123 000
    TOTAL FUNDING REQUIRED $0
    Assets $23 125
    Non-cash Assets from Start-up $18 750
    Cash Requirements from Start-up $0
    Additional Cash Raised $18 750
    Cash Balance on Starting Date $21 875
    TOTAL ASSETS $373 125
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $620 125
    Planned Investment $620 125
    Investor 1 $0
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $620 125
    Loss at Start-up (Start-up Expenses) $313 125
    TOTAL CAPITAL $251 875
    TOTAL CAPITAL AND LIABILITIES $251 875
    Total Funding $255 000

    Products

    Before deciding the services Albert analyzed what others are lacking in this domain. To adopt additional paths for advertisement besides traditional means Albert has decided to start a digital marketing agency. The overall services Albert Advertisers will provide are given here:

    • Printing innovative flyers and brochures
    • Designing appealing and unique billboards
    • Making related banners and flags
    • Making business cards and invitation cards
    • Advertising through social media sites, websites, and emails
    • Advertising using the technique of search engine optimization

    Marketing Analysis of Marketing Agency

    The next important step you have to take if you are looking for how to start your own marketing agency is to do an accurate market analysis. You need to figure out what others in the same business are doing and what additional services you’ll have to provide to take a lead upon them. Albert has decided to start marketing agency not just for the sake of opening his own business but to introduce new ways of advertising and getting introduced to people. He has decided to follow both the traditional means of advertisements and the latest digital trends. So, you can have guidance from this sample business plan even if you are looking for how to start digital marketing agency.

    5.1 Market Trends

    The entrepreneurs when they are taking a startup, can’t focus on each and everything by themselves and they want the services of some professional and trustee organization to do marketing work for their marketing plan. According to a report by IBISWorld, stats have shown a noticeable growth rate of 4.2% of the advertising industry in the United States over the past five years, generating a revenue of $54.5 billion annually. In the US alone there are more than 120 thousand advertising agencies running successfully. So the business can prove extremely beneficial for you provided that you plan it effectively.

    5.2 Marketing Segmentation

    To know and focus on the demands of its customers, Albert Advertisers has divided its customers in the following target groups. The detailed marketing segmentation of our target audience is as follows:

    Advertising Agency Business Plan - Marketing Segmentation

    5.2.1 Business Owners: The biggest category of our customers will be the owners of small and large businesses based in Austin. They will avail our services of designing billboards and printing brochures for them as well as the services of our experts to make their website SEO friendly.

    5.2.2 Institutions & Organizations: Our second target group comprises of various institutions and organizations located in Austin including public-sector organizations, schools, colleges and universities, political parties, sports organizations, and non-profit organizations. They will need our services to promote their ideas and services.

    5.2.3 Online Companies: Our third target group will be the online companies not just restricted to Austin but to anywhere in the United States. They will avail just our services of social media marketing, developing websites and SEO their content.

    Market Analysis
    Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
    Institutions & Organizations 32% 11 433 13 344 16 553 18 745 20 545 13,43%
    Business Owners 48% 22 334 32 344 43 665 52 544 66 432 10,00%
    Online Companies 20% 12 867 14 433 15 999 17 565 19 131 15,32%
    Total 100% 46 634 60 121 76 217 88 854 106 108 9,54%

    5.3 Business Target

    We aim at extending our services to several cities through our online servicing. Our financial goals to be achieved over the course of three years are:

    • To balance the initial cost of the startup with earned profits by the end of the first year
    • To achieve the net profit margin of $10k per month by the end of the first year and $15k per month by the end of the second year

    5.4 Product Pricing

    After considering the market demands, we have priced our services in the range similar to our competitors. However, we’ll be offering several discounts to introduce us to the market.

    Strategy

    If you are going to start a social media marketing agency or even a traditional marketing agency you must have an excellent sales strategy plan for yourself. To present your work to your target customers you have to prove that you can help them in gaining customers through advertisements, and that is only possible if your own advertisement plan for your company is extraordinary. If you are looking for how to start a digital marketing agency pdf format, you can take help from this freely available business plan on how to start marketing agency mainly focused on digital marketing.

    6.1 Competitive Analysis

    Our biggest competitive advantage is that our company will not only be making billboards and banners but in addition to these, we will be hiring IT Experts and Web Developers to advertise through digital media. Our skilled and experienced employees will make your website SEO friendly. Secondly, our staff especially web developers are highly experienced and despite their prior experience they will be given continuous learning programs. Moreover, we will be servicing online, thus enabling our customers to facilitate online orders. Lastly, we will be offering discounts to our customers to help us in getting introduced to a large audience.

