Various companies almost daily resort to the help of advertising companies. The reason for this is that advertising increases profits and the popularity of products. All this leads to the fact that the advertising business is one of the most profitable. In some cases, its profitability can reach 100% or more. The main thing is to successfully choose the direction of the company and select the right personnel.

Main areas of work

• Branding – involves the development of elements of a corporate identity and slogan.
• Event Marketing – organization of events: presentations, seminars, summits, exhibitions, fairs.
• BTL – promotions during which consumers can get acquainted with the quality of the product.
• Advertising placement and creation – signs, stands, leaflets, posting information on the Internet.
• Carrying out organizational work – search for performers, placement or distribution of ready-made advertising materials.
• Contents of advertising platforms – Internet platforms, billboards, advertising screens.

Agency registration

Before starting work, any enterprise must be registered. But this is only relevant if you actually open your own company with a staff. At first, you can engage in advertising business as an advertising agent. Registration is not required for this.

So, before opening a company you must:

1. Contact the tax office and select the form of registration of individual entrepreneur or LLC. It is worth considering that if you register as an individual entrepreneur, you will not be able to provide services to large companies, that is, legal entities.
2. Before starting work, you must familiarize yourself with the federal law “On Advertising” and all amendments made to it.
3. It is also necessary to familiarize yourself with legislation at the local level. Some cities have certain restrictions on outdoor advertising.

In addition, it is necessary, together with a lawyer, to draw up a standard agreement that will provide for the rights and obligations of the parties, payment (preferably in stages), cases in which the contract can be broken, and compensation.

Premises and equipment

At the beginning of work you will not need a room. Basically, clients do not come to the company’s office; often it is advertising managers who come to them. Basic issues are resolved over the telephone.

The need for an office appears if the company has 5 or more people. This is a place where you can schedule a meeting with a client, discuss all issues with him, and also gather the entire team to distribute responsibilities. In addition, all necessary documentation and equipment are stored in the office.

At the initial stage, you will need a minimum of equipment. This includes:

• computer for designer;
• printer;
• scanner;
• copy machine;
• telephone;
• Internet;

Where to start?

Osman Seit-Valiyev

Osman Seit-Valiyev

Investment volume

If you immediately intend to open a large agency, then you will need at least 3 million rubles to purchase all the equipment. If you start from scratch, from home, then at first do not expect profit, everything will have to be invested in equipment. We drew a layout, sent it to print, received money and bought...figuratively speaking, a hammer.

Osman Seit-Valiyev

Experts do not advise taking out loans right away or asking for help from funds. It is better to start with a minimum capital. If you want a lot at once, it’s better to sit down, think and come to your senses: even if you have good equipment and workshops, where will you find many specialists ready to work on it, and in a coordinated and fast manner, and such a number of orders to recoup the costs? It's better to grow gradually, buying equipment as needed.

If possible, you can first invest 200 thousand rubles. Buy a good printer for printing large-format paper, a good computer, a drill-grinder. This is the required minimum. You can ask friends for money. Although they are unlikely to give it to you if you have no experience.

Where does the money go? Firstly, for salaries, because as you grow you will have to hire people. It is most convenient to introduce a percentage payment system - for each completed object. This motivates you to work faster. The second point is the purchase of equipment. You can find an unconventional way out of the situation, for example, making friends with the workers of a wholesale warehouse and offering them barter. As a result, you will be able to receive equipment at the purchase price, even cheaper than in wholesale warehouses.

At first, we purchased equipment worth about 100 thousand rubles. If we bought the same thing in stores, we would need half a million.

Step by step instructions

I saw a moral demand in the client's eyes.​​​​​​​

You have to look the part, because you are the image maker. Clients look at the car you arrived in. Therefore, if you don’t have a good car, it’s better to walk.

But first of all, you must understand who we came to and why, analyze the person’s problem and help solve it. Then he won’t care what you’re wearing or what you drove. The human approach always plays an important role. But the more serious and larger the customer, the greater the responsibility. Because such people are simple, they have clear, concise tasks, they know what they need and in what time frame. And you, too, must be able to quickly and clearly answer whether you are able to cope with the task. If you are confused, it will reveal your lack of professionalism. However, communication with customers of this level should not frighten start-ups; they need to grow up to this level, first time working with retail stores and small operators.

