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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 February 7, 2022
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
Key details to focus on when starting your web design business:
Starting a web design business has pros and cons to consider before deciding if it’s right for you.
The US web design market should ideally continue to grow as record numbers of Americans start their own businesses,((https://www.vox.com/recode/22884040/more-americans-starting-own-business-entrepreneur)) but market analyst IBISWorld says industry performance has been hindered by online website development platforms like Squarespace and Shopify, which have been helping users create their websites without having to hire a web designer.((https://www.ibisworld.com/united-states/market-research-reports/web-design-services-industry/)) If combined with website development, however, the industry is still poised for growth.
Trends in web design include:
Challenges in web design include:
The best and worst states for a web designer to live and work in 2022((https://www.zippia.com/web-designer-jobs/best-states/)) are:
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 |
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.
There are a few barriers to entry for a web design business. Your biggest challenges will be:
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.
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.
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:
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.
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.
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:
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.
Here are the key components of a 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.
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 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.
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:
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 are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
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.
Starting a web 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 (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.
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 may want to use industry-specific software, such as Birdview, ActiveCollab, or ContentSnare, to manage your projects, workflows, teams, estimates, invoices, and payments.
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.
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 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:
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.
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:
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.
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 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.
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.
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.
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.
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.
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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