7 Steps to Start a Lead Generation Business
There’s a budding market online for lead generation as it becomes increasingly difficult to cut through the clutter of digital advertising. Instead of blasting a company’s name out into the ether and hoping some targeted audience see (and click) on an ad, a lead generation business can help clients have prospective customers come to them instead.
If you’ve wondered how to start a lead generation business, you’re in luck. These businesses tend to have little overhead, large market potential, and can scale quickly and easily. But every new business, be it a lead generation business or a grocery store, needs to start off with a few of the same steps in order to get up and running smoothly. Most of these are basic, but a few are a bit more complex.
Here’s what you need to know when figuring out how to start a lead generation business. We’ll start off with some of the basic business setup steps, and then delve into industry-specific considerations you’ll want to cover as you get things moving.
How to Start a Lead Generation Business in 7 Steps
Getting a business set up doesn’t have to be a hassle. Sure, there are plenty of tasks to cross off the to-do list before you can get your actual operations underway, but the work tends to be fairly easy. If you know what needs to be done, that is. Here’s what you have to consider when getting started.
1. Write a Business Plan
Starting a business may begin with a grand idea, but it’s only until you commit a plan to paper that your idea for a new venture truly begins to take shape. A solid business plan can organize your thoughts, crystallize your aspirations into concrete ideas, and develop your sense of what has to happen in order to get everything running. This plan will also help you put your best foot forward when approaching lenders for small business financing, and can grow with your business as it changes.
A solid business plan for lead generation companies, as well as most other entrepreneurial endeavors, should contain at least a few core components. These consist of a declarative statement that outlines the objective of the company, competitive research, market demand forecasts, and financial considerations that your business will have to factor in during startup and regular business operations.
With a lead generation business, you may benefit from some of these questions having well-defined answers from the beginning. For example, you’ll already know the aim and scope of your business: finding top-tier leads and selling them to your clients. What may be less clear, however, is the composition of your target audience. Most lead generation businesses tend to serve specific industries rather than taking a broader approach to their craft. This question will influence how much each lead might cost—both in terms of your effort and time as well as the price you charge your clientele.
Every factor in your business plan should demonstrate thoughtful, thorough research. You’ll want to show an authoritative knowledge of the existing industry, your own financial needs, and the tactics you’ll take to differentiate your business from the rest. The more detail you provide here, the better your plan will be. Plus, you’ll be able to refer to this business plan later on as your business expands; modifying its contents and updating calculations can keep you on track when things get hectic and time is a precious commodity.
2. Register Your Business
Once you’ve put together a robust business plan, you’ll want to move on to formalities that come with starting a business. And by that, we mean forms. Chiefly, you’ll want to register your company with local, state, and federal bodies—each requiring different kinds of information in order to make your lead generation business official. You’ll also have to come up with a name for your company, so get your creative juices flowing.
Local and state governments will want you to register a business entity for your lead generation company. Registering your business will ensure that you pay taxes properly, have the right kind of liability protection, and can ensure that you are legally operating in your jurisdiction. Choosing a business entity is an important decision, so you may want to consult with an attorney or tax professional to make sure you’re choosing the right one for your business. Common options are sole proprietorships, general partnerships, LLCs, and corporations.
You’ll also want to register for an EIN, which is a business tax ID much like a social security number. This is an important number that will uniquely identify your company, and which you’ll be required to provide in many instances down the line, such as when filing taxes, opening a business bank account, or applying for funding.
3. Establish Your Strategy and Niche
Nearly every business benefits from having an ample supply of good, qualified leads—which you’ll be in the business of providing. It may be tempting to go big in terms of your company’s aspirations to provide these leads across a slew of industries, but be wary of biting off more than you can chew.
In this business, you’re better off developing a specialty. If you can drill down into one specific, profitable segment, you can demonstrate a track record of success that goes a long way with clients. Plus, you’ll better understand how to attract the right kinds of people and get better leads in the process.
You’ll likely have done a great deal of applicable research when you created your business plan, but take the time to make sure you have a set target market, and think of how you’ll differentiate your business from others in the same market.
4. Build Your Team and Operations
There are many components to what makes a team “great.” A large portion of it comes down to skills, but you also need to think about the culture you’re building and make sure you can provide fair compensation to help with retention. You want your employees to be talented, yes—but also happy. Consider all of these facets when building your team. Also remember that a diverse staff brings lots of diverse ideas to the table, which can help you succeed.
One additional component to consider is where your office will be—or if you’ll have an office at all. Many companies, especially those who don’t need a brick-and-mortar presence and exist solely online, choose to be fully distributed. That means that employees work from wherever they want. Some businesses also choose to have a hybrid model with a small office and other workers remote. Consider this carefully as you put your business together since this will affect your hiring decisions and candidate pool as well.