As for personnel, if there are funds, you need to recruit experienced employees. But without personal experience, you risk hiring the wrong people. Therefore, it is better to hire a smart manager who will help you. If there is no money, focus on your talents.

Osman Seit-Valiyev

We started together and worked like that for the first three months. We sometimes had to work until 4 in the morning, and then we decided to hire people, although we were scared that we wouldn’t be able to pay salaries, because all the money was going towards equipment. They hired people and began to earn clearly more. Now we have two people in the workshop, plus my partner and I alternately help them. And now we need more people.

Our work schedule is unstable. At first we worked seven days a week from 9 a.m. sometimes until two in the morning. At the same time, people received 500 rubles a day, which caused dissatisfaction among them and their loved ones. Moreover, the guys are already about 30 years old. We motivated them by saying that the enterprise would soon grow, and then the salary of the core workers would be higher than that of those who would come later. This is how it happens. Now we have a six-day period. We try to leave no later than eight in the evening, although sometimes we stay until ten. A percentage salary was introduced. You have to come to all this. If you want to rise quickly, you have to work.

Opening checklist

Is it profitable to open

How soon can you reach point zero? This question is appropriate if you made an initial investment. However, if you start from scratch and invest all the funds received, with the exception of those needed for food and housing, in development, then you can develop endlessly. You can buy more and more equipment and open branches. If you work immersively and effectively, then you need at least a year and a half for the enterprise to bring a stable profit.

You can increase your profit by processing more orders and increasing the average bill. For example, a person orders a sign, and you also sell him flyers, business cards, gift certificates, and discount cards.

Don't want to do sales and production isn't for you? Find out how the advertising business works. Perhaps this way of earning money will suit you.

♦ Capital investments – 700,000 rubles
♦ Payback – up to 1 year

There is a misconception that creative people will never be able to open a profitable business and, on the contrary, entrepreneurs who are completely devoid of imagination will never launch a creative startup, preferring old proven methods.

However, there is an area of ​​activity that combines creativity and business, which is suitable for both “physicists” and “lyricists”, which is quite easy to start from scratch.

If you don’t want to engage in buying and selling, and production is not for you, then ask how to open an advertising agency.

This creative and fun way to make money might be right for you.

Advertising business: what is it and how to open it

• distributes outdoor advertising;
• promotes the product in the media;
• conducts PR campaigns, including political ones;
• advertises its client on the Internet;
• conducts SMS marketing.

These are the types of activities that most advertising agencies engage in.

Domestic businessmen who want to open an advertising business often focus on one thing.

They think for a long time about where to start, and in the end they begin to promote their client on the Internet (the most promising and inexpensive way of advertising) or they organize a PR agency, promoting the latest brand, politician or star.

On the one hand, opening a narrow-profile agency is profitable because you don’t need to hire a large staff or rent a giant office.

On the other hand, there is a risk that you will not be able to form a client base, because few people who need advertising will enter into contracts with several agencies to promote their product in different ways.

How should an advertising agency work if I decide to open one?

Advertising business owners have two options:

1. Promote one client in various ways.
2. Form a base of many clients of varying profitability.

The first option is not very popular in our country, unless we are talking about a political PR campaign (often advertising agencies are created by a specific politician to promote himself or herself).

But abroad, production giants prefer that PR specialists focus only on advertising their brand, without scattering themselves on others.

That is why companies such as Coca-Cola, Pepsi and others know where to start conquering the market of the next country: by opening a branch of an advertising agency in that country.

The main thing for you is to start forming a client base, and then you will get your bearings: if you manage to hook a big fish, you will only be engaged in promoting it, but if not, you can make good money on small clients, the main thing is that you have:

• advertising space (agreements with the media, websites, etc.);
• personnel who are capable of creating impeccable and creative PR products;
• designs (banners, cubes, etc.);
• normal technical equipment;
• partnerships with, which will quickly and efficiently print the products you create in large quantities.

What is it impossible to open an advertising agency without?

Creativity.

You must be a creative person with a rich imagination.
If you are a hopeless “physicist”, you will not be able to control the actions of your subordinates.

Stress resistance.

In the advertising business there are different examples.
Sometimes products have to be remade several times until you please the client.
Moreover, the customer will not always express his dissatisfaction politely and tolerantly.
There are different types of entrepreneurs, and you need to learn to find a common language with everyone.

