How to Start a Talent Agency

Talent agencies serve an important purpose, helping to build the careers of artists of various kinds as well as athletes. They help their clients with training and exposure, getting auditions, and booking gigs. If you’re looking to get into the talent industry, starting a talent agency could be a great way to do so.

Talent agencies can make a lot of money when their clients are successful, making the celebrity and sports agents industry worth $15 billion in the U.S. alone. You’d also get the rewards of helping your clients achieve success.

But before you start scouting for talent, you’ll need to understand the business. Fortunately, this step-by-step guide details all the information you’ll need to start a successful talent agency.

Step 1: Decide if the Business Is Right for You

Pros and cons

Talent agency industry trends

Industry size and growth

• Industry size and past growth – The U.S. celebrity and sports agents industry is worth $14.5 billion in 2023 after growing 2.7% annually for the last five years.((https://www.ibisworld.com/united-states/market-research-reports/celebrity-sports-agents-industry/))
• Growth forecast – The U.S. celebrity and sports agents industry is projected to grow 3.7% in 2023.
• Number of businesses – In 2023, 48,449 celebrity and sports agent businesses are operating in the U.S.
• Number of people employed – In 2023, the U.S. celebrity and sports agents industry employs 72,704 people.

Trends and challenges

Trends

• The number of influencers who work with talent agencies is growing.
• The diversity of the client base for talent agencies is expanding, allowing talent agencies that are not located in hot spots like California or New York to find more opportunities.

Challenges

• Some of the larger talent agencies have merged, creating huge powerhouses in the industry that make it difficult for small agencies to compete.
• Some actors and other celebrities have challenged the agency business model, and no longer want to pay agent commissions.

How much does it cost to start a talent agency business?

Startup costs for a talent agency range from $7,000 to $14,000. Costs include a marketing budget, both to market your agency and your clients, and legal fees for client contracts. The costs assume that you’ll start by running your business from home. 

How much can you earn from a talent agency business?

You’ll charge your client a commission on their earnings, which generally is 10%. Your profit margin should be about 70%.

In your first year or two, you could work from home and book client jobs that bring in $8,000 on average per month, bringing in $96,000 in revenue. This would mean $67,200 in profit, assuming that 70% margin. 

As you gain traction, you might have an office and hire staff, reducing your margin to around 40%. Your bookings could climb to $30,000 average per month. With annual revenue of $360,000, you’d make a tidy profit of $144,000.

What barriers to entry are there?

There are a few barriers to entry for a talent agency. Your biggest challenges will be:

• Breaking into a competitive market
• Finding talent to represent

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Step 2: Hone Your Idea

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

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Why? Identify an opportunity

Research talent agencies in your area to examine their services, price points, and customer reviews.

• Make a list of talent agencies that offer similar services. 
• Review your competitors’ services – their features, pricing, and quality – and marketing strategies
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

You’re looking for a market gap to fill. For instance, maybe the local market is missing a modeling agency, or an agency that represents child actors. 

You might consider targeting a niche, such as voice actors.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

Your services will involve helping your clients build a portfolio, marketing them, getting them auditions, and negotiating their contracts. You could decide on a niche, such as building acting careers, or sports talent management, or you could represent a range of clients. 

How much should you charge for talent agency services?

The standard rate for talent agencies is 10% of client earnings but can go up to 20%.

Who? Identify your target market

Your target market will depend on the niche you choose, but in any case, TikTok and Instagram are good places to market and to find talent.