When hiring employees, you’ll also want to make sure you understand your responsibilities as an employer, including obtaining the required business insurance, including workers compensation, unemployment, and more.
5. Organize Your Finances
As you might expect, your finances are a huge part of both starting a lead generation business and setting it up for success. There are a few crucial components that you’ll want to set up and decide on before you launch your lead gen business into the market.
Open a Business Bank Account
Every company needs a dedicated business bank account. If you don’t separate your personal and business finances, you can run into accounting and liability problems that may leave your personal finances at risk.
Luckily, opening a business bank account is easy: If you’ve registered your business with your state and received an EIN from the IRS, you’re halfway there. The next step is to choose the right business bank account for you from an array of options—including banks that are entirely digital—and sign up by submitting your business information for validation.
Apply for a Business Credit Card
As you’re accruing your startup expenses for your lead generation business, you’ll find that you need a strong financing tool. Many entrepreneurs turn to a business credit card, which can provide that spending power that you need both at the beginning and as your business grows, too.
Even if your credit isn’t perfect, you’ll find that there’s a range of business credit card options for which you can apply. Another reason to get a business credit card: Paying your bills in full and on time will build your business credit, which can open up lots of avenues for you down the line in terms of securing financing.
If you qualify, you also might want to explore 0% introductory APR business credit cards, which provide cardholders with a period of interest-free spending (that can be up to a year). This can enable you to build up your business and then, once you’re generating revenue, pay off your balance before the introductory period ends and a variable interest rate kicks in.
Look Into Business Funding
If not now, then at some point you’ll likely want to look into your business funding options. In candor, there aren’t many business loans that are available for new companies that don’t have a track record or revenue. Often, you won’t be approved for business loans without about six months of business history. (If you need ASAP funding, a business credit card is a great solution. You can also look into personal loans for business.)
That said, even if you’re not applying right now, you’ll want to know your options for funding down the line. Here are the funding options to consider as you’re starting a lead generation business:
- Line of credit: A business line of credit is one of the most popular tools for financing, often because it’s so flexible. You’re able to use a line of credit as you want—meaning that you don’t have to spend the entire amount you’re approved for—and you only pay interest on what you use. You can use this for payroll, overhead, opportunities, and more.
- Term loans: Another flexible type of working capital that can help you finance what you need as a small business owner is a business term loan. These loans are more “traditional” business loans in which you get approved for a lump sum with specific repayment terms and interest rates.
Decide on Your Accounting Method
Now that you have all of your finances set up, how are you going to manage and track them? At the beginning, business accounting software could be a great fit for your business. You’ll be able to keep track of your spending and income as well as essential tasks such as payroll. Many accounting software programs will also auto-generate financial statements for you, such as a profit and loss statement or balance sheet, which will be crucial documents for you down the line.
Alternatively, you can always hire a bookkeeper to help guide you. This personalized attention can be great as you grow, and a great bookkeeper can do all of the above tasks as well as provide you with specialized financial guidance.
6. Build a Website
Most of your business will take place online—so it’s crucial that your website is professional and appealing. You want to make sure that you accurately and comprehensively convey what you do, list your team and their specialties, and explain how your services and pricing works. As you accrue successes, you might consider adding customer testimonials to your site, too.
You have a few options for building a website. You can hire a developer, which will yield professional and highly custom results, but might be expensive. You can also look into a less costly website builder, which can provide you with a lot of options for stylish templates that anyone can use to create a website—no coding experience required.
7. Market Your Lead Generation Business
Last—but certainly not least—is developing a marketing plan. There are lots of different ways you can market your business, but the most important thing to consider as you’re coming up with a strategy is finding where your customers are.
For instance, do they use certain products and services that you can advertise against? Are they in a certain industry? They likely spend a lot of time online. These are just a few considerations, but asking questions like these can help you make sure your marketing and advertising efforts will pay dividends.
Some approaches to consider are Google Ads, LinkedIn Ads, direct mail, and conferences.
The Bottom Line
Starting a lead generation business takes some work, but if you follow these core steps, you’ll position yourself to get a strong start in the market. Make sure you consider the business you’re starting in a 360-degree sense, getting a handle on your strategy, the competition, your marketing, and, of course, your finances.
Brian O’Connor is a small business owner and contributing writer for JustBusiness.
Brian is the former director of digital strategy at Morgan Stanley, has worked at Foreign Affairs magazine, Student Loan Hero, and is a partner of a small consulting firm. Combined, these experiences allow him to offer a unique perspective on the challenges small business owners face. Brian writes about finance, business strategy, and digital marketing for JustBusiness.