Be a good psychologist.

Again, you will have to deal with different clients.
Some will come to you with ready-made ideas, expecting only their high-quality implementation in advertising products, and someone will contact you with the wording “I want this, I don’t know what” and you must quickly evaluate the client in order to understand what exactly he needs offer.

Communication skills.

You will have to communicate a lot with people, and if you start to blush in the company of strangers, then it makes sense to think about opening something other than an advertising agency.
You can’t do this without communication skills.

Be a good manager.

The advertising business is still a business.
If you are bursting with ideas, but are not able to organize the work of your staff, calculate your income, or figure out how to cut costs where possible, then your agency will quickly burn out.

Of course, the lack of these qualities should not necessarily prevent you from opening an advertising agency.

You can hire people who will have all the necessary qualities for the advertising business.

But it is still better if the boss sets an example for his subordinates and is well versed in the business he is involved in, which cannot be said about many unsuccessful businessmen.

If you decide to open an advertising agency from scratch, then you may want to take advice from professionals who know where to start your activities in order to quickly develop a client base and make your first profit:

1. Come up with a creative name for your business.
   Customers will pay attention to your company name.
   They will understand that if you cannot come up with an interesting name for your company, then how can you come up with a creative and effective advertising campaign for them.
   The name of the agency should be short, memorable, and easily match the products that you will use to promote your business.
2. Don't rush into trying to catch the big fish the day after you decide to open an advertising agency.
   Work with small companies, completing small orders for them.
   This way you will gain experience and learn to understand the customer better.
3. When offering your services to potential clients, talk about your uniqueness.
   When calling clients, you cannot say the same thing to everyone over the phone: “Hello. Manya's name is Ivan Ivanovich.
   I decided to open an advertising agency and am offering you my services.” Tell us exactly how you differ from your competitors.
4. Be sure to study your competitors: the advertising campaigns they ran, their pricing policy, what their customers were especially pleased and dissatisfied with (if possible), etc.
   This will help you avoid common mistakes at work.
5. Don't forget that the advertising business also needs to be advertised.

How to advertise the advertising agency that you have decided to open?

The most effective ways to promote a new agency are:

Phone calls.

You take a directory of enterprises in your city and begin to methodically call them, informing them that a unique advertising agency has finally opened in your city, which can conduct an effective and original PR campaign from scratch.

You need to get the email addresses of businesses in your city and send them letters offering cooperation.
Work on the text of the letter to hook the client from the first lines, otherwise your message will end up in the trash before being read.

Media.

Banners, cubes, notice boards, etc.
The main thing is that your advertising is interesting and attracts attention.

Don't underestimate their power in disseminating the information you need.

Word of mouth.

One satisfied client will tell another happy client about a great advertising agency that has opened, and you will quickly build a client base.

The presence of a website immediately suggests that you are a serious company with which you can do business.

How to open an advertising agency: calendar prospects

Launching a startup like advertising business, will not require a lengthy preparatory process.

If you decide to open an agency, then you need to take care of the standard steps: registration, finding suitable premises for work, recruiting staff, purchasing equipment and finding clients.

If you quickly implement all of the above and get smart assistants, you will be able to launch a startup from scratch in 5 months, or in extreme cases, in six months.

How to open an advertising agency: the main stages of launching a startup

We have already talked about what needs to be done to open an advertising agency.

Now let’s take a closer look at all the stages of launching a startup.

Registration

Choose one of the suitable forms for opening an agency: individual entrepreneur, LLC, CJSC.

The simplest form in terms of registration is the individual entrepreneur, but the other two will require cooperation with a qualified lawyer, because it is quite difficult to figure out all the nuances of the procedure on your own.

Choose a form of taxation that will not bankrupt you at first when starting an advertising business, for example, UTII.

Room

However, it is not worth going to the remote outskirts, since it is unlikely that any businessman will want to travel so far to get acquainted with samples of your products.

If you nevertheless decide to save on rent and open an agency too far from the center, then be sure to take care of creating a website to make it easier for your clients to get to know you.

You should not invest too much money in renovating your rented premises.

You are not a restaurant, so you shouldn’t impress with the interior.

Neutral colored walls can be decorated with samples of your agency's best products.

But the area of ​​the premises in which you will work depends on how large an advertising agency you decide to open.

