How to Start a Web Design Business

Most businesses, big or small, have a website. And with 17 million new US businesses expected to launch in 2022, web design is sure to be in great demand. 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.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a web design business has pros and cons to consider before deciding if it’s right for you.

Web design industry trends

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.

Industry size and growth

• Industry size and past growth – The US web design services industry is estimated to be worth $11 billion in 2022, according to IBISWorld.((https://www.ibisworld.com/industry-statistics/market-size/web-design-services-united-states/))
• Growth forecast – Web development and web design combined will continue to expand as indicated by a 13% annual growth in employment through 2030.((https://www.bls.gov/ooh/computer-and-information-technology/web-developers.htm))
• Number of businesses – Nearly 27,000 businesses provide web design services in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/web-design-services-united-states/)) 
• Number of people employed – US web design services companies employ more than 40,000 people.((https://www.ibisworld.com/industry-statistics/employment/web-design-services-united-states/))

Trends and challenges

Trends in web design include:

• 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.

Demand hotspots

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:

• Best states – Web designers enjoy the highest salaries in Washington, Massachusetts, and Oregon.
• Worst states – South Dakota, Wyoming, and Kentucky offer the lowest salaries for web designers.

What kind of people work in web design?

• Gender – 62% of web designers in the US are male, while 38% are female.((https://www.zippia.com/web-designer-jobs/demographics/#gender-statistics))
• Average level of education – 67% of web designers hold a bachelor’s degree and 18% have an associate degree.((https://www.zippia.com/web-designer-jobs/demographics/#degree-level-types))
• Average age – The average age of a web designer is 37 years old.((https://www.zippia.com/web-designer-jobs/demographics/#age-statistics))

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. 

If you’re not already a graphic designer, there are many online courses that you can take. The online platform Skillshare offers a $150 subscription that offers unlimited access to classes. If you want to get a web design certificate, many universities offer course programs online for around $3,000.

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

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Step 2: Hone Your Idea

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. 

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:

1. White Space
2. Color Scheme
3. Unique Typography
4. Content Hierarchy
5. Simple Navigation
6. Mobile-friendly Design
7. User-friendly Experience
8. Engaging Calls-to-Action
9. Engaging Visuals
10. 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 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: “Jim’s Bakery” over “Jim’s Cookies”
• 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 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: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

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 ZenBusiness’s 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. 

Step 6: Register for Taxes

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.  

Step 8: Apply for Licenses/Permits

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.

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.

Step 9: Open a Business Bank Account

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.

Step 11: Prepare to Launch

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.

Accounting

• 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. 

Marketing

Some of your business will come from online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Schedule Now”. This can sharply increase purchases. 
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers. 

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

• Signage – Put up eye-catching signage at your store and website.
• In-Person Sales – Offer your web design services to local businesses.
• Post a video – Post a video about your web design services.
• Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
• Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
• Seek out referrals – Offer incentives to generate customer referrals to new clients. 
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
• Do a webinar – Share your web design expertise online with a video seminar.
• Testimonials – Share customer testimonials about how your web design helped them.

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. 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. 

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.

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: 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!