Maybe you’ve been working on the same in-house design team for years, or maybe you’ve been stuck in the same agency role working on projects you don’t want to be. Whatever your motivations, there’s no substitute for the thrill of taking control of your future and launching a design agency. From freelancer to growing agency, read on to learn how to start a graphic design business in 5 steps.
Step 1: Business Formation
Before your design business makes a single dollar, it will need to be registered with your state. Unfortunately, it’s not as easy as filling out a form and mailing it in. In the U.S. there are over a dozen types of business entities recognized by state governments—and each type of entity has its own nuanced ownership and tax structures you need to take into consideration. Making the wrong decision now could lead to lasting financial impact and costly tax bills down the road.
Fortunately, you don’t have to go it alone as you learn how to start a design business. Hiring a lawyer and a CPA who both have experience in business formation and M&A (mergers and acquisitions) can provide you with the expert guidance you need to get your design business off on a great start. They can help answer questions like:
- What state should I register the business in?
- C-corp, S-corp, Sole proprietorship, LLC, or something else?
- Pass-through entity or not?
- How should I structure my cap table?
It’s tempting to do everything as cheaply as possible when thinking about how to start your own graphic design business, but a small up front investment in expert guidance can save you tens of thousands of dollars (or more) in the coming years.
Step 2: Define your Mission, Vision, and Values (MVV)
What purpose will your design business serve? What is your vision for how you will drive value for your customers? Why would they want to work with you instead of any other design agency out there? What are the internal values your design business will operate on?
Most people learning how to start a graphic design business are creatives who want to dive right into their work. But if you don’t slow down and spend some significant time seriously evaluating what type of design business you are creating, you’ll encounter long term difficulties in pitching to clients, choosing the work that fits your abilities best, and positioning yourself in the market. A clearly defined MVV will provide you with a fixed reference point against which you can consider every decision you make, so that your design business is always marching in the right direction.
Take a look at these inspiring MVV statements from the Hubspot blog. They range from the general and aspirational, to incredibly laser-focused and targeted. As you think about your own MVV, be honest with what value you can bring to the world and what type of impact you want to create. And remember, you’re learning how to start a design business because you want to create a new future for yourself. Rome wasn’t built in a day—it’s going to take some serious patience and honest reflection before you can craft a powerful MVV to guide your business for years to come.
Step 3: Introduce Yourself
The name you choose for your design agency will say a lot about your vision of the future. Your name will impact how much you’re able to charge for your work, what type of clientele you will service, how likely clients will be to refer you to colleagues, and how easy it is to remember your business.
The simplest approach for anyone learning how to start a graphic design business is to use your own name. However, while this might be the easiest solution, it also tells potential customers that you intend to stay a freelance design business (or perhaps grow into a small, boutique agency with a narrow creative focus). For that reason, I recommend a simple, short name that speaks to the caliber of work your design business will produce, as well as indicates the types of customers you want to be working with.
Do you have a lot of experience within a specific industry? Think about the work you’ve done in the past, and the challenges and problems those clients face. Or perhaps you have experience working across a broad collection of industries, but from a specific creative viewpoint. Let this past expertise inform your name so your customers will know what you’re all about.
Also, make sure to conduct a thorough copyright search before settling on a name, or you run the risk of legal challenges down the road.
Step 4: Pricing
As you learn about how to start your own graphic design business, it’s important to also learn about different pricing structures. In the world of creative services, there are 3 things you can sell to your customers:
- Deliverables
- Capacity
- Value
Deliverables are the tangible goods you deliver to your customers. You can sell a website, a social media campaign, a brochure design. When selling deliverables, you are using project-based pricing, wherein both you and the client agree to a rigid scope, timeline, and budget at the start of the work. Selling deliverables ensures everyone has a clear understanding of the project parameters.
Selling your capacity amounts to charging your clients hourly. Instead of presenting one fixed cost for the scope of work you are producing, you will instead provide an upfront hourly cost and estimate of hours needed to complete the project. This approach incentivizes the client to stick to your schedule and thoroughly review all design drafts before providing feedback so that the project can be wrapped up in as few rounds of revision as possible.
Value selling is built on the idea that the quality of design work you deliver will drive real business value for your customers. Rather than selling a deliverable or an hourly rate, you are selling some financial gain for your client. In these types of engagements, design businesses will often bill for one fixed fee that only covers internal costs of production, but will also then stake a claim on a percentage of increased revenue the design work generates for the client. This approach incentivizes the design business to be a true partner to their clients, as the better the work is, the more money the design business will make.
There is an overabundance of pricing calculators and freelance rate reports on the web for anyone learning how to start a graphic design business. While these are useful in setting an initial framework within which to consider pricing, the reality is that every design business is unique. As you think about pricing in relation to the 3 items you can sell (deliverables, capacity, value), think about the industries you plan to service, and the roles of your clients within those organizations. The right pricing structure will balance the needs of your design business with the needs of your clients.
As a final thought, don’t be apologetic in your pricing. Good clients will recognize the value your design work brings, and understand that paying you for your work is an investment into their own future.
Step 5: Getting (and Keeping) Clients
Clearly, there is a lot of legwork to be done when learning how to start a design business. By now you’re probably anxious to win some clients and get to work. Here’s what you need to earn new business:
Website
When building your design business’ website, be sure that your messaging aligns with the MVV you developed in step 2. Your website is your best opportunity to showcase who you are and your unique approach to design (and, more importantly, how that translates into real value for your clients). Make sure your portfolio only showcases your absolute best work, as well as the creative problem solving and thought process that went into each engagement. Clients want to see that you can understand a business challenge and translate that into actionable creative solutions. Here are some great Portfolio Examples.
Marketing
If you’re learning how to start a design business, chances are you have some experience in design and, accordingly, some expertise to share. Content marketing (through blog articles, and other publications), is a proven tactic for driving customers to your website. Hubspot has created a fantastic guide to content marketing, updated for 2020. The more quality content you put out in the world, the greater your reputation becomes and the more likely you are to get your message in front of your target customers.
Referrals
Your clients can often be your best source of new business opportunities, as they will undoubtedly have multiple colleagues they can introduce you to. For this (and many other reasons), you must strive to always be service-oriented in order to keep your clients happy. Some key steps to happy clients:
- Overcommunicate. Get as much face time as possible with your clients, even if that only takes the form of video calls. Always make sure your clients know what to expect from you every step of the way.
- Be on the same team as your client. The “us vs. them” mentality has no place in creative work. If disagreement arises, work to solve the issue collaboratively.
- Never miss a deadline. Period. Your client can, but you can’t.
- Care about your clients’ personal lives. Design work is a necessarily human-driven endeavor, and the best way to understand the motivations and needs of your client is to understand who they are as a person.
And that’s how to start a graphic design business in 5 steps! It requires skill and effort, but there’s no substitute for the freedom that comes from owning your own agency. As your design business grows in the future, be sure you always stay true to your MVV and keep marching toward the goals and vision you’re formulating today.
