Starting your own business has many benefits, including flexible work hours, choosing the projects you want to work on, and more. If you're a skilled graphic designer looking to be your own boss, starting a graphic design business might be the ideal option.
Let’s explore the steps you need to take to start a graphic design business.
Step 1: Know your value proposition
To communicate the unique value of your graphic design services and distinguish them from these threats and competing design firms, you need a clear value proposition.
A strong value proposition clearly and concisely communicates the benefits customers receive when choosing your services over others. To develop this, consider these key questions:
- What exactly is my brand offering?
- What specific needs will customers hire my business to address?
- Who are my competitors – companies, products, or services – who fulfill that same need?
- What unique qualities set my services apart from those competitors?
Additionally, identify your target customers and the types of clients you wish to serve. Understand their challenges and how your design services can effectively solve each situation. Clients seek reassurance that your expertise can help solve their problems, so demonstrating your ability to address their needs is crucial.
Step 2: Consider starting a side hustle
If you’re new to business or looking to build your portfolio, consider starting with a few side jobs. Many freelance graphic designers start their careers as a side hustle while keeping their full-time jobs. This allows you to explore the field and build a client list while not heavily depending on freelance income right away.
As you gain experience and strengthen your reputation, gradually take on more freelance projects. This could mean exploring a broader variety of assignments or reaching out to new clients. Taking this gradual approach is also an effective way to grow your portfolio.
Step 3: Create a business plan
A business plan is critical for any new business owner, but especially for graphic designers since the market is so competitive.
A well-thought-out plan can help you make key business decisions, set important goals for growth, and identify potential challenges. Business plans can also help you get funding or bring on new business partners.
Here’s a suggested template for your graphic design business plan:
- Executive summary: A brief overview of your graphic design business and why it will be successful
- Company description: Detail information about your business and explain your competitive advantages
- Service offerings: List the types of graphic design services you will offer.
- Organization and management: How will your company will be structured and who will run it.
- Market analysis: What is the industry outlook? Who are your target customers? What competition are you up against?
- Financing plan: A description of your funding requirements, your detailed financial statements, and a financial statement analysis.
- Marketing strategy: What is your overall plan for reaching prospects and turning them into customers? Communicate your advantage over a potential competitor.
Step 4: Choose a business name
When choosing a name for your business, pick one that is easy to remember, describes what you do, and suits your brand.
If you intend to form an LLC or corporation, be aware that each state has different requirements, including words that are required, restricted, or prohibited. For example, depending on the state, you may not be allowed to use words such as “cooperative” or “industrial” in your business name.
If you choose to operate your graphic design business under a name other than your personal name (if you are a sole proprietor) or legal entity name (if you are an LLC or corporation), you will need to register that name with local and/or state governments in a process known as filing a “doing business as” (DBA) name.
For more information, see:
Step 5: Choosing a business structure
Your choice of business structure for your graphic design business will impact your daily operations, taxes, and the amount of risk you’re willing to take with your personal assets. When choosing a business structure, you’ll need to balance legal protections with potential benefits.
The four most common business structures are:
- Sole proprietorship: This business is owned and operated by a single individual, meaning there is no legal separation between the owner and the business. Consequently, the owner is personally responsible for all debts and obligations incurred by the business. No state filing is necessary to establish a sole proprietorship.
- General partnership: A general partnership is the most straightforward form of partnership and is formed automatically when two or more individuals start a business with the intention of making a profit. In a general partnership, the owners face unlimited personal liability for the debts of the business, which also extends to actions taken by employees. There is no need for state registration.
- Limited liability company (LLC): An LLC offers limited liability protection (by separating the business assets of the company from the personal assets of the owners) and pass-through taxation.
- Corporation: A corporation is a separate legal entity owned by its shareholders, thereby protecting owners from personal liability for corporate debts and obligations.
For more information on business entity structures, read Comparing company types and Compare S corporation vs LLC.
Step 6: Understand legal requirements for a graphic design business
Your graphic design business may be subject to various legal requirements depending on your business structure and location. Consider the following:
- Business licensing: Most businesses are subject to general registration, licensing, and other requirements.
- Forming an LLC or corporation: If you form an LLC or corporation, you will need to file formation documents with the state. You will also need to obtain an EIN and fulfill other requirements such as getting a registered agent.
- Register with the Department of Revenue: Your graphic design business may need to register with your State Department of Revenue.
- If you hire employees: There are various requirements if you plan on hiring employees, such as having an EIN and registering with the Department of Labor in your state.
- File a DBA: Doing business under an assumed name (also known as a trade name or fictitious business name) requires a DBA filing with either the state or local jurisdiction.
- Home-based business rules: If you intend to operate your business from home, check local zoning regulations and determine if your Homeowners Association (HOA) or landlord has any restrictions on operating from your residence. Some jurisdictions also require home-based businesses to obtain a home occupation permit.
For more information, see What are the legal requirements for starting a small business?
Step 7: Open a business bank account and credit card
By law, LLCs and corporations must keep their business finances separate from the owner's personal accounts. Having a dedicated business bank account and credit card for business-related expenses can protect your liability and safeguard your personal assets in the event of a lawsuit or liability situation.
Even if your business is not structured as an LLC or corporation, maintaining separate finances is advisable for tax reasons. Additionally, using a business credit card can help you build your business credit, which suppliers and vendors will check prior to working with you. Set up your business accounts as soon as you begin incurring business expenses or receiving payments.
Step 8: Establish a pricing plan
The right pricing strategy can attract clients, foster long-term relationships, and position you as a valuable asset to your clients' ventures.
Below are common graphic design pricing models:
- Hourly rate: This conventional pricing approach involves billing clients based on the total hours dedicated to a project. It's suitable for small tasks and ongoing assignments.
- Project-based pricing: In this model, you set a fixed fee for the entire project, making it ideal for well-defined jobs with specific scopes and timelines.
- Value-based pricing: You determine your rate based on the perceived worth of your service to the customer. This approach is commonly applied to high-stakes projects for established businesses.
- Retainer pricing: Clients pay a monthly fee for a set number of hours. This ensures you are available for ongoing projects as needed. This model is frequently used with long-term clients who need regular design services.
Step 9: Create contracts and agreements
Don’t sign up for any new client work without a contract!
Written contracts and agreements are essential for protecting both your business and your clients. These documents should clearly outline the project's scope, timelines, payment terms, and intellectual property rights. It is advisable to consult with a legal professional to ensure that your contracts are thorough and legally valid.
If a client requests changes to the scope of work after a contract has been signed, it is important to amend the document and obtain the necessary signatures before proceeding.
Step 10: Remain relevant
Staying updated on the latest trends and technologies is important to stay relevant in this industry. You may not be involved in every new trend, but being able to talk about them is essential.
AI can handle some design tasks, but it can't match human creativity. Graphic designers are still crucial because they understand design principles and have a trained sense of what looks good. This helps them create visuals that stand out, unlike the often template-based, or AI-generated designs.
Ready to start your own business?
Discover how to launch your own graphic design business with our comprehensive guide. Get expert tips, essential tools, and step-by-step instructions. For more information, contact us today.
