Starting a digital media company can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful digital media company.
Importantly, a critical step in starting a digital media company is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Digital Media Company:
- Choose the Name for Your Digital Media Company
- Develop Your Digital Media Company Business Plan
- Choose the Legal Structure for Your Digital Media Company
- Secure Startup Funding for Your Digital Media Company (If Needed)
- Secure a Location for Your Business
- Register Your Digital Media Company with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Digital Media Company
- Buy or Lease the Right Digital Media Company Equipment
- Develop Your Digital Media Company Marketing Materials
- Purchase and Setup the Software Needed to Run Your Digital Media Company
- Open for Business
1. Choose the Name for Your Digital Media Company
The first step to starting a digital media company is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your digital media company:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your digital media company.
2. Develop Your Digital Media Company Business Plan
One of the most important steps in starting a digital media company is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business model. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your digital media company.
- Company Overview – this section tells the reader about the history of your digital media company and what type of digital media company you operate. For example, are you a social media company, content publisher, or an advertising company?
- Industry Analysis – here you will document key information about the digital marketing industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target audience are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your digital media company? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your digital media company make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Digital Media Company
Next you need to choose a legal structure for your own digital marketing agency business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the digital marketing company and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a digital media company together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a digital media company include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a digital media company is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your digital media company, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Digital Media Company (If Needed)
In developing your digital media company business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a digital media company to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a digital media company that they believe has high potential for growth.
5. Secure a Location for Your Business
There are a few things you’ll want to take into account when looking for a location for your digital media company. You’ll need a space that is large enough to accommodate your team and all of your equipment. Additionally, you’ll want to find a location that is accessible and has good internet connectivity. You’ll also want to consider the cost of living in the area, as well as the availability of talent.
The best way to find a suitable location for your digital media company is to consult with a real estate professional. They will be able to help you identify locations that meet your specific needs. Additionally, they can provide you with information on the local market, as well as the current rental rates.
6. Register Your Digital Media Company with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your digital media company’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your digital media company to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
The licenses and permits you need to start a digital media company depend on the specific business you plan to operate. For example, if you plan to sell advertising or make copyrighted content, you may need a license from the government. You should speak with an attorney or business licensing agency in your area to find out what specific licenses and permits you need for your business.
10. Get Business Insurance for Your Digital Media Company
There are various types of insurance necessary to operate a digital media company.
Some business insurance policies you should consider for your digital media company include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Digital Media Company Equipment
To run a digital media company, you will need computers, software, cameras, and storage devices.
12. Develop Your Digital Media Company Marketing Materials
Marketing materials will be required to attract and retain customers to your digital media company.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your digital media company. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional digital media company website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you..
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your digital media company.
13. Purchase and Setup the Software Needed to Run Your Digital Media Company
To run a digital media company, you need software to create and manage your content, as well as software to sell and distribute your content. Some common software options for creating content include Adobe Photoshop and Illustrator, while common software for sales and distribution include Apple iTunes and Amazon Kindle.
14. Open for Business
You are now ready to open your digital agency. If you followed the steps above, you should be in a great position to build a successful business and know everything you need about starting a media company. Below are answers to frequently asked questions that might further help you with how to build a media company.
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How to Start a Digital Media Company FAQs
Is it hard to start a digital media company?
There is no one-size-fits-all answer to this question, as the ease or difficulty of starting a digital marketing business will vary depending on your digital marketing skills, experience, and resources.
However, if you follow the steps above, you should be able to start your digital media company without too much difficulty.
How can I start a digital media company with no experience?
It can be difficult to start a digital media company with no experience, but it's not impossible. Here are a few tips to help you get started:
- Do some research. Make sure you understand the digital marketing space and the competitive landscape.
- Develop a strong business plan. This will help you outline your goals and marketing strategy.
- Build a strong team. You'll need talented and experienced people to help you grow your own business.
- Be prepared to invest money and time. It will take a lot of hard work and dedication to make your business successful.
- Stay focused and don't give up. Successful businesses take time to build, so be patient and don't get discouraged.
If you follow these tips, you'll be on your way to starting a successful digital media company.
What type of digital media company is most profitable?
The most profitable type of digital media company is one that creates and distributes content across multiple platforms. This could include websites, social media, and other digital channels. Companies that focus on multiple platforms are typically more profitable than those that focus on a single platform, such as just a website or just social media.
A digital media company can also be more profitable if it has diversified revenue streams. This means that the company generates income from multiple sources, such as advertising, subscriptions, and e-commerce. Companies that rely heavily on one source of income are usually less profitable.
How much does it cost to start a digital media company?
The cost to start a digital media company can vary depending on the size and scope of the business. However, in general, there are some basic costs that are incurred in starting any business, such as incorporation costs, legal fees, and marketing expenses. In addition, there may be specific costs associated with launching a digital media company, such as website design and development costs, online advertising expenses, and subscription fees for digital content platforms.
What are the ongoing expenses for a digital media company?
Digital media companies incur a variety of ongoing expenses, including personnel costs, marketing and advertising expenses, and software and hardware expenses. Personnel costs can be significant for digital marketing agencies, as they often employ engineers and technical staff to design and maintain their websites and online audio and video content. Marketing and advertising expenses are also common for digital media companies, as they strive to build their audiences and generate revenue. Software and hardware expenses can also be significant for digital media companies as they often need to purchase and maintain servers, storage devices, and other computer equipment.
How does a digital media company make money?
There are a few ways a digital media company makes money. One way is through advertising. Companies pay to have their ads placed on the website or app, and then the company will receive a commission based on how many people view or click on the ad. Another way is through subscriptions in which people pay a monthly fee to access the company's content. Finally, some digital media companies make money by selling products or services related to their content. For example, a website about travel might sell travel insurance or flight tickets.
Is owning a digital media company profitable?
There are a few reasons owning a digital media company can be profitable. First, the number of people who consume digital media continues to grow. Second, companies are willing to pay a premium for quality digital media content. Finally, digital media is an effective way to reach a large number of people.
Why do digital media companies fail?
There are a few reasons digital media companies fail. First, it's difficult to compete in the saturated marketplace of digital media. Second, they don't always have sufficient funding early on to grow and scale their business properly. Third, some business owners may not focus enough on the customer experience to attract and retain customers. Finally, they may fail if they cannot pivot quickly to new trends in the media industry.