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.
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 February 7, 2022 Updated on April 11, 2024
Fast Facts
Investment range
$2,050 - $5,100
Revenue potential
$120,000 - $470,000 p.a.
Time to build
0 – 12 months
Profit potential
$100,000 - $140,000 p.a.
Industry trend
Declining
Commitment
Flexible
Most businesses, big or small, have a website. It’s already an $11 billion industry, so starting a web design business could be a great way to help new businesses get off the ground while making good money.
But it will require careful planning and execution, as well as business knowledge. Fortunately, this step-by-step guide is loaded with all the business tips and insights you need to start designing your way to success.
Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.
Organic shapes, minimalism, and bold colors are popular lately.
User experience, or UX, is everything. People want the fastest-loading site and relevant content immediately, rather than being overloaded with options.
It’s increasingly important these days that website content responds to visitors’ location and browsing history.
Challenges in web design include:
Clients expect excellence and security when it comes to their website, requiring web designers to be up-to-date on all the latest tech tools.
The increase in free DIY website builders, like WordPress, is creating more competition for web designers.
How much does it cost to start a web design business?
Startup costs for a web design business range from around $2,000 to $7,500. The low end assumes that you already have a computer, while the high end includes the purchase of a computer.
Start-up Costs
Ballpark Range
Average
Setting up a business name and corporation
$150 - $200
$175
Business 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
Initial marketing budget
$500 - $1,000
$750
Total
$2,050 - $5,100
$3,575
How much can you earn from a web design business?
The average rate for a web designer is $75 per hour. You’ll have few ongoing expenses, so your profit margin should be about 90%.
In your first year or two, you could work 30 hours per week, bringing in nearly $120,000 in annual revenue. This would mean over $100,000 in profit, assuming that 90% margin. As you build a reputation and start to get referrals, you could get work that requires 120 hours a week. At this stage, you’d rent a commercial space and hire staff, including other web designers, reducing your margin to 30%. With annual revenue of around $470,000, you’d make a tidy profit of about $140,000.
What barriers to entry are there?
There are a few barriers to entry for a web design business. Your biggest challenges will be:
Obtaining strong web design skills and experience
Standing out from stiff competition in a saturated market
Related Business Ideas
If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
Step by Step Business values real-life experience above all. Through our Entrepreneur Spotlight Series, we interview business leaders from diverse industries, providing readers with firsthand insights.
Now that you know what’s involved in starting a web 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.
Why? Identify an opportunity
Research web design businesses to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the market is missing a web design business that specializes in websites for online service companies, such as online tutoring or online personal training.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as e-commerce sites.
This could jumpstart your word-of-mouth marketing and attract clients right away.
What? Determine your products or services
Your services will depend on your level of skill. You may be able to offer web development as well as design, and search engine optimization (SEO) services. Key elements of web design include:
White Space
Color Scheme
Unique Typography
Content Hierarchy
Simple Navigation
Mobile-friendly Design
User-friendly Experience
Engaging Calls-to-Action
Engaging Visuals
SEO-Boosting Elements
How much should you charge for web design services?
The average price for web design services is $75 per hour. Web development can be up to $200 per hour, and SEO services can be up to $150 per hour. Your ongoing expenses will be very low, so you should aim for a profit margin of 90%.
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 prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Your target market will be mainly small business owners. You can find them on LinkedIn, and you can also find local businesses on Yelp! and Google Maps and contact them.
Where? Choose your business premises
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:
Central location accessible via public transport
Ventilated and spacious, with good natural light
Flexible lease that can be extended as your business grows
Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Web Design Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Short, unique, and catchy names tend to stand out
Names that are easy to say and spell tend to do better
Name should be relevant to your product or service offerings
Ask around — family, friends, colleagues, social media — for suggestions
Including keywords, such as “web design”, boosts SEO
Name should allow for expansion, for ex: “PixelPerfect Web Design Agency” over “Small Business Web Solutions”
Avoid location-based names that might hinder future expansion
Use online tools like the Step by Step 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. 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 set 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.
Step 4: Create a Web Design Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
Executive Summary: Provide a concise overview of your web design business, highlighting its commitment to creating innovative, user-friendly websites for a variety of clients.
Business Overview: Describe your business’s specialization in web design services, including website creation, redesign, and maintenance for businesses and individuals.
Product and Services: Detail the range of services offered, such as custom website design, responsive layouts, e-commerce solutions, and search engine optimization (SEO).
Market Analysis: Assess the demand for web design services, identifying target markets like small businesses, entrepreneurs, or e-commerce ventures.
Competitive Analysis: Compare your services to other web design firms, focusing on your strengths like unique design styles, technical expertise, or customer service.
Sales and Marketing: Outline your strategy for attracting clients, using methods like online portfolios, social media marketing, or networking in business communities.
Management Team: Highlight the experience and skills of your team, especially in areas like graphic design, programming, and digital marketing.
Operations Plan: Describe the process of client engagement, from initial consultation and design to development, testing, and website launch.
Financial Plan: Provide an overview of financial aspects, covering startup costs, pricing strategies, and revenue projections.
