Starting a web design business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful web design business.
Importantly, a critical step in starting a web design business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Web Design Business:
- Choose the Name for Your Web Design Business
- Develop Your Web Design Business Plan
- Choose the Legal Structure for Your Web Design Business
- Secure Startup Funding for Your Web Design Business (If Needed)
- Secure a Location for Your Business
- Register Your Web Design Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Web Design Business
- Buy or Lease the Right Web Design Business Equipment
- Develop Your Web Design Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Web Design Business
- Open for Business
1. Choose the Name for Your Web Design Business
The first step to starting a web design business is to choose your business’ name.
This is a very important choice since your company name is your personal brand and will last for the lifetime of your own business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your own web design business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your web design business.
2. Develop Your Web Design Business Plan
One of the most important steps in starting a web design business is to develop your web design business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your web design business.
- Company Overview – this section tells the reader about the history of your web design business and what type of web design business you operate. For example, are you a web development agency or a freelancer?
- Industry Analysis – here you will document key information about the web design industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target market are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your web design business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your web design business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Web Design Business
Next you need to choose a legal structure for your web design business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the web design business owner and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to start a web design business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a web design business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a web design business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your web design business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Web Design Business (If Needed)
In developing your web design business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a web design business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a web design business that they believe has high potential for growth.
5. Secure a Location for Your Business
To find a location for your web design business, you’ll need to consider a few factors. First, think about the kind of environment where you want to work. Do you want to be in a busy city or a rural area? Next, consider your budget. How much can you afford to spend on rent or office space? Finally, think about what kind of commute you’re willing to endure. Do you want to be close to public transportation, or will you drive to work? Once you’ve narrowed down your options, take a tour of the locations and see which one feels right for you.
6. Register Your Web Design Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your web design business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your web design business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
The licenses and permits you need to start a web design business will vary depending on your location. You may need a business license, a trade license, or a special permit. Contact your local government or business licensing office for more information.
10. Get Business Insurance for Your Web Design Business
Other business insurance policies that you should consider for your web design business include:
- General liability insurance: This covers accidents and injuries that occur at your office. It also covers damages caused by your employees or products such as copyright or defamation lawsuits.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Web Design Business Equipment
To start a web design business, you will need computer equipment, software, and a website. You will need a computer with a high-speed internet connection, graphic design software, web development software, as well as a domain name and hosting account.
You will need an up-to-date computer with enough RAM and hard drive space for all of the software applications, design files, and eCommerce tools that you plan to use. Make sure your computer is properly configured before purchasing expensive design programs.
12. Develop Your Web Design Business Marketing Materials
Marketing materials will be required to attract and retain customers to your web design business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your web development business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional web design business website provides potential clients with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your own website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media channels will help customers and others find and interact with your web design business.
13. Purchase and Setup the Software Needed to Run Your Web Design Business
The most important software for a web design business is a content management system (CMS). A CMS allows you to manage the content on your website without needing to know how to code. Popular CMS software includes WordPress, Drupal, and Joomla.
If you plan to offer search engine optimization (SEO) services, you’ll need analytical software, such as Google Analytics. You will also need a customer relationship management (CRM) tool to manage your sales pipeline and a project management software to keep track of your clients and projects.
14. Open for Business
You are now ready to open your web design business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Web Design Business FAQs
It is not hard to start a web design business. There are many web design platforms that allow you to create professionally designed websites for your clients. Web design is one of the easier forms of businesses to start with little financial investment required.
Start by researching web design. Find some beginner tutorials and books on the topic. Practice as much as you can. It's important to practice because if you don't know what you're doing then it might be difficult for new clients to take you seriously.
There is no definitive answer to this question as it depends on a number of factors, such as the size of the business, the location, and the services offered. However, in general, businesses that offer web development and web design services are more likely to be profitable than those that only offer web hosting or domain registration services.
It can cost anywhere from $0 to tens of thousands of dollars to start a web design business. The amount of money you'll need to invest depends on the type of business you want to start, the services you offer, and the tools and resources you need to get started.
The most expensive part of starting a web design business is the cost to build a website. If you want to become an independent contractor and build websites for others, it can be fairly affordable to get started. You may simply need a domain name and hosting service which starts around $12 per month. However, if you want to be a freelance web designer and offer website building services, you'll probably need access to software, design tools, and other resources that cost money.
Ongoing expenses for a web developer can include website hosting, domain name registration and renewal, email hosting, software licenses, and marketing materials.
The biggest expense is the cost of the website, which is around $3,000. You also have to pay for hosting, which is about $100 per month and domain registration which is about $10 per year. There are also marketing and advertising payments, which can be pretty expensive.
One way web designers can make money is by charging for their services. They may charge a set fee for designing a website, or they may charge by the hour. Another way a web designer can make money is by selling advertising space on their websites. They may also sell products or services on their websites.
The profitability of a web design business will vary depending on several factors, including the size and scope of the business, the location of the business, and the type of services offered. In general, owning a web design business can be quite profitable if it is run efficiently and marketed correctly.
Other web designers fail for various reasons. However, the majority of web design companies fail because they are unable to generate enough sales to pay their expenses. Usually this occurs when a web design company fails to obtain new business from existing clients or is unable to obtain new customers through advertising and marketing strategy.
Web design companies should develop a customer base with regular monthly income from past work before they attempt to obtain new customers.