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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on January 18, 2022
Investment range
$2,150 - $7,300
Revenue potential
$100,000 - $310,000 p.a.
Time to build
0 – 3 months
Profit potential
$90,000 - $125,000 p.a.
Industry trend
Growing
Commitment
Flexible
These are the key elements to think about when starting your graphic design business:
Starting a graphic design business has pros and cons that you should weigh before deciding if it’s right for you.
Trends in the graphic design industry include:
Challenges also exist in the graphic design industry including:
Startup costs for a graphic design business range from $2,000 to a little over $7,000. The low end assumes that you already have a computer, while the high end includes purchasing one. Other costs include a website setup and obtaining design software. If you’re not a graphic designer already, you can take online courses for less than $1,500 through places like the New York Institute of Art and Design.
You’ll need a handful of items to successfully launch your graphic design business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corportation | $150 - $200 | $175 |
| Licenses and permits | $100 - $300 | $200 |
| Insurance | $100 - $300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Computer | $0 - $2,000 | $1,000 |
| Design software programs | $600 - $1,200 | $900 |
| Total | $2,150 - $7,300 | $4,725 |
If you’re an experienced graphic designer, you can charge up to $150 per hour for more high-level work. On average, you will probably charge closer to $75 per hour. Your profit margin after marketing expenses should be about 90%.
In your first year or two, you could work from home and work 25 hours per week, bringing in nearly $100,000 in annual revenue. This would mean close to $90,000 in profit, assuming that 90% margin. As your brand gains recognition, you could hire additional designers and sales could climb to 80 hours of work per week. At this stage, you would rent a commercial space, reducing your profit margin to around 40%. With expected annual revenue of over $310,000, you would make about $125,000.
There are a few barriers to entry for a graphic design business. Your biggest challenges will be:
Now that you know what’s involved in starting a graphic design business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research graphic design businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a 3D graphic designer.
You might consider targeting a niche market by specializing in a certain aspect of your industry such as logos.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Based on your experience, determine the scope of services that you could offer. You could offer logo design, print design, web design, brand design, presentation design, and promo item design.
The prices you charge should reflect the complexity of the work you’re doing but can range from $50 per hour all the way up to $150 per hour. You can also quote per project prices bases on your estimated time. When working by yourself, you should aim for a profit margin of about 90%. As your business grows and you have staff and an office, your profit margin will be closer to 40%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price point. Remember, the price you use at launch should be subject to change if warranted by the market.
Your target market will be business owners. You can expect higher revenue if you target larger companies, particularly local companies that want more personal service. You can make direct calls to business owners, or you can find them on sites like LinkedIn.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Discover over 310 unique graphic design business name ideas here. If you want your business name to include specific keywords, you can also use our graphic design business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan before, it can be an intimidating task. You might consider finding and hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to graphic design businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your graphic design business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Personal funding is probably the best option for a graphic design business since startup costs are low.
Starting a graphic design business requires obtaining a number of licenses and permits from local, state, and federal governments. Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level licenses and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account. Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your graphic design business as a sole proprietorship.
Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You can use industry-specific software, such as Adobe, Canva, or teamwork, to manage your projects, tasks, communication, and metrics.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your graphic design business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your graphic design business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a graphic design business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in graphic design for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in graphic design. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a graphic design business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Graphic design has come a long way with the advancement of technology. The latest graphic design tools are an opportunity for you to start a business with the highest and most creative level of graphic design services. In a $13 billion industry in the U.S., the market for your services will be large, and you can work for global customers as well.
The sky is the limit to how large you can grow your business, and even if your business stays small, you can make good money. Now that you’ve educated yourself about the process, you’re ready to start designing your way to entrepreneurial success!
Yes, graphic design can be a profitable career if you have the necessary skills and knowledge to meet the demands of clients in various industries. The profitability of a graphic design business depends on factors such as pricing, client base, and overhead costs.
You can get clients locally, and online so you can do a combination of direct sales and online marketing. Make direct sales calls to local business owners and connect with them on sites like LinkedIn. To get clients online you can use a variety of digital marketing strategies including SEO strategies and pay-per-click ads.
To start a graphic design business without experience, you could begin by developing your skills through online tutorials or courses, practicing your design skills on personal projects, and building a portfolio of your work.
To differentiate your graphic design business from competitors, you could focus on providing unique and innovative designs, offer a personalized and consultative approach to your services, specialize in a specific niche or industry, or use eco-friendly and sustainable design practices.
Yes, you can start a graphic design business part-time by complying with local legal and regulatory requirements. You’ll need a computer, software, a website, and a dedicated workspace that’s clean and organized. Consider beginning on a small scale and expanding as your business grows.
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