If you are setting your sights on a modest business, then at first you can rent 1-2 rooms for an office in one of the office buildings for several employees.

Serious agencies need offices with a total area of ​​at least 50–60 square meters.

Staff

The number of employees you will need to hire depends on how large an advertising agency you decide to open.

To start a small agency you must hire:

• two designers, one of whom will be involved in the production of a creative product, and the other will perform technical work: layout, etc.;
• a manager whose main task is to attract new clients;
• a cleaning lady - without her you will drown in dirt.

You will perform the functions of the head of an advertising agency: negotiate with clients, conclude contracts, arrange advertising in the media, etc.

If you can handle the accounting yourself, you will save money on the position of accountant. Otherwise, you will have to hire an accountant or enter into an agreement with an outsourcing company.

You also cannot do without a programmer, since your main equipment is computers. He can be hired part-time.

Equipment

Equipment for an advertising agency is expensive.

You will definitely need computers, and for designers to work they need powerful machines that are very expensive, printing and office equipment, furniture, office supplies, and so on.

The main costs for office equipment will be as follows:

Expense item	Qty	Cost (in rub.)	Amount (in rub.)
Total:			500,000 rub.
Computers or laptops	4	40 000	160 000
Laser printer	1	10 000	10 000
Scanner	1	10 000	10 000
Xerox	1	30 000	30 000
Large format printing press	1	100 000	100 000
Cutting plotter	1	70 000	70 000
Telephone sets	2	1 000	2 000
Tables	4	4 000	16 000
Visitor and work chairs	8	2 000	16 000
Plumbing for the bathroom		10 000	10 000
Other		76 000	76 000

How to open an advertising agency and how much does it cost?

People interested in the topic of how to open an advertising agency are worried about the question “How much money will have to be invested in launching this startup?”

Those who were hoping for minimal spending will be disappointed.

As you can see, you need decent capital investments to open an advertising agency.

If you were unable to raise the required amount on your own, then it makes sense to think about attracting a partner who would take on part of the costs.

After all, not only one-time, but also monthly investments await you:

We offer you to watch a video about what you need,

If you open an advertising agency, how quickly will the expenses pay off?

Another way is personal visits by a director or manager to an organization that needs advertising.

You set the prices for your services yourself, focusing on the price level and financial capabilities of the residents of your region.

You can work in the low, middle or high price category.

• script – 10–20,000 rubles;
• company logo – 20–30,000 rubles;
• banner layout – RUR 5–8,000;
• layout in the media – 10–15,000 rubles;
• original layout for a corporate publication – 20–30,000 rubles;
• souvenirs – from 1,000 rubles;
• full-fledged PR campaign – from 100,000 rubles. etc.

In addition to orders from clients, you will receive a percentage from advertising in the media (this should only be done after agreement with the client).

An income of 400–500,000 rubles per month is considered good.

It is very possible to have such an income if you manage to acquire at least ten regular customers, do not ignore small orders and constantly work to expand your customer base.

The main thing is that the income of your business should not be lower than 200,000 rubles per month (after all, this is exactly the amount of your monthly expenses), otherwise you will work at a loss, which means there’s no point open an advertising agency gets lost.

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“Only a mint can make money without advertising” - this statement very well reflects the essence of modern highly competitive markets, where you have to fight for every client. The advertising business will always be in demand, especially in times of crisis, when everyone’s sales begin to decline and a search for new promotion strategies is required.

To open an advertising agency from scratch, you will not need large investments - you can spend 300-400,000 rubles (without purchasing production equipment), the main thing is to correctly determine the direction and concept of the new business and make the necessary economic calculations.

Choice of format and concept

The first step is to determine the main direction of the advertising agency. If you are new to business and do not plan to make large investments, it is better to choose a separate direction with development prospects. To operate a full-cycle agency, you will need a staff of highly qualified personnel and high costs for renting offices and equipment.

RA can successfully work in the following formats:

• Full service agency.
• A narrow-profile agency whose specialization will be, for example, only printing services or design of outdoor advertising, development and promotion of websites, etc.
• Manufacturing company – digital printing, production of souvenirs, exhibition stands, etc.
• Design studio. Development of corporate identity, logos, original layouts and preparing them for production.
• Buyers. Placement of client's advertising videos in the media - on TV, radio, plasma screens.

