Start a web design business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your web design business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a web design business?
Many web design entrepreneurs choose to start out operating from a home office. Without the startup and operating costs associated with renting or purchasing office space, you’ll save a significant amount of money. With this portion of your budget freed up, you can re-invest in your business through education, web design tools, and marketing.
Below is a list of basics you’ll need to get started:
- Marketing materials - website, brochures, and business cards
- Attorney and/or CPA to help ensure you have a solid business plan and that it’s carried out smoothly
What are the ongoing expenses for a web design business?
As a web design business owner, your overhead expenses will be fairly minimal. Below are a few items you’ll want to budget for in your monthly expenses:
- Rent/mortgage on office space
- Travel and fees associated with continuing education and conferences
- Computer maintenance and repair
- Payroll expenses - you could combat this expense by keeping your core team small and hiring independent contractors to help out with larger jobs.
Who is the target market?
You’ll most likely have numerous clients whom you never hear from again, once their website is built. While there is nothing wrong here, it does cause a bit of instability and requires constant marketing to maintain a profitable workload. Therefore, your most valuable clients will be the ones that realize the benefit of having a website that is continuously maintained and upgraded. With each customer retained, work diligently to build a strong and trusted relationship. With this foundation built, they’ll consider you an extension of their workforce, looking to you for guidance for many years to come.
How does a web design business make money?
Your web design business will generate revenue through each website designed and/or service provided. Most designers require new clients to pay a retainer, with the balance due once services are complete.
How much can you charge customers?
Your fees depend upon the specifics of the project and your client’s individual needs. Projects can range anywhere from $3,500 to over $40,000.
How much profit can a web design business make?
The average profit of a freelance web designer is almost $75,000 annually. Imagine the possibilities if you had a team of talent and were able to offer a diverse set of services.
How can you make your business more profitable?
The following are a few strategies other web design business owners have implemented to ensure a more profitable business:
- Web designers are responsible for the visual layout of a page or site, whereas web developers are more responsible for the coding and building of a site. By offering both services to potential clients, you make yourself a more desirable candidate for a project.
- In addition to web design and development, offer additional services such as: graphic design, content writing, content marketing, inbound marketing, and web hosting.
- Consider joining affiliate programs for tools you use to complete projects. This is a great way to earn extra money for referrals.
- Design ecards.
- Design and sell templates.
- Offer holiday specials such as redesign services. For example, Google changes their logo every day. You could design unique holiday logos and landing pages for existing clients. This is a great way to increase your profits and remind clients of all you have to offer.
- Host webinars and create tutorials - the number of topics to choose from is endless.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your web design business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a web design business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Web design businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership (who will ultimately own the site’s design). Here is an example of one such services agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your web design business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a web design business
The marketing strategy for a web design company is about networking, branding, and offering examples of how your enterprise’s talent surpasses the competition.
As you start to build a brand for your business, consider implementing these marketing strategies:
- Have a booth set up at an industry trade show.
- Offer to speak at industry events.
- Network with others in the industry every opportunity you get. Consider hosting a workshop for local entrepreneurs.
- Cold-call local businesses, preferably in-person.
- Take a look at existing websites and re-do one for free. Contact the owner of the business and send him/her the design. Explain why you made the changes you made and how you believe this could help them better serve their customers and attract new business.
- Have a strong online presence and content marketing strategy.
- Maintain a professional portfolio that represents your organization’s mission and highlights each individual’s strengths.
- Publish case studies, highlighting client’s successes.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Once you’ve gotten a prospective customer in the door, it’s important that your team offer the very best in service. For a long-standing relationship, this means getting to know your customers’ likes and dislikes, as well as their business’ short and long-term goals. Trust is critical in retaining a strong customer base. Be present and work to establish a strong reputation as a thought leader within the community.
While it might seem obvious, we would be remiss not to mention the importance of a visually pleasing and user-friendly company website. If making a strong first impression was ever important, this is the moment!
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Web Design Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
In our current business environment, websites are a major component to an enterprise’s success. As a web design business owner, it’s critical to possess determination, meticulousness, and creativity. If you’re a technological innovator, who’s ready to begin building towards success, web design is a tremendous industry.
What happens during a typical day at a web design business?
As a web designer, your day will be split between interacting with colleagues and clients and crafting quality sites for your customers. While the specifics of each day vary, most days you will:
- Read and answer emails
- Host meetings with prospective clients to discuss their needs
- Meet with current clients to provide updates on projects, collaborate, and get a feel for their feelings on pitched ideas
- Manage your own projects, as well as oversee your team’s projects
- Map out websites
- Source images
- Put out fires within the company (e.g. identify and fix issues when a site goes down)
As with every business, there will also be administrative duties to attend to. While your business grows, you’ll probably want to take a more active role in these tasks. However, as you start to realize success, entrusting a responsible team member with these duties can be both cost-effective and managerially responsible. With your schedule freed up, you’re allowed more time to focus on building your business.
What are some skills and experiences that will help you build a successful web design business?
While it’s possible to build a web design business without being a web designer, it would prove beneficial to have experience in the field. It’s recommended that you start out working for an organization that’s established. This will offer you key insight into the inner workings of the industry. It would also prove beneficial to join associations such as AIGA and International Web Association. Membership benefits include educational and certification opportunities, as well as networking and collaboration with some of the best in the industry.
Additionally, a successful web design business owner must be creative, hard-working, and have the ability to work swiftly, without sacrificing quality of work. You’ll need to possess great communication and listening skills, as much of your design successes will be drawn from information that is subtly expressed to you by the client. If you plan on offering a wide variety of services to your clients, you’ll want to hire an experienced and talented team, making strong prowess as a delegator paramount.
What is the growth potential for a web design business?
No matter how much business strategy evolves in the future, a well-designed website will always be critical to an organization’s success. This is great for your business, as it adds a certain level of stability that most industries never achieve. The growth and success of your company is contingent on your vision and the talent your team possesses. With the right support, the opportunity is there to build an organization that serves customers on a global scale.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a web design business?
The following are some insider tips from entrepreneurs who have found success in this ever-growing industry:
- Start out working for an agency to grow industry experience and gain an understanding of what makes clients tick and what their expectations are for various projects.
- Know the strengths and weaknesses of each member of your team and play on those strengths.
- Always remember - it’s ok to refuse work. Listen to your gut feeling when considering taking on new projects.
- Take time each day to work on projects that are personal and that you’re passionate about.
- Know your worth. Clients are always going to try to get more work for less money. Don’t settle.
- Keep in mind that you can’t, and shouldn’t, try to do everything yourself. Surround yourself with talented and hard-working individuals who you can trust with important projects.
- Maintain a healthy work-life balance. There will always be one more detail to check on or email to answer. Take care of you so that you’re always able to provide the very best service.
- Maintain bookkeeping and billing information to ensure nothing slips through the cracks.
How and when to build a team
As previously mentioned, a large majority of web design company owners start out as freelancers. This affords the opportunity to enjoy lower overhead costs and establish a solid foundation for your business’ long-term success.
Hopefully, at some point the number of projects coming in will exceed what you can handle. When it’s time to build a team, it can be done in a couple of ways. First, you could bring team members on as freelancers. Since they’ll be contracted, rather than employees, you’ll eliminate the extra expenses of payroll taxes, Worker’s Comp, and benefits. Your other option is to build a team of employees. While you’ll face increased costs, the tradeoff is that you’ll have a team of loyal employees, dedicated to building a successful business. Whichever method you decide to deploy, just make sure each individual has the talent to truly make a difference for the team. A diverse team will equal greater success in the long run.