Many designers and developers dream of starting their own web design agency. Most don’t try because it seems too challenging, but getting started is simple.
To start a web design agency, you decide you’re the boss of a web design agency. That’s all there is to it.
Now, let’s talk about the tricky part: making your web design agency sustainable over the short, medium, and long term.
Over the next few weeks, we’ll walk you through the necessary steps to set up a viable web design agency business: nothing onerous, just one task per day. Depending on your circumstances, some tasks will take a few minutes, some will take a few hours.
By the end of the month, the goal is to be up and running as a web design agency. Week one is all about building solid foundations.
Day One: Legal Checks
Day one should be nice and simple for most people. Let’s start by checking if you are legally allowed to run a web design agency.
There are few jurisdictions where you aren’t entitled to make your living in any legal way you see fit. However, you may have agreed not to run a web design business.
Firstly, if you’ve entered into any insolvency agreement (such as bankruptcy), you may be restricted in the types of business you can run. Secondly, some credit agreements (including some mortgages) may be conditional on you not being self-employed. Consider how starting a web design business will affect those agreements, and if you’re concerned, check with a legal professional.
As well as circumstances under which you may have agreed not to run a business, there are times when you are restricted in the work you are allowed to take on.
If you’re currently — or were recently — employed within the field, there may be a non-compete clause in your contract. If so, you need to examine the scope; does it prohibit you from poaching your employer’s clients or competing with them at all, and if so, for how long?
If you’re currently employed, do you own your work? Many employers stipulate in contracts that they own anything you work on, even in your own time. You might be surprised to learn that many colleges and universities take ownership of anything created during the time a student’s enrolled.
In most cases, legal hurdles are obstacles, not barriers. But it’s essential you have a clear understanding of your position.
Day Two: Taxes
If you thought Day One was boring, you’ll absolutely hate Day Two.
By far and away, the most arduous thing a business has to deal with is taxes. Virtually everywhere in the world, you will need to pay taxes on your income.
Most web design agencies start on a non-incorporated freelance or partnership basis. That will substantially simplify your tax arrangements (unfortunately, it will also increase your personal risk).
Different jurisdictions handle this differently, so give your local tax authority a call and let them know you’ve started a company specializing in web design and development. They will be happy to let you know what your obligations are.
Do not leave this step until you owe money. Finding out what your tax obligations are is essential for calculating your rates later this week.
Day Three: Pick a Niche
Every business needs a niche to operate in, especially while it gets established.
Poor niches are based on existing skills. Just being good at something isn’t enough to keep you motivated when times get hard.
Successful niches can be found among your existing interests, the part of your skillset classed as ‘transferrable.’ For example, if you love eating out, then design for restaurants. Or, if you love technology, design for fintech. Your niche will evolve, so don’t sweat over it.
There’s received wisdom that says if you choose a job you love, you will never have to work a day in your life. That is ****; the kind of meaningless platitude spouted by high-school guidance counselors who don’t know how to guide.
However, if you choose a niche you love, the days you work won’t suck.
Day Four: Pick a Name
Finally, we’re onto the creative stuff. You’re going to need an awesome name for your web design agency. “Jellyfish Ninja Design” [dibs] or something. Whatever you choose, expect to compromise a little securing the right domain name.
Once you’ve got something right for you (or rather, right for you right now) check that there isn’t a web design agency down the block already using the name. And, for obvious reasons, avoid anything that could be misconstrued — if your name happens to be John Pentagram, you can’t use your surname.
Day Five: Decide Pricing
It’s a fair bet you aren’t starting a web design agency so you can barely make ends meet; hard work expects to be rewarded.
How much you charge for your services is one of your most difficult decisions. You need to charge enough to cover your costs (don’t forget taxes), a little extra to put aside for expansion, plus some profit to make it worthwhile. Be honest with yourself and decide on a minimum annual income.
You’ll need to adapt as you grow, but here’s a starting point: Assume 245 business days in the year and 7 hours of billable time per day, totaling 1715 billable hours per staff member. Divide your minimum annual income by the billable hours. Then, multiply the result by 1.5 to cover periods of inactivity (and because too many web designers undercharge). The final total is your hourly rate.
Billing hourly isn’t sustainable; you want to bill per job because when you become more skilled and faster at the job, your income will increase instead of decrease. However, until you know how long tasks take, billing hourly will allow you to take on jobs without taking on too much risk.
Even though you’re billing hourly, potential clients will want an estimate ahead of agreeing to work, so work out an approximate price list for common tasks you expect to undertake, based on your hourly rate.
Day Six: Business Accounts
Now you know how much you want clients to pay you, you need to set up a system to enable them to pay you.
You will need a dedicated business bank account. Do not be tempted to use your personal account, it is too easy to get the two confused. Most modern banks will allow you to open a business account online, provided you aren’t asking for a credit facility.
Day Seven: Rest
There’s a toxic myth spread over social media that to be successful, you have to work 24/7. In reality, proper rest and recovery are essential to your performance.
Elite athletes will tell you that recovery sessions are as important as training. The same applies to strenuous mental work, and especially creative work.
When you start out opening a web design agency, you’ll need to work hard. But always reserve at least one day to restore your stamina ahead of the coming week.
Next week, we’ll build on this foundation and start defining who you are as an agency.
Featured image via Unsplash.
Ben Moss is Senior Editor at WebdesignerDepot. He’s designed and coded work for award-winning startups, and global names including IBM, UBS, and the FBI. One of these days he’ll run a sub-4hr marathon. Say hi on Twitter.