Opening stages

• Market research.
• Definition of format and concept.
• Registration of individual entrepreneur or LLC (for several partners).
• Search for office space.
• Purchase of office equipment.
• Personnel selection.
• Development and implementation of promotional events.

An example for our readers.

For those who want to learn the most complete recommendations for creating business plans, we suggest that you familiarize yourself with - a universal assistant for you.

Competitive analysis and identification of target audience

Market analysis includes conducting competitive analysis, studying the target audience, and assessing the prospects of a particular area.

In order to identify your competitors, you need to collect information about companies that provide advertising services in a given region. Such data can be found in business directories and specialized online resources. It is necessary to analyze prices, list of services, location, reputation in the market (from customer reviews). Such an analysis will allow you to form your competitive advantage, as well as a base of contractors in some areas (many advertising agencies cooperate with each other, providing services to each other).

• Manufacturing enterprises.
• Trading companies, shops.
• Food establishments, shopping and entertainment centers.
• Beauty salons, hairdressers, sports clubs.
• Representatives of the service sector – lawyers, notaries, advocates.
• Private medical institutions, dentistry.

The choice of your target segment must be made after determining the format and scope of service provision. For example, if you provide printing services (business cards, catalogs, brochures), then the target audience will be manufacturing and trading companies; if the placement is in the media, only large companies with a large advertising budget can be clients.

Registration of individual entrepreneur or LLC for an advertising agency

Before opening an advertising agency, you need to decide on the organizational and legal form of the future company. At the first stages, you can register as an individual entrepreneur, and in the future as a legal entity. Individual entrepreneurs have restrictions on sales volume, number of employees and type of counterparties (for example, an individual entrepreneur will not be able to work with legal entities, but only with individual entrepreneurs).

RA staff

For example, an RA for the production of digital printing will require the following personnel:

• Designer with knowledge of basic production processes.
• Printer-binder.
• Account Manager.
• Accountant (outsourcing).
• Cleaning lady (outsourcing).

How to calculate a business plan

Even if you are going to invest your own money, be sure to calculate a business plan. This will help determine the required amount of investment, the level of planned income, the payback period of the project, the main organizational activities and their features. In the case of raising borrowed funds, a properly drawn up business plan is the main factor in the investor’s decision in your favor.

What should an advertising agency business plan include:

• Project summary.
• Description of the concept.
• Marketing analysis.
• Production plan (if you plan to produce any type of advertising and souvenir products).
• Organizational plan and personnel plan.
• Financial plan.

How to promote an advertising agency

What marketing activities need to be carried out before the start of the RA work:

• Development of a concept, corporate identity, logo, slogan, name.
• Website development, content and launch of an SEO campaign.
• Production of RA business cards, office signs.

What activities will be effective for promoting an advertising agency:

• Advertising in print regional media oriented towards a business audience. You can place an ad in a specialized section (Advertising services) or in sections of related industries.

• Direct sales. The most effective way to establish contact, which allows you to tell not only about the services of the RA, but also about the advantages and benefits for the client during cooperation. But this method of sales requires managers not only to have good knowledge of their product, but also communication skills, as well as responsibility (data from cold contacts must be recorded in an electronic document for further analysis and management decisions).

• Participation in exhibitions. Even if the exhibition is focused on a specialized audience, for example, construction or furniture, among the participants and visitors there will certainly be potential clients who need RA services. In addition, participation in the exhibition will help not only disseminate information about the company, but also build a positive business reputation.

To be better than your competitors, you need to care, first of all, about the success and prosperity of your clients - and then they themselves will look for a meeting with you!

We also recommend reading:

In the world of modern business, there are many ways to promote goods and services. The most accessible of them are promotional activities, thematic events, merchandising, as well as the production of banners, leaflets, POSM. This is not all that can promote a product. However, all of the above applies to advertising. Few businesses can survive without advertising.

Entrepreneurs for entrepreneurs

Demand creates supply. The need to attract customers has given rise to the need for an advertising business.

During just one day, a person encounters advertising at almost every step. Turning on the radio in the car in the morning or the TV in the kitchen, on the way to work, during a break to surf social networks, simply working at a manufacturing plant, going to the grocery store in the evening, going for a walk with the children... Advertising finds a person wherever he goes. no matter what he walked or did. Today this is the most effective way to manage people and make a profit.

