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How to Start a Modeling Agency

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Published on June 5, 2022

Updated on August 12, 2022

How to Start a Modeling Agency

How to Start a Modeling Agency

Being a model is a dream for countless young women and girls, and modeling agencies help runway hopefuls get their first big break. With the rise of social media, more models than ever are being discovered outside the traditional audition process, changing the landscape for talent and agencies alike. 

This significantly expands the talent pool for modeling agencies, which means huge profits. 

After a pandemic-driven dip, the US modeling industry is worth $1.6 billion dollars and forecast for steady growth. 

But before you start looking around for the next Kate Moss, it’s important to familiarize yourself with the insight and information needed to launch a successful venture. Luckily, this step-by-step guide has the entrepreneurial knowledge you need to get a great head start. 

Fast Facts

Investment range

$4,100-$10,400

Time to build

0-3 months

Industry trend

growing

Revenue potential

$52,500-$140,000 p.a.

Profit potential

$47,000-$91,000 p.a.

Commitment

flexible

Step 1: Decide if the Business Is Right for You

businesswoman organizing financial documents writing the pros and the cons business concept

Pros and cons

Before starting a modeling agency, it’s important to consider the pros and cons. 

Pros

  • Flexibility – Work from anywhere in the world!
  • Good Money – Make thousands of dollars per contract
  • Low Startup Costs – Start your business from home with a laptop

Cons

  • Stiff Competition – You’ll have to stand out from established modeling agencies
  • Extensive Networking – Takes time and money to build a talent pool

Modeling agency industry trends

Industry size and growth

Trends and challenges

Trends within the modeling agency industry include:

  • With the rise of body positivity, the modeling industry is seeing an uptick in more models of all body types. This booming niche has made many modeling agencies even more successful.
  • Many of today’s top models were discovered through their social media accounts. Today’s agencies can discover talent without having to leave the office.

Challenges within the modeling agency industry include: 

  • Working within the fashion industry is high-maintenance and fast-paced. Some clients and models can be tough personalities to work with.
  • In recent years, the modeling industry has come under scrutiny due to corrupt business practices and the mistreatment of models. Issues include sexual harassment and stolen wages. Increased transparency is required. 

What kind of people work in modeling agencies?

How much does it cost to start a modeling agency?

Startup costs for a modeling agency range from $4,100 to $10,400. Costs include a computer, website, and insurance. Your highest expenses will be related to marketing and advertising your business. 

Start-up CostsBallpark RangeAverage
Licenses and permits$100-$300$200
Insurance$100-$300$200
Marketing and advertising$2,000-$5,000$3,500
Website$1,000-$3,000$2,000
Computer$800-$1,600$1,200
Software$100-$200$150
Total$4,100-$10,400$7,250

How much can you earn from a modeling agency?

Modeling agencies charge a commission of 15%–25% of a model’s contract. Contracts for runway and photo models can be anywhere from a few thousand dollars to $30,000, depending on the model and brand. 

Many smaller brands offer contracts of $1,000–$5,000 per day, while well-known models make as much as $20,000 per day. When you’re first starting out, your rates should fall at the lower end of the range until you build a reputation. Your ongoing expenses will be low, so aim for a profit margin of around 90%. 

In your first year or two, you could work from home and book 100 photo modeling contracts at $2,000 each. You could also book 15 runway model contracts at $10,000 each. At a rate of 15% per contract, you’d bring in $53,000 in annual revenue and $47,000 in profit, assuming that 90% margin. 

As your network grows and your agency gains a reputation, you could increase your rates to 20% and double your business. At this stage, you’d rent out an office and hire staff, reducing your profit margin to about 65%. With annual revenue of $140,000 , you’d make a handsome profit of $91,000.

What barriers to entry are there?

There are a few barriers to entry when it comes to starting a modeling agency. Your biggest challenges will be:

  • Building a solid pipeline of potential clients
  • Beating out other modeling agencies for top talent 

Step 2: Hone Your Idea

Now that you know what’s involved in starting a modeling agency, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Why? Identify an opportunity

Research modeling agencies in your area to examine their services, price points, and testimonials. You’re looking for a market gap to fill. For instance, maybe the local market is missing a modeling agency that only works with social media influencers or plus-sized models. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as child models or runway models. This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You’ll be responsible for finding modeling jobs for your talent base. Your services may include negotiating contracts, creating model portfolios, and coordinating travel arrangements. 

How much should you charge for modeling agency services?

Modeling agencies make money from modeling contracts. An agency charges a percentage of a contract, which typically ranges from 15% to 25%. Your rates will largely depend on the size of your network and reputation within the industry. 

It will also depend on how much you assist the model with things like creating a portfolio and providing coaching for interviews. Your ongoing costs will be mostly related to advertising and marketing, so expect a profit margin of around 90%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be models looking to book contracts. You’ll likely work with models in specific niches, like fitness or lingerie. Spread your marketing efforts across social media platforms like Instagram, TikTok, and Facebook. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed
Should you start a modeling agency business

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “modeling agency” or “top models”, boosts SEO
  • Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your offerings in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
  • Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
  • Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running. 

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to modeling agencies. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your modeling agency will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online. It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a modeling agency. You might also try crowdfunding if you have an innovative concept.  

funding business concept

Step 8: Apply for Licenses/Permits

Starting a modeling agency requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your modeling agency as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Mediaslide, Mainboard, or StarAgent to schedule bookings, manage photos and portfolios, and store model and client contact information.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from word of mouth or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Book a Call”. This can sharply increase your network of models and clients. 
  • Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

  • Flyering – Distribute flyers in your neighborhood and at industry events 
  • Sponsor events – You can pay to be a sponsor at events that are relevant to your target market
  • Post a video – Post a video about your modeling agency. Use humor and maybe it will go viral!
  • Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
  • Seek out referrals – Offer incentives to generate customer referrals to new clients. 
  • Press releases – Do press releases about new products, sales, etc.
  • Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
  • Influencer marketing – Pay people with large social media followings to promote your modeling agency. You can find micro-influencers with smaller followings and lower rates.
  • Testimonials – Share customer testimonials about how your modeling agency helped them

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your modeling agency meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your modeling agency could be:

  • The metro area’s top teen and tween models
  • The cutting edge of haute couture runway talent
  • The best agency for aspiring male models

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a modeling agency, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in modeling for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in modeling. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a modeling agency include:

  • Administrative Assistant – Schedule bookings, bill clients
  • Accountant – Bookkeeping, tax preparation
  • Talent Scout – Attend industry events, build pipeline of models

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

Modeling agencies discover new talent and help them make the money they deserve. As the owner of an agency, you’ll get to network with top brands, meet a ton of interesting people, and make great money. No two days will ever be the same!

Now that you’ve done your homework, you’re ready to find America’s next top models and land them some amazing contracts. It’s time to get out there and start the modeling agency of your dreams. 

Modeling Agency FAQs

How much should I price my modeling agency’s services?

Modeling agencies typically charge around 20% of a model’s contract. Your rates will depend on the caliber of models you represent as well as your reputation in the industry.

Is a modeling agency a profitable business?

Yes, a modeling agency can be an extremely profitable business. The key to driving revenue is building a robust pipeline of models and relationships with the fashion industry.

How much does it cost to start a modeling agency?

You can start a modeling agency for as little as $4,000. Costs include a computer, website, and insurance. Your biggest expenses, other than a computer and website, will be related for marketing your services.

Do I need a license to run my modeling agency?

You may be required to obtain specific licenses or permits to operate your business. Check with your state and local government or visit MyCorporation’s Business License Compliance page.