    6.2 Sales Strategy

    • We’ll ensure a 25% increase in our website traffic every month and a gradual increase in our means to convert that traffic to our customers
    • We’ll SEO our website to give our customers an example of how we work
    • We’ll advertise us through posting appealing billboards and banners on public places and on social media
    • We’ll display our works to our customers by sending them introductory letters and by exhibiting them in the waiting area for them
    • We will offer a 20% discount on our services for the first five months of our launch

    6.3 Sales Monthly

    Advertising Agency Business Plan - Sales Monthly

    6.4 Sales Yearly

    Advertising Agency Business Plan - Sales Yearly

    6.5 Sales Forecast

    Advertising Agency Business Plan - Unit Sales

    Sales Forecast
    Unit Sales Year 1 Year 2 Year 3
    Flyers & brochures 1 887 030 2 680 320 2 588 240
    Billboards, banners & flags 802 370 815 430 823 540
    Business & invitation cards 539 320 770230 1 002 310
    Digital advertising 265 450 322 390 393 320
    TOTAL UNIT SALES 3 494 170 4 588 370 4 807 410
    Unit Prices Year 1 Year 2 Year 3
    Flyers & brochures $140,00 $150,00 $160,00
    Billboards, banners & flags $600,00 $800,00 $1 000,00
    Business & invitation cards $700,00 $800,00 $900,00
    Digital advertising $650,00 $750,00 $850,00
    Sales
    Flyers & brochures $2 149 800 $2 784 000 $3 383 200
    Billboards, banners & flags $120 050 $194 500 $268 500
    Business & invitation cards $50 110 $71 600 $93 000
    Digital advertising $139 350 $194 600 $249 850
    TOTAL SALES
    Direct Unit Costs $Year 1 $Year 2 $Year 3
    Flyers & brochures $0,70 $0,80 $0,90
    Billboards, banners & flags $0,40 $0,45 $0,50
    Business & invitation cards $0,30 $0,35 $0,40
    Digital advertising $3,00 $3,50 $4,00
    Direct Cost of Sales
    Flyers & brochures $989 300 $1 839 000 $2 679 700
    Billboards, banners & flags $66 600 $119 900 $173 200
    Business & invitation cards $17 900 $35 000 $52 100
    Digital advertising $19 400 $67 600 $115 800
    Subtotal Direct Cost of Sales $1 294 100 $1 699 400 $2 104 700

    Personnel plan

    If you are starting a marketing agency especially a digital marketing agency you will need to hire highly trained staff to prove that you are the best among your competitors. In this sample digital marketing agency business plan, we are enlisting the employees Albert will hire with a little job description.

    7.1 Company Staff

    Albert will manage the business himself, the staff he’ll hire is as follows:

    • 1 Accountant to maintain financial and other records
    • 1 Receptionist to attend to customers
    • 4 Graphic Artists and Painters to design billboards, banners, and brochures
    • 2 SEO Specialists to do search engine optimization
    • 4 Web Developers to develop websites and to do social media marketing
    • 2 Technicians to operate the machines
    • 2 General Assistants to carry day to day tasks and to bring required materials
    • 1 Cleaner to clean the facility
    • 1 Driver to provide transport

    7.2 Average Salary of Employees

    Personnel Plan
    Year 1 Year 2 Year 3
    Accountant $85 000 $95 000 $105 000
    Receptionist $45 000 $50 000 $55 000
    Graphic Artists $152 000 $159 000 $166 000
    SEO Specialists $152 000 $159 000 $166 000
    Web Developers $152 000 $159 000 $166 000
    Technicians $145 000 $152 000 $159 000
    General Assistants $50 000 $55 000 $60 000
    Cleaner $42 000 $45 000 $48 000
    Driver $42 000 $45 000 $48 000
    Total Salaries $304 000 $318 000 $332 000

    Financial plan

    The success of a business heavily depends on the accuracy of its financial plan. A financial plan is important because it demonstrates what will be your startup expenses including the salaries of your employees. Your financial plan will help you in devising the way to balance your startup costs with the earned profits.
    While making your marketing agency business plan, you must hire a financial expert to make an accurate financial plan for your business. As you will have to do large scale advertisement and will have to hire experienced and highly paid staff, so it is very important to have an idea of the expenses you will have to meet and the investments you will have to do. For a rough estimate, we are providing the sample financial plan of Albert Advertisers, but still, it is advisable to seek the services of a financial expert for this task if you entering this venture.

    8.1 Important Assumptions

    General Assumptions
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10,00% 11,00% 12,00%
    Long-term Interest Rate 10,00% 10,00% 10,00%
    Tax Rate 26,42% 27,76% 28,12%
    Other 0 0 0

    8.2 Brake-even Analysis

    Advertising Agency Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $159 740
    Assumptions:
    Average Per-Unit Revenue $260,87
    Average Per-Unit Variable Cost $0,89
    Estimated Monthly Fixed Cost $196 410

