Starting a Web Design Business: Month One

Posted by Crystal on Jun 28, 2010 in Management | 10 comments

For anyone with similar dreams or aspirations, hopefully this series can be of inspiration. Note that posting here on TFC might take a downfall in frequency as I’ll be working hard on setting up and maintaining my new found web presence over at the XHTML Shop. However, in a few months it will hopefully be back to normal.

Now, without further a due…

As previously mentioned, you can check out the new design company here: XHTML Shop.

Forever Changing My Mind

Setting up the new site took a lot of planning, and I can’t even begin to count how many times I decided to revamp my look, overall business plan, and even goals. It was very public for a while — a constantly changing design and constantly changing business, so it seemed, for anyone who happened to stumble across the domain. One week it seemed the XHTML Shop was only going to offer PSD to XHTML services, the next was to sell an array of premade WordPress themes and premium web templates.

Finally, though, I made up my mind. I sat down (approx. at the beginning of June) and wrote down what I really wanted to accomplish. I wrote my thoughts down first in plain English, then more in the sense of a rough business plan. I finally wrote down what I wanted to do professionally by determining what I would enjoy doing on a day-to-day basis. To do so, I analyzed what I already do in my spare time:

• I design WordPress themes
• I design static web designs
• I love to write/blog/copywrite
• I make some pretty cool custom web apps as well

I then realized if I only focused my business in one area, I would feel neglected throughout the business’s lifetime in another. So, I found a way to integrate them all into one solid business plan. I’d create a web development firm that offers the following solutions: web design, blog design, and custom web applications. I’d also give it a blog for some marketing effort, and in the future I plan to release a few publications related to the web design field under the XHTML Shop brand. (Similar to what Smashing Magazine has recently started doing.) All this would cover what I do best, and the things that I could manage best when I got to the point of outsourcing and eventually hiring others.

Dealing with the Fears

One emotional thing I dealt with while setting things up and planning was fear: fear of rejection. This hasn’t only been within the last month, but within the last several years. These fears probably contribute nearly 100% of the reasoning I haven’t tried to create a web design business yet. So just a note on dealing with fears: what I’ve learned is that no matter what kind of fear it is, personal or professional, don’t let it overrun your life. I’m here to jump in and make mistakes with my new firm, and even more bravely, confess it all here.

So here are a few things I vow not to fear throughout this process:

• Making mistakes – Perfectionism is not an option, not now, or in the future. I’ll never reach it, and I can only grow as a designer and grow my business. Why fret over it?
• Being rejected by clients -I have to keep in mind that even my most admired design firms or freelancers have had clients reject them. If it’s for a mistake I made, I’ll learn from it. If not, I have to understand that these things just happen.
  
• Being rejected by those in the design community – Nothing I haven’t dealt with before. Others can be mean, critical, and hurtful. However, I have to remember that many in the design community are great people, and very helpful. One bad criticism on my work or my company should never hurt me long-term.
  
• Losing money – What business doesn’t at first? If I go into a few months of famine, I just need to keep working harder.
• The feast-or-famine cycle of starting a small business – I’ve been a freelancer for a few years now. I’ve survived this far!
• Letting out my own true design style, and embracing others’ styles – I often feel the temptation to repeat other successful businesses styles, and when I try to let out my own style and talents, I feel too exposed. I shouldn’t fear this, ever. Individuality is the key to success, after all.

Getting Out of Debt & Saving Up

I realize not everyone is in the same boat with me on this one, but I thought I’d share it anyway for anyone that may be going through something similar. For the past few years, I’ve been riddled with debt. Not an excessive amount, but enough to reach my small credit card’s limits. (Hence the inspiration for this post: How to Beat Debt as a Freelancer)

Earlier this month, after about 3 years, I am completely free of credit card debt. The only way I got free of it was by moving into my parent’s home for a few months (I’m still pretty young so it’s not super embarrassing!), getting a part-time job at $8/hr. and working nearly 40 hr weeks, and then still freelancing on top of that. After four months of consistent really hard work, I finally ended up with a positive balance of $130 in my account. I wanted to get out of debt fast so I could start this business on the right foot, while still living on my own again.