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

Step 3: Brainstorm a Talent Agency 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 “creative artists agency” or “talent agency”, boosts SEO
• Name should allow for expansion, for ex: “All Spectrum Talent” and “Universe of Talent” over “Melody Makers Agency” and “Silver Screen Starlets”
• 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 and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Talent Agency 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: Provide a concise summary of your business plan, highlighting your agency’s mission, vision, and key objectives.
• Business Overview: Present an overview of your talent agency, including its location, specialization (e.g., actors, musicians, models), and any unique features or services.
• Product and Services: Detail the services your talent agency offers, such as talent representation, career management, audition preparation, and networking opportunities for artists.
• Market Analysis: Analyze the entertainment industry’s demand for talent representation, identify your target clientele, and assess industry trends and opportunities.
• Competitive Analysis: Identify and evaluate other talent agencies in your niche, highlighting your agency’s strengths and what sets it apart from the competition.
• Sales and Marketing: Explain your strategies for attracting and signing new talent, as well as how you plan to promote your represented talent to industry professionals.
• Management Team: Introduce the key members of your talent agency team, emphasizing their industry experience and qualifications in talent representation.
• Operations Plan: Describe the day-to-day operations of your agency, including talent scouting, contract negotiations, and talent development programs.
• Financial Plan: Present financial projections, including revenue forecasts, commission structures, and operating expenses, to demonstrate the agency’s potential profitability.
• Appendix: Include any supplementary materials, such as client testimonials, talent portfolios, and industry endorsements, to support your business plan.

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

Step 5: Register Your Business

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 talent 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 talent 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. Here’s how to form an LLC.
• 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. Read how to start a corporation here.
• 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 an 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. 

Form Your LLC

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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 talent agency business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Talent Agency Business Licenses and Permits

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

Some states require that you become a licensed talent agent and you may also have to get a surety bond. Check with your state for requirements.

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.

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 talent agency business 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 Skybolt, or staragent, to manage your clients, workflows, and billing. 

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.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. 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.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. 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 “Schedule Consultation Now”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

1. Social Media Storytelling: Utilize platforms like Instagram and TikTok to showcase success stories, behind-the-scenes glimpses, and day-in-the-life content of your talent to humanize your agency and build a strong online presence.
2. Specialized Events and Workshops: Host industry-specific events or workshops to not only showcase your talent but also position your agency as a thought leader, attracting both aspiring talent and potential clients.
3. Strategic Partnerships: Collaborate with complementary businesses, such as local fashion boutiques, event organizers, or media companies, to cross-promote and expand your reach within relevant target audiences.
4. Online Talent Challenges: Leverage the power of user-generated content by creating online challenges or contests, encouraging your talent and followers to participate and share their skills, thus increasing visibility for both the agency and its talent.
5. Podcast or Webinar Series: Start a podcast or webinar series that discusses industry trends, provides career advice, and features interviews with successful talent from your agency, positioning your brand as an authority in the field.
6. Localized Guerrilla Marketing: Implement creative and attention-grabbing guerrilla marketing tactics in local hotspots frequented by your target demographic, leaving a memorable impression and sparking curiosity about your talent agency.
7. Client Testimonials and Case Studies: Highlight success stories through client testimonials and detailed case studies, emphasizing the positive impact your talent has had on various projects and campaigns.
8. Community Involvement: Engage with the local community by sponsoring or participating in relevant events, fostering a positive image for your talent agency and creating opportunities for organic word-of-mouth marketing.
9. Email Marketing with a Personal Touch: Implement targeted email campaigns that go beyond generic promotions, showcasing the unique stories and achievements of your talent while establishing a more personal connection with your audience.
10. Innovative Packaging of Talent: Differentiate your talent by offering unique packages or bundled services that cater to specific needs in the market, making your agency more appealing and memorable to potential clients.

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 talent 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 talent agency business could be:

• We only represent the best
• Build your acting career with professional representation
• Models of all ages to meet your specific needs

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 talent agency business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in talent agencies 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 talent agencies. 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 talent agency business include:

• Talent Scouts – find local talent
• Booking Agents – handle client job bookings
• Marketing Lead – create and implement marketing strategies
• Receptionist – take calls, greet clients
• General Manager – scheduling, accounting

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: Run a Talent Agency – Start Making Money!

Owning a talent agency can be a very rewarding pursuit as you help your clients build their careers, whether in acting, modeling, or sports. You’ll also become part of a $15 billion industry and make a healthy living. There’s no limit to how large you can grow your agency, whether you’re in Los Angeles or a city in the Midwest. 

You understand the business now, so you’re ready to hit the pavement and get your successful talent agency started!