How To Start a Graphic Design Business

How To Start A Graphic Design Business

Starting a Graphic Design business can be fun, exciting and very rewarding. If you are considering starting your own Graphic Design business, be sure to read the following advice so that you can shorten your learning curve, minimize your risk, and start generating income quickly.

We cover all the essential information to help you decide if starting a graphic design business is a good match for you. Learn about the day-to-day activities of a graphic designer business owner, your typical target market, growth potential, startup costs, legal considerations, and more!

Startup Costs: Low

Skill Level: Medium

Earning Potential: Medium

This business is ideal for artistically-minded people who can work independently, but also effectively communicate with clients to ensure they meet their design needs. Graphic designers usually have a degree in design or a related field.

Startup expenses for a graphic design business can be relatively low, but they typically include the cost of software and a company website. Growth prospects for the business are only limited by your sales success and capacity.

BUSINESS OVERVIEW

Graphic design professionals create or maintain a visual look that might be carried out in signage, letterheads, ads, sales collateral material, website and digital content and virtually all other internal and external communications. This can involve logo design, fonts and typography, color and imagery selection and layout. The owner of a graphic design studio might work alone or have one or more employees to generate new business, work on existing projects and support the enterprise.

Graphic design studios are run by individuals with an artistic flair and an eye for visual composition. You must be adept at networking and pitching client business and should have at least a basic understanding of the work of photographers, illustrators, copywriters and other creatives who might take part in projects.

You should understand and have the ability to bring to life the design aspirations of clients. You must also be able to manage the work of others who are involved in client projects, whether it involves employees, freelancers or outside vendors. And have the entrepreneurial skills to grow their business.

Graphic designers usually have bachelor’s degrees in graphic design or related fields. Before going on their own they often get experience and make valuable connections by working at ad agencies, in-house corporate creative departments or other studios.

Who is this business right for?

Ownership of a graphic design studio is ideal for artistically minded people who are adept at managing the aesthetics of the way their business and organizational clients address their various markets, communicating creative ideas and executing design decisions independently or through employees or vendors.

You should be able to work alone and in a collaborative environment as you grow or work alongside clients. And you must feel confident in both worlds—business and creative expression—because your work will span both.

What happens during a typical day at a graphic design business?

Here’s how your day might typically be spent:

  • Developing new business on the phone or at business networking or social events
  • Connecting with photographers, illustrators, freelance graphic designers and others with whom you might collaborate now or in the future
  • Executing projects for clients
  • Supervising the creative work of employees or freelancers
  • Handling the day-to-day responsibilities associated with running a business, such as billing clients and paying bills

What is the target market?

Some graphic design studios get the bulk of their work from advertising agencies while others promote their services directly to clients. Many work for both client types. Some studios might specialize in a certain type of client, such as non-profit organizations or business-to-business firms. Others might focus on a particular practice, such as logo development or packaging design.

What are the costs involved in opening a graphic design business?

Many graphic design businesses start at home, with no employees. Your main expenses in that case will be the computer and design programs required to get the work done. Those programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others.

You can now buy Adobe on the cloud for a monthly subscription fee of $40 or $50 depending on the bundle. Also, check out this article about the availability of free graphic design software. You might have additional costs for development of your own website and for printing sales materials such as business cards, brochures or promotional items.

Even with all of that, it’s easy to imagine being able to open for business after spending less than $2,000. Just remember, unless you can generate revenue immediately you should also have a nest egg large enough to support you before you start seeing a steady income stream.

How does a graphic design business make money?

Graphic design studio owners charge their clients an hourly rate or bill by a flat fee based on their hourly rate. If there are ongoing assignments they might negotiate a monthly retainer.

What is the growth potential for a graphic design business?

Many studios are sole proprietors or small partnerships. They operate on their own, hiring project help when needed. However, there’s virtually no limit to growth potential except your sales success. You can hire talent and support staff as your reputation and your business grow. The largest are multinational firms with offices in major cities across the world and rosters of Fortune 500 brands.

How much can you charge customers?