Whether you have a similar situation, or just not a lot of money in the bank to start off with, I highly recommend paying off any previous debts and saving up first. I’m still going to save up $500 minimum to move out on my own again, and really begin maintaining my business. At the same time, I plan on doing most of the work myself to build up more of an income base: design, development, marketing, etc. It won’t be until the future where I’ll feel comfortable financially outsourcing some of the work.

Given my specific situation, $500 is a lot from where I was. I may still get a part-time job the first several months of maintaining my business as well. However, for others, I’d recommend saving up an even larger amount — thousands if necessary. If you have a family, house payment, insurance, etc. to deal with, saving up more is definitely essential.

When I got that first $130 in the bank, I decided to get started. I first bought a few personal items that I’d wanted for awhile: a few groceries, new shoes, a new dress, a book — things I deserved after all my hard work! Then, with about $40 left, I bought the domain name, set up the WordPress theme, and began creating the content for the XHTML Shop.

I’m all set up, and ready to begin: with $3.56 in the bank. Ready or not, here I come.

Of course, I would never allow my balance to get that close to zero again if I weren’t still living with my parents, and literally couldn’t live for free. I still have two more paychecks coming from my part-time job, which I estimate will total about $700, and an estimated $500 coming from freelance jobs within the next few weeks as well. My plan is to not spend any more on my business until I am fully financially stable again and living on my own.

In the meantime, I will market for free, do all my own work, and get a first few clients accomplished. My goal is that only after that, I will decide to take it to the next level and start outsourcing pieces of the business for better efficiency.

Current Business Model & Legal Issues

Based in Iowa, I looked up the various business models available for what I was looking to do. Of course, if looking to building your own firm, do a quick Google Search for the legal requirements and business types in your own State/Country. Fortunately, Iowa’s sole proprietor business model is the simplest form that I already have set up as a freelancer. It’s definition is as follows:

“The sole proprietorship is the oldest, most common, and simplest form of business organization. A sole proprietorship is a business entity owned and managed by one person. The sole proprietorship can be organized very informally, is not subject to much federal or state regulation, and is relatively simple to manage and control.

The prevalent characteristic of a sole proprietorship is that the owner is inseparable from the business. Because they are the same entity, the owner of a sole proprietorship has complete control over the business, its operations, and is financially and legally responsible for all debts and legal actions against the business. Another aspect of the “same entity” aspect is that taxes on a sole proprietorship are determined at the personal income tax rate of the owner. In other words, a sole proprietorship does not pay taxes separately from the owner.

A sole proprietorship is a good business organization for an individual starting a business that will remain small, does not have great exposure to liability, and does not justify the expenses of incorporating and ongoing corporate formalities.”

Because there are no incorporation fees and because of it’s simplicity, I decided that I’ll keep with this model as long as I am maintaining the business myself. It would be the most practical financially for now, but of course when I grow my business to the point where I’ll want to separate my taxes or hire professionals, I’ll need to change my business model and officially license it. This would also be the point where I’ll want to hire legal services.

For now, let’s keep the business legality simple: sole-proprietorship, hire a tax man at the end of the year, and just try to keep my records as clean as possible.

Accomplished So Far in Month One:

• Got out of debt and set up shop!
• Wrote copy for the entire website.
• Got at least three example designs in the portfolio. (These are indeed fictional clients.)
• Set up social media accounts: Facebook, Twitter, Flickr
• Set up a Google Voice number for a business phone number: (515)344-4247 (still need to set up an outgoing voicemail message)
• Saved up a few hundred extra for the next few months of excitement!

Goals for Next Month:

• Get at least 5 articles done for the blog. I may not maintain this regularly at first, but these will provide for a good base.
• Market via social media and obtain first client through the business.
• Add 6 more pieces to the portfolio, whether they be from real clients or just samples.
• Create 2 free WordPress themes for marketing purposes.
• Set up more official contract, proposal, and quote documents relevant to the brand.

What Are Your Experiences?

Have any of you guys ever dreamt of going bigger and better, or would many of you prefer staying freelancers throughout your career? Either way, what were some challenges you faced when starting up your own business?