Types of advertising agencies

The field of advertising is quite extensive and includes a large number of both large transnational enterprises and representatives of small firms. As in any field, the advertising business can be divided based on territorial coverage:

1. International agencies, working with major global brands operating in several countries. Such agencies offer a full range of services.
2. National firms. This type works within one country. Can act as a contractor for international enterprises, or as the main contractor for domestic customers.
3. Regional agencies. Here, services are provided within a specific region, and it is possible to involve the client in the business. It is beneficial for small and medium-sized businesses with a small budget to work with the third category due to their relatively low prices for the services provided.

The second classification is based on the list of works performed by the agency:

1. Full service agencies can organize almost anything an advertiser wants. If only there was enough budget for his desires;
2. Narrow-profile agencies, specializing in the production of advertising materials, staffing, signage or other individual work.

How to open your own advertising agency from scratch

Your own business is much more enjoyable and profitable than just working in a company, even if it is a very high position in a large company. But only people who are ready to take risks can try their luck in free-floating business.

What does it take to open an advertising agency from scratch and how to do it? First of all, you need to have a clear idea of ​​what you will have to deal with on a daily basis. Advertising is constant communication with people. This is communication with customers, contractors, personnel, subordinates, representatives of executive government bodies, and the tax inspectorate. Therefore, you need to have good organizational skills, nerves of steel, communication skills and a great desire to do what you love.

Advertising agency business plan

A good business usually starts with investment. But how to open an advertising agency from scratch? If there is no money, but there is a desire, you can turn to the bank for a loan or attract investors. This will be useful for those who are thinking about how to open an advertising agency with “zero” in their pocket. Even if the company employs only one person, you will need money to prepare documents for opening a company, rent an office, pay for communication services, Internet, courier services, social and tax contributions to the budgets of the region and the Russian Federation.

To attract funds from outside, you will need at least a rough business plan for an advertising agency. There is no need to delve into economic calculations and write two-volume abstracts on the topic: “Romashka Advertising Agency and Profit.” A business plan can be presented on two sheets, but the main thing is to understand the principle of its preparation for a novice businessman.

General principles of a business plan

• establishing relationships with first clients,
• list and cost of advertising agency services offered,
• ways to expand your customer base,
• time and financial costs for PR,
• purchase of necessary furniture, equipment, office rental,
• recruiting staff and drawing up job descriptions,
• prospects for the development of the agency in the short term.

You can list many more standard points of a business plan, but it is enough to remember that a properly executed document does not always lead to success.

A competent attitude to business, without trying to manage everything from start to finish on your own in order to save money, understanding what the client needs and the ability to invest profits in business development, and not in your own salary, can help you quickly attract the right investor.

Organizational and legal form

How to open an advertising agency from scratch? After an investor has been found, it’s time to think about what form to register the business. In this case, two options are good: individual entrepreneurship or a limited liability organization.

To make the right choice, you need to know 6 significant differences between an individual entrepreneur and a limited liability company:

1. A businessman who wants to conduct advertising activities alone, without sharing power with anyone, would be better off choosing to register an individual entrepreneur. If an investor wants to participate in making decisions important for the fate of the company, he will have to open an LLC.
2. An advertising agency can fall into disrepair if it does not have a competent development strategy. In this case, the founder of the individual entrepreneur bears responsibility for the debts of the organization with his personal property. The company risks not only the personal belongings of the founders, but also the authorized capital.
3. A sole founder can save on accountant services. There are special taxation regimes for it - simplified tax system, UTII and patent. The company will definitely need an accountant on staff.
4. Withdrawing money is easier with individualist OPF. The founders of the company can only receive dividends. Payments are made no more than once per quarter, provided that this is the agency’s net profit and a personal income tax deduction of thirteen percent.
5. Mandatory insurance premiums for an individual entrepreneur do not stop with the suspension of business activity. The company may not pay a penny if there is no profit, since payments depend only on the wages of employees.
6. The biggest difference is the future prospects of an advertising agency. An individual entrepreneur is suitable for working on small orders at the startup stage, but if you plan to develop into a large business and carry out orders on a grand scale, you should choose a limited liability company.

Advertising agency structure

How to open an advertising agency from scratch? One person can take on the fulfillment of orders, but this is the case if the company is just starting its work. Distribution of labor leads to greater efficiency and therefore greater profits.