First, establish an hourly rate. For some client relationships, you’ll keep track of your time and charge that rate. But since many clients will feel more secure knowing the cost upfront (and you’ll avoid arguments after invoicing) you might be better off charging a flat fee for every project based on your estimation of how long the project will take.

Many graphic designers and studio owners charge an hourly rate of somewhere between $75 and $100. You probably won’t want to go lower than $75 unless you’re guaranteed many billable hours. And you might want to go higher if the competitive situation allows a higher rate.

Here’s a good article on what several graphic designers charge and how they bill their clients. You’ll see that it’s fairly common to get a third to one-half of the flat rate up front, especially if it’s a costly or long-term assignment.

How much profit can a graphic design business make?

Experts say that a graphic design studio must make at least a 15 percent profit margin and that a preferred rate is 50 percent or higher. That’s based on the rate you’ll charge your clients minus the out-of-pocket costs to get the job done: your employees’ hourly rate or the costs of hiring freelancers to complete the job.

What are the ongoing expenses for a graphic design business?

In the beginning, you’ll probably work alone and from your home. As your business grows you might eventually have ongoing expenses related to studio rent and employee costs—including taxes and healthcare benefits.

You might have monthly subscription costs of less than a hundred dollars for your graphic design software. And you’ll have to pay vendors such as freelance designers, photographers, illustrators and copywriters. While those expenses will be billed into your invoice, you might have to pay the vendors before your clients pay you. (That’s one reason it’s such a good idea to get a portion of the project fee paid in advance.)

How can you make your business more profitable?

Graphic design studio owners sometimes develop sideline businesses that also use their artistic skills. This might include art and jewelry design, t-shirts, book jacket design, web development and photography, to name a few possible areas of expansion. You might also consider partnering with a copywriter and forming an advertising agency.

What are the key steps to start a graphic design business?

Once you’re ready to start your graphic design business, follow these easy steps to ensure that your business is legally compliant and focus on growing your business.

1. Write A Business Plan.

Writing a business plan for your small business is key in getting your new graphic design business venture off to the its best start. Lenders won’t even consider your request for a loan without a written business plan in hand. Also, the process of preparing a business plan forces you as an entrepreneur to consider every aspect of the company’s operations. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even. Don’t skimp on this crucial step.

2. Choose A Company Name.

When choosing a company name, pick a name that easily fits into a web address or domain name. Your web address should be easy to type, simple but catchy. Every business has an internet presence nowadays. You must be sure that your graphic design business is on the internet as well. Once you pick a company name for your graphic design business , make sure to register the domain name quickly, before someone else does. You may also want to get not only the .com version of the name, but the .biz and .info versions as well, so that competitors don’t encroach on your business by grabbing your domain with a different extension. You may regret not having these additional domains when your company grows and becomes successful.

3. Incorporate Your Business.

One of the primary advantages to incorporating your graphic design business is the fact that you can then enjoy limited liability. As a sole proprietorship, of a graphic design business, you assume all the liability of the company. Your personal assets, such as your house and car can be seized to pay the debts of your business.

When you incorporate your graphic design business, you become a shareholder in the corporation. As a shareholder in the corporation, you can’t be held responsible for the debts of the corporation. Your liability as an individual shareholder of the graphic design business is limited to the amount you have invested in the company. In today’s litigious society, it is best to protect yourself, and separate your personal assets from the graphic design business’s company assets.

4. File For A Tax Identification Number.

There are several types of tax id numbers:

*A Federal EIN Number – The Federal Tax Identification Number is used to identify a business entity and is required for employers and corporations as well as partnerships.

*A State Sales Tax Id – Sales tax id number or sales tax exemption certificate is a legal document issued by the state. This certificate of authority gives your business the authority to collect the required sales and use taxes, and to issue appropriate sales tax exemption documents, including resale certificates used for purchasing inventory

*A State EIN Number – A state specific Tax Identification Number. Check your state regulations to see if it is required.

