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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on March 30, 2022
Investment range
$2,550 - $7,100
Revenue potential
$65,000 - $520,000 p.a.
Time to build
0 – 3 months
Profit potential
$58,000 - $104,000 p.a.
Industry trend
Growing
Commitment
Flexible
Pay attention to these important factors as you establish your translation agency:
How to Lead in the Digital Translation Era with Vidby’s CEO
Starting a translation agency has pros and cons to consider before deciding if it’s right for you.
Trends in the translation industry include:
Challenges in the translation industry include:
Startup costs for a translation agency range from $2,500 to $7,000, or significantly lower if you already have a good computer. The other main cost is translation software, which significantly increases speed and efficiency, saving thousands of dollars each year.
You can become certified in translation through the American Translators Association. You must pass an exam and regularly complete continuing education to keep your certification.
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Computer | $800 - $2,000 | $1,400 |
| Translation software | $200 - $1,000 | $600 |
| Total | $2,550 - $7,100 | $4,825 |
Translation prices range from $.09 to $.40 per word depending on the complexity of the documents and the rarity of the language. These calculations will assume an average rate of $.25. Your profit margin should be about 90%.
In your first year or two, you could translate an average of one 5000-word document per week, bringing in $65,000 in annual revenue. This would mean $58,000 in profit, assuming that 90% margin. As your brand gains recognition, sales could climb 40,000 words per week. At this stage, you’d hire other translators, reducing your profit margin to around 20%. With annual revenue of $520,000, you’d make a tidy profit of $104,000.
There are a few barriers to entry for a translation agency. Your biggest challenges will be:
Now that you know what’s involved in starting a translation agency, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research translation agencies in your area and online to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a translation agency that specializes in legal documents or bank loan documents. Or maybe medical, technical, or entertainment translations.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as marketing copy translation or website translation.
Your services will depend on your skills and experience with a specific industry. Specializing helps in building a reputation as an expert in a specific field, attracting clients who need specialized services.
In addition to document translation, you could also do local in-person translation and live real-time translation online.
Prices will vary based on the complexity of the documents and range from $.09 to $.40 per word. You should aim for a profit margin of about 90% when you’re working by yourself. Ensure that your pricing is competitive and consider offering packages or discounts for large or ongoing projects.
Once you know your costs, you can use our 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.
Your target market will be mainly business owners who you can find on LinkedIn. You can also contact local businesses directly. You can find them on Google or Yelp.
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:
Here are some ideas for brainstorming your business name:
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.
Here are the key components of a 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.
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!
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’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to translation 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.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your translation agency will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
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.
Choose Your State
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’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a translation agency business.
Starting a translation agency business 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.
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 translation 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.
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:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
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 Smartling, Trados, or lokalise, to manage your projects, workflows, and translation quality.
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.
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.
Here are some tailored marketing strategies to help you thrive in the competitive translation industry:
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 translation 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 translation business could be:
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 translation business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in translation 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 translation agencies. You’ll probably generate new customers or find companies with which you could establish a partnership.
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 translation agency business include:
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.
If you’re fluent in a language, why not put those skills to work? In a world where business is increasingly global, translation services are seeing a sharp increase in demand. You can start your translation agency at home as a solopreneur for a small investment and soon be making good money.
You’ve got the business skills to match your language abilities, so now it’s time to go ahead and begin your entrepreneurial adventure!
Yes, it can be profitable. When you’re working at home as a solopreneur, your ongoing expenses will be low. As long as you’re providing high-quality services, you should get repeat customers and be successful.
They can establish an online presence by creating a professional website and utilizing search engine optimization (SEO) techniques to improve visibility in search results. They can also leverage social media platforms to showcase their expertise, engage with potential clients, and run targeted advertising campaigns.
The payment for translation services can vary depending on several factors such as language combination, specialization, complexity of the content, and the client’s budget. Generally, highly specialized or rare language pairs, such as translating from or into lesser-known languages, can command higher rates. Legal, medical, or technical translations also tend to pay more due to their specialized nature and the required expertise.
Various businesses and industries require translation services. Some common examples include international corporations expanding their reach into foreign markets, e-commerce platforms looking to localize their websites and product descriptions, legal firms needing translations of legal documents, healthcare providers requiring translation of medical records or patient information, and government agencies needing translations for official documents or international communications.
First, deliver high-quality translations consistently and meet agreed-upon deadlines. Establish clear and effective communication channels with clients to address their needs and provide regular updates. Develop a specialization or expertise in a specific field or industry to differentiate yourself from general translators. Build a strong professional network and seek referrals from satisfied clients or industry colleagues.
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