    8.3 Projected Profit and Loss

    Pro Forma Profit And Loss
    Year 1 Year 2 Year 3
    Sales $309 069 $385 934 $462 799
    Direct Cost of Sales $15 100 $19 153 $23 206
    Other $0 $0 $0
    TOTAL COST OF SALES $15 100 $19 153 $23 206
    Gross Margin $293 969 $366 781 $439 593
    Gross Margin % 94,98% 94,72% 94,46%
    Expenses
    Payroll $138 036 $162 898 $187 760
    Sales and Marketing and Other Expenses $1 850 $2 000 $2 150
    Depreciation $2 070 $2 070 $2 070
    Leased Equipment $0 $0 $0
    Utilities $4 000 $4 250 $4 500
    Insurance $1 800 $1 800 $1 800
    Rent $6 500 $7 000 $7 500
    Payroll Taxes $34 510 $40 726 $46 942
    Other $0 $0 $0
    Total Operating Expenses $188 766 $220 744 $252 722
    Profit Before Interest and Taxes $105 205 $146 040 $186 875
    EBITDA $107 275 $148 110 $188 945
    Interest Expense $0 $0 $0
    Taxes Incurred $26 838 $37 315 $47 792
    Net Profit $78 367 $108 725 $139 083
    Net Profit/Sales 30,00% 39,32% 48,64%

    8.3.1 Profit Monthly

    Advertising Agency Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    Advertising Agency Business Plan - Profit Yearly

    8.3.3 Gross Margin Monthly

    Advertising Agency Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    Advertising Agency Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Advertising Agency Business Plan - Projected Cash Flow

    Pro Forma Cash Flow
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $40 124 $45 046 $50 068
    Cash from Receivables $7 023 $8 610 $9 297
    SUBTOTAL CASH FROM OPERATIONS $47 143 $53 651 $59 359
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $47 143 $53 651 $55 359
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $21 647 $24 204 $26 951
    Bill Payments $13 539 $15 385 $170 631
    SUBTOTAL SPENT ON OPERATIONS $35 296 $39 549 $43 582
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $35 296 $35 489 $43 882
    Net Cash Flow $11 551 $13 167 $15 683
    Cash Balance $21 823 $22 381 $28 239

    8.5 Projected Balance Sheet

    Pro Forma Balance Sheet
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184 666 $218 525 $252 384
    Accounts Receivable $12 613 $14 493 $16 373
    Inventory $2 980 $3 450 $3 920
    Other Current Assets $1 000 $1 000 $1 000
    TOTAL CURRENT ASSETS $201 259 $237 468 $273 677
    Long-term Assets
    Long-term Assets $10 000 $10 000 $10 000
    Accumulated Depreciation $12 420 $14 490 $16 560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198 839 $232 978 $267 117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9 482 $10 792 $12 102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9 482 $10 792 $12 102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9 482 $10 792 $12 102
    Paid-in Capital $30 000 $30 000 $30 000
    Retained Earnings $48 651 $72 636 $96 621
    Earnings $100 709 $119 555 $138 401
    TOTAL CAPITAL $189 360 $222 190 $255 020
    TOTAL LIABILITIES AND CAPITAL $198 839 $232 978 $267 117
    Net Worth $182 060 $226 240 $270 420

    8.6 Business Ratios

    Ratio Analysis
    Year 1 Year 2 Year 3 INDUSTRY PROFILE
    Sales Growth 4,35% 30,82% 63,29% 4,00%
    Percent of Total Assets
    Accounts Receivable 5,61% 4,71% 3,81% 9,70%
    Inventory 1,85% 1,82% 1,79% 9,80%
    Other Current Assets 1,75% 2,02% 2,29% 27,40%
    Total Current Assets 138,53% 150,99% 163,45% 54,60%
    Long-term Assets -9,47% -21,01% -32,55% 58,40%
    TOTAL ASSETS 100,00% 100,00% 100,00% 100,00%
    Current Liabilities 4,68% 3,04% 2,76% 27,30%
    Long-term Liabilities 0,00% 0,00% 0,00% 25,80%
    Total Liabilities 4,68% 3,04% 2,76% 54,10%
    NET WORTH 99,32% 101,04% 102,76% 44,90%
    Percent of Sales
    Sales 100,00% 100,00% 100,00% 100,00%
    Gross Margin 94,18% 93,85% 93,52% 0,00%
    Selling, General & Administrative Expenses 74,29% 71,83% 69,37% 65,20%
    Advertising Expenses 2,06% 1,11% 0,28% 1,40%
    Profit Before Interest and Taxes 26,47% 29,30% 32,13% 2,86%
    Main Ratios
    Current 25,86 29,39 32,92 1,63
    Quick 25,4 28,88 32,36 0,84
    Total Debt to Total Assets 2,68% 1,04% 0,76% 67,10%
    Pre-tax Return on Net Worth 66,83% 71,26% 75,69% 4,40%
    Pre-tax Return on Assets 64,88% 69,75% 74,62% 9,00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 19,20% 21,16% 23,12% N.A.
    Return on Equity 47,79% 50,53% 53,27% N.A.
    Activity Ratios
    Accounts Receivable Turnover 4,56 4,56 4,56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19,7 22,55 25,4 N.A.
    Accounts Payable Turnover 14,17 14,67 15,17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1,84 1,55 1,26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0,02 -0,04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120 943 $140 664 $160 385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0,45 0,48 0,51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23,66 27,01 30,36 N.A.
    Sales/Net Worth 1,68 1,29 0,9 N.A.
    Dividend Payout 0 0 0 N.A.

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