5. Examine Your Competition.

Examine your competition in the graphic design business industry – your clients will. Compare your business ideas against your competitors. Determine what are your strengths and weaknesses are. Compare them and determine how to strengthen your weaknesses and how to emphasize your strengths. Your clients will compare your graphic design business services with others before choosing – so make sure you offer your clients a service they can’t refuse.

6. Calculate Your Fees.

Since you will be working on your own you will need to determine your wages. Keep in mind that you will need to pay for self-employment taxes, insurances, supplies and education. Make sure when calculating your fee to include all of your expenses and what you need to make a profit. Make sure your rates are competitive or you can justify why you are charging more than your competitors. Remember, your potential clients aren’t always looking for the cheapest graphic design business. They want dependability, reliability and genuine quality service from a skilled and professional graphic designer.

7. Create A Logo.

A logo is also a very important element for your graphic design business, especially since graphic design is the key service you are offering!. A logo clearly sets the tone and presents a graphic representation of your business and it’s value – providing your graphic design business with an extra level of professional presence. You need to provide your clients with a sense of legitimacy, as they will be entrusting you with their graphic design business needs.

A great logo should be eye catching and visually appealing, without being too garish or flashy. Your logo is often the first impression a potential client will get of your graphic design business services. So it is best to have a professional design that is timeless, that can stand as your business identity for years to come.

8. Create A Website.

Hire a website developer or use one of the many do-it-yourself online companies that offer you an assortment of website templates, where you can enter your own content. Be sure to choose a template that relates to the graphic design business industry.

Keep your website simple and to the point. Start with a home page, which describes your business and the services you offer. Then include a page that provides your professional biography and credentials as well as a photo. A web form that allows potential clients to enter their information for quote by phone is a nice feature. Don’t forget a page that provides your contact information. Include a payment form where clients can pay for your services using a credit card or electronic check, if advance payment or a deposit for your services is required.

9. Find Clients.

You will need to advertise, market and promote your graphic design business in order to attract clients. Make sure to prepare a budget for maintaining your a website, getting business cards, ordering fliers, and sending out a press releases. Offering a special incentive to your first clients could help speed up your client acquisition process.

10. Keep Learning.

Stay current within your field of graphic design. Sign up for free newsletters and subscribe to magazines and newspapers designed for those in the graphic design  industry. This will help you stay in touch with the newest trends in the graphic design business world. The more knowledgeable you are about graphic design, the more likely to you are to succeed.

GROWING YOUR BUSINESS

How to promote & market a graphic design business

The quality of your work is your best means of self-promotion. The look you create in your logo, signage, website, business cards and even the interior design of your studio speaks volumes about your capabilities, so be sure to give the aesthetics surrounding your business the special attention it deserves.

Many future graphic design studio owners start by working for ad agencies or other studios. If that’s your route, remember to keep electronic copies of your best work for self-promotion when you open your own business. You should have a website that showcases your style and serves as your portfolio for when you start pitching your own business.

If you can get an ongoing relationship with one or more ad agencies or branding firms, this can be a strategy for getting assignments from clients you wouldn’t yet be able to gain on your own until you’ve enhanced your creative reputation. Partnering with a more senior graphic designer can be another foot in the door for work that wouldn’t otherwise be available to you.

And finally, establish great working relationships with clients and keep track of their career comings and goings. Marketing directors who leave one position for a promotion elsewhere might bring you access to new client work while you retain good relations with the former workplaces.

How to keep customers coming back

Define yourself. What sort of a studio do you want to be? Are you going to work with ad agencies or initiate a client roster on your own? Is there a particular business sector with which you have experience or an interest?

Keep in mind as you develop business that every client is your best salesperson. Don’t be afraid to ask them for referrals. Here’s an excellent article on making your existing customers part of your ongoing new-business strategy.

LEGAL CONSIDERATIONS

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a graphic design business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:

Service Contract

In businesses where services are provided on an extended basis, a service contract is often put in place outlining terms and conditions of service. Graphic design companies should require clients to sign a service agreement before starting a new project. Such agreements clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership (who will ultimately own the design). Here is an example of one such services agreement: AIGA Standard Form of Agreement for Design Services