Have you been building websites on the side? Or just really like web design? Now might be a good time to start your own business. You can avoid pitfalls by learning from industry experts.
How to start a web design business
We had the privilege of partnering with Chris Edwards on a webinar. He has been a website developer for about 20 years, 8 of which were working with WordPress. He also has 13 years of experience in SEO and digital marketing. Chris started out as a freelancer and slowly grew his business into an agency. He joined us to share his process for starting a web design business.
How Chris started his web development agency
Chris started out building websites on the side in high school and while working in IT. As he picked up more clients, he went full time and started building an agency with his wife. They expanded services beyond just building websites.
They underwent a brand change because no one understood the name was a play on their initials. Choosing the right branding was one thing Chris wishes they’d done from the start.
They grew their recurring revenue with the expanded services, hired additional help, and further promoted their brand. Data Driven Labs is now a full-blown agency.
Business planning steps
There are 3 things you’ll need to do before starting your web design business: Prepare your finances, create a simple business plan, and setup your business and administration software. These are the steps you need to follow for each:
Financial Preparation
- How much money do you need? Have about 6 months income set aside & plan for unknowns.
- Have a fallback plan. Don’t burn bridges with your old job when you go full-time.
- Don’t risk it! If you aren’t financially ready to go full-time, you can do this on the side.
Simple Business Plan
- What are your services?
- What will you charge?
- What market or niche will you focus on?
- Where will you find your clients?
Business and Administration Setup
- Pick a name & register your business.
- Set up your accounting software.
- Set up your domain & email address.
- Create a website, even just a simple one to start.
“It all starts with proper planning. Don’t make a big mistake by jumping right in.”
How to define your website services
When you’re figuring out what services you’re going to offer, think outside the box. You may have some skills that pair well with web design, like graphic design or videography.
To start deciding which services to offer, ask yourself what you’re good at. There may be things you know, but you will want to sell the things that you’re really great at.
Another thing to consider is whether or not you have the resources to perform these services. Specialized photography is a good example. If you’re going to offer that, you’ll need professional cameras and other equipment. Make sure you already have the resources ready to go, don’t just leave it to figure out later.
You also need to figure out if you can sell your services. Are they something people want to buy? Make sure you have a market before you set your offerings.
Doing research and talking to others is a good way to find out how viable your services are. People who offer similar services, even your competitors, won’t mind sharing tips. There’s enough business out there for everyone.
Finally, make sure all the additional services you offer complement your main service. If your main service is web design, you could offer website maintenance & hosting, marketing & SEO, or photography & video.
Chris makes a good point that in the beginning, it’s just you. If you try to offer too much, you’ll stretch yourself thin. Make sure you can deliver on everything you offer.
How to price your website services
You should determine your rate based on a combination of factors, including your skill level, what your competitors charge, your overhead costs (including taxes and fees), cost of contracting out, and your desired profit margin.
These are 3 pricing models you can use to set your rates.
- Hourly: Charge by the hour. You can use a flat hourly rate, which is the easiest form, or variable rate (different rate for each service), which is more complex.
- Project Based: One price for the whole project. It’s easy to quote, and clients won’t ask why a simple project takes so long.
- Value Based: Pricing based on the value your work adds can be complex and is a hard sell for budget-minded clients, but it can mean more money. Profit sharing is not recommended because it relies on client honesty.
Many designers wonder if you should price differently for design work than you do for development. Some assume that design work is less valuable. Chris
“You need to know what you are worth and don’t undersell yourself.”
Build recurring revenue
There will be dry spells. Build recurring revenue to keep cash flow coming in even when you’re not getting new projects. COVID-19 is a great example of how business can slow down. Due to the pandemic, lot of businesses are not starting new projects; they’re holding onto their budgets.
Beyond financial security, recurring revenue has other benefits. It builds a stronger relationship with your clients because they work with you on an ongoing basis instead of disconnecting after the project is finished. It can also allow you to take vacation because you don’t have to keep selling or doing project work every single day. You will have time to take a break because the recurring revenue keeps your bills paid.
Some common sources of recurring revenue are:
- WordPress maintenance: updates, small changes, optimization
- Website hosting
- Social media management
- Ongoing marketin: SEO, PPC
Automation is really important for recurring revenue because it’s easy to add services without adding a lot to your workload.
Find web design clients
Finding web design clients is an art form. While Chris brought in a business development person at Data Driven Labs, you can also find clients through networking groups and community meetups, among local businesses or friends and family, and even by partnering up with other agencies.
In fact, some of your competitors might have overflow that they can pass along to you. Other agencies may hand over projects that are too small for them or outsource tasks they don’t want to do. Chris recently began outsourcing the SEO side of his business to another provider who specializes in SEO. You can meet other agencies in the networking groups and meetups. Partnering up is a win/win.
“We have other clients that are massive agencies that get these smaller sites for small businesses … they’ll just give them to us.”
Hire help
As you grow, you may find that you need some help. As we mentioned before, you can partner up with other agencies or outsource to contractors. A good way to add new services is to resell them from other providers.
Just make sure you have a positive cash flow. You don’t want to establish a pricing model to resell contracted services at a rate that leaves you with no profit margin … or worse, a negative profit margin. Quote the contract before you quote the project for the client.
Collaborating in WordPress
Sometimes you need to allow multiple people to access the WordPress Admin area, especially if you run an agency or outsource work to contractors.
Automated client reporting
Your clients pay you because they trust in the value you’re providing. The easiest way to reaffirm that value is to provide a regular report to show them what they’re getting.
Pricing
When you’re building out your website maintenance plans, pricing is going to be top of mind for you. You’ll want to make sure any tools or software you’re paying for leaves you enough room for a healthy profit margin.
Show your clients the value of website maintenance
Offering website maintenance plans is one of the best ways to provide additional value to your clients while building recurring revenue for your business. It’s a total win/win situation.
Editor’s note: The above is a guest post from our friends at GoDaddy.