Appendix: Include supplementary documents such as design portfolios, client testimonials, or detailed market research to support your business plan.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Step 5: Register Your Business
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!
Choose where to register your company
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 are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to web 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.
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your web design business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
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.
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 are completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
Personal: Self-fund your business via your savings or the sale of property or other assets.
Bank and SBA loans are probably the best options, other than friends and family, for funding a web design business. You might also try crowdfunding if you have an innovative concept.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits 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 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 web 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.
Step 10: Get Business Insurance
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:
General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
Business Property: Provides coverage for your equipment and supplies.
Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
Worker’s compensation: Provides compensation to employees injured on the job.
Property: Covers your physical space, whether it is a cart, storefront, or office.
Commercial auto: Protection for your company-owned vehicle.
Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Essential software and tools
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 may want to use industry-specific software, such as Birdview, ActiveCollab, or ContentSnare, to manage your projects, workflows, teams, estimates, invoices, and payments.
Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Develop your website
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 services like WordPress, Wix, or Squarespace. 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.
Marketing
Here are some powerful marketing strategies for your future business:
Specialized Niches: Focus on specific industries or niches (e.g., healthcare, e-commerce) to position yourself as an expert, making it easier to target and attract clients in those sectors.
Case Studies and Portfolios: Showcase your best work through case studies and a visually appealing portfolio, emphasizing the impact of your designs on client success.
Social Proof and Testimonials: Collect and prominently display client testimonials and endorsements on your website and social media to build trust and credibility with potential clients.
Content Marketing: Create valuable content through blog posts, infographics, or videos that address common problems your target audience faces, showcasing your expertise and providing solutions.
Interactive Workshops or Webinars: Host workshops or webinars to educate businesses on the importance of effective web design, demonstrating your knowledge while establishing a direct connection with potential clients.
Local SEO Optimization: Optimize your website for local search by including location-specific keywords, obtaining local backlinks, and ensuring your Google My Business profile is complete and up-to-date.
Partnerships with Complementary Businesses: Form partnerships with businesses that offer complementary services (e.g., marketing agencies, SEO experts) to expand your network and tap into shared client bases.
Referral Programs: Implement a referral program that incentivizes existing clients, industry contacts, and even employees to refer new business to your web design services.
User-Centric Design Workshops: Offer free or low-cost workshops on user-centric design principles to engage with potential clients, demonstrating your commitment to creating websites that prioritize user experience.
Leverage Social Media Advertising: Use targeted social media advertising to reach specific demographics or businesses in your target market, promoting your expertise in web design and offering special promotions.
Focus on USPs
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 web 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 web design business could be:
Professional web design for your ecommerce website
Give your website the best level of UX!
They’ll come to your site in droves with strong SEO
Networking
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 web design business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in web 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 web 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.
Step 12: Build Your Team
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 web design business include:
Web Designers – design websites
Web Developers – develop websites
SEO Strategist – SEO for clients
General Manager – staff management, scheduling, accounting
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.
Step 13: Run a Web Design Business – Start Making Money!
Having a good website is crucial for almost any business. It can attract online visitors, make them stay longer, and convince them to get your products or services. With millions of new businesses forming, web design and development services are in great demand. Your challenge is to offer better services than what the DIY platforms provide.
You don’t need much to get started, and with a little marketing and some strong design work, you’ll see the money start to roll in. Now that you have a bit of business savvy, it’s time to go ahead and launch your successful web design company!
Web Design Business FAQs
How profitable is a web design company?
Web design services are generally priced at about $75 so even as a solopreneur, you can bring in well over $100,000. You’ll have very few ongoing expenses, so most of that will stay in your pocket.
How can I learn to be a web designer?
There are many platforms that offer online classes in web design. Sites like Skillshare let you subscribe and then have access to unlimited classes. Llook for a site that offers a full range of classes so that you learn all the necessary skills. Alternatively, you can take courses online at a major institution like Cornell University and get a web design certificate for around $3,500.
How do I get clients for my web design business?
To get clients for your web design business, build a strong online presence by creating a professional website, showcasing your portfolio and client testimonials, and utilizing social media and online advertising.
How can I optimize websites for search engines and improve their visibility?
To optimize websites for search engines, focus on creating high-quality, relevant, and engaging content that incorporates relevant keywords and meets the user’s intent. Utilize on-page optimization techniques such as title tags, meta descriptions, header tags, and image alt tags to improve the website’s relevance and visibility in search engine results pages. Build high-quality backlinks from reputable sources, and ensure that the website is mobile-friendly, fast, and easy to navigate.
What are some best practices for creating user-friendly and visually appealing websites?
Best practices for creating user-friendly and visually appealing websites include using a simple and consistent layout, clear and concise messaging, easy-to-read fonts and colors, and intuitive navigation. Ensure that the website is accessible and compatible with different devices and screen sizes.
Can I start a web design business on the side?
Yes, you can start a web design business on the side by identifying your target market, developing a service offering and pricing strategy, and creating a strong online presence. Build a portfolio of work samples and showcase your expertise through online marketing and networking. Ensure that you can balance your time and resources effectively between your full-time job and your side business.
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