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How to Start a Web Design Business

How to Start a Web Design Business

With digital media increasingly becoming an essential part of all aspects of life, the ability to design a functional, user-friendly website that also looks appealing is a skill set in high demand. If you have a creative flair and are tech-savvy as well, you should read on. Every business or organization will essentially need your skills at one point or another.

As a web designer, you have the option to work for an agency or in-house for a large company. However, this profession lends itself to freelancing. Being your own boss means you get the freedom to select your projects, but you will also have to be ready to manage your business and put both time and effort into finding potential clients.

While there are hundreds of millions of active websites globally and your skills and expertise will be in high demand for a long time to come, doesn’t mean it’s easy to build a successful web design business. 

Business Overview

Web designers primarily build business websites. Their task is to make a website easy to use but also aesthetically appealing. They are the professionals to create an online experience that users will love. Within the field of web design and depending on your qualifications, experience, and additional upskilling, you may decide to branch off into front-end development, front-end design, product management, User Experience design (UX design), visual designer, app development, or graphic design.

Additionally, a web design company may work with content marketing and search engine optimization (SEO) and writing blog posts to increase traffic to the website.

Industry Summary

Web design and web development is an industry that generally has low entry barriers. You can easily start small, ease yourself into being your own boss, and then grow your business from there. It’s also a business that ‘travels well’ as you can do a lot of the tasks wherever you are, as long as you have a reliable computer and internet connection.

According to the U.S. Bureau of Labor Statistics, almost 200,000 web professionals were registered as web developers and digital designers. And data published by IBISWorld shows that there are 83,150 web design businesses registered in the U.S.

The web design service industry has no major players with a market share of greater than 5%. These numbers show us that the majority of web design businesses are owner-operated, i.e., run as an individual freelancing venture.

Industry Trends

According to the Bureau of Labor Statistics, the web design services industry is forecast to grow 13% by 2030, notably faster than the average taken for all occupations. This surge is driven to a large part by the ever-increasing popularity of mobile devices and e-commerce. Professionals retiring from the workforce or transferring to different jobs requiring different skill sets are also contributing factors.

Target Market

Your target market will be small business owners, educational institutions, government departments, and organizations that wish to have a web presence. Whether this is to sell something or to inform, whether it is for initiatives, learning opportunities, or portals to bring communities together, digital media permeates all aspects of our life.

Typically, the smaller the business or organization, the more likely they will need to outsource web design and website maintenance.

Consider also the opportunity to build up expertise and specialize in web design for specific market segments, such as e-commerce, NGOs, or educational institutions, for example.

 

Skills, Experience, and Education Useful in Running a Web Design Business

Credentials and Competence. Do you know your adaptive from your responsive web design? A relevant bachelor’s degree is typically expected in this industry. But to underpin your competence, it’s equally important to show how you’ve put theory into practice with your professional portfolio. Your project work, additional certifications as well as professional memberships from organizations like the American Webmasters Association and Professional Association of Design will help back up your web design skills.

Stay up to date and on top of trends. Web design is a fast-moving and dynamic field. Stay up to date with the latest innovations and trends. Spend time testing and understanding new functions, programs, and relevant applications. Stay connected with your industry and your network. It’ll help you stay ahead of the game and offer your web design clients a competent, professional, and innovative service.

Excellent interpersonal skills: Presenting your web design ideas to potential clients and consulting with existing customers on projects will be vital for running a successful business. You will need to be a good listener to translate the client’s wish into a functional and good-looking web design. To be successful in running your own web design business, you will need to be able to clearly communicate your creative ideas,  as well as the benefits and practicalities of a new website’s interface – in layman’s terms.

Troubleshooting skills. When designing or maintaining web pages, you will likely deal with challenges and hurdles, sometimes totally unforeseen. Troubleshooting skills, pragmatism, and keeping calm will help you to navigate these challenges.

Checklist for Starting a Web Design Business

Starting a website design business can be an extremely profitable venture, but it’s not without its challenges. Here is a checklist to help you get started on the right.

Step 1: Write your Business Plan

You’ve decided to be your own boss and start a web design business. After coming up with the idea, the next step should be to write a business plan.

