How to start a web design company

Who is a web design business suited to?

Nearly everyone has a next door neighbour whose ‘genius’ sixteen-year-old is a web designer. But it’s safe to say, that’s not really the level you’re at once you start thinking ‘web design business’. If you are planning on setting up a web design agency, you need to aim higher than the standard-issue sites born of amateur enthusiasm: web design is a highly competitive area.

The dot-com bubble has long burst, but nowadays, just about every business needs online presence. As Ross Williams of Rawnet Ltd explains: “In the beginning there was a rush for everyone to have a website. Now the focus is on the most innovative and exciting. Brands have to continuously refresh their websites.” Whether it’s through new design or the latest in interactive content, the current trend for innovation means that web developers and designers really need to keep up-to-date with the latest technologies and to keep the creative juices flowing in order to beat the competition.

The thing is, web design is a problematic industry. There’s a pretty low barrier to entry, in that you can become a web designer with very little outlay. It’s open to anyone who can teach themselves the tools of the trade. But at the lower end of the spectrum, there are many, many companies fighting for the same small amount of work. It’s an easy market to enter, but at the same time it’s quite difficult to make a success of things. “It’s a different industry now to ten years ago,” Andy Budd of Clearleft explains. “Then, the industry itself was quite immature, so you could get a foothold really quickly. Now, the quality