You might think a plan is not that important because starting a web design business doesn’t typically require a large upfront investment. But the business plan will make you focus on some important aspects of your business, such as who your customers are, how you plan to reach them, projecting income and expenses, and much more. Multiple studies have shown that a business plan helps increase the odds of starting a successful business and sustain it longer-term.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect name for your web design business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: How to do a Trademark Search Before Choosing a Business Name

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a web design business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: 3 steps to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select your Location

It’s an important consideration, but perhaps one that comes with easy options. Statistics show that most web design businesses are owner-operated and are run from a home office. Make sure you understand the regulations  – if any – for running your business from home, as they might differ from state to state.

If you are looking to start a web design agency,  rental costs for office space may come into play, although web designers often work remotely and in distributed teams. Costs will depend on the office’s square footage, location, and amenities. Finding a space with good visibility to other local businesses may help attract new clients.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

A business owner will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located. Some common local, state, and federal registrations a web design business may need to include a sales tax permit and Employer Identification Number.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing. Getting the funding to start your own business is another. Luckily, a web design business should typically not require a large amount of capital upfront and can start small scale. However, should you need a loan, it is important to understand that the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts is vital. It will also make it easier to track the income and expenses of your business.

Step 8: Get your Marketing Plan in Place

A web design business will need to set aside a budget for a marketing strategy.

Some common marketing techniques for web design businesses include social media marketing on Facebook, Instagram, LinkedIn, along with investing in digital marketing such as using paid ads on Google, and print advertising. Look out for trade expos and events in your area to advertise your business and extend your reach to new customers.

Asking for referrals from satisfied clients is a great way to get new clients and build your business.

Be sure to build an outstanding portfolio website to demonstrate your skills as a web designer.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

Compared to other businesses, a web design business will not need an extensive range of insurances. But you should explore:

– General liability insurance protects the business from expenses like medical and legal bills that it could face if a customer is ever hurt while on the business’ property. It can also protect you should a mishap occur at a customer’s location.
– If applicable, worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Insurance policies will vary in cost depending on factors like the business’s location, the value of its inventory (if any), and the number of employees on staff (if any). To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hire Employees

Most web design businesses are owner-operated and may have no employees. But should you want to hire staff to expand the range of web design services you offer and set up a web design agency,  the median pay for web developers and digital designers was $37.12 in 2020, according to the U.S. Bureau of Labor Statistics. Many website developers hire a freelance web designer to handle overflow projects or when specific skills are needed.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff. It will also be useful to set aside both time and budget for training and development.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for a web design business is critical to its long-term success. A good system will allow you to stay on top of your billing and will track income and expenses. It will help you to maximize profits, identify trends and also keep the business out of trouble with the government.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a web design business?

Your main cost will be investing in time. Especially if you are fresh out of college or you are a self-taught web designer. Spend time knowing your tools inside out and work hard to develop a cracking portfolio. A good way to test the waters is to put your profile on platforms such as Upwork and get started with some smaller projects to build up experience.

Even if you’ve been a web designer for some years, make sure you make room for upskilling and additional certification in your budget. The American Webmasters Association has extensive resources available to its members, well worth investigating.

And lastly, of course, you will need a powerful computer, excellent internet connection and programs and applications that are up to date.

How profitable is a web design business?

According to Salary.com, an experienced web designer can earn well over $40 per hour. IBISWorld further states that the wage growth for web designers is forecast to be 3.7% in 2021 in the U.S.

Remember, this is data for a salaried worker. Being your own boss, you can and should charge differently – within reason, of course. Your rate will need to cover your overheads. It pays to check out your competition in your area as well. Your rate will be influenced by demand and supply, which state you work in, but also by the expertise and specialized services you can offer.

Web design companies can generate additional revenue by offering web hosting or monthly maintenance. While these services may not add a lot of income, it is a consistent revenue strean,

Are there grants to start a web design business?

It’s extremely rare to find a grant to start a web design business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a web design business?

The NAICS code for a web design business is 541511 which is classified under Custom Computer Programming Services. Other industries listed in this code include; software development, computer programming services, computer software support services, software analysis, and others.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours

Resources:

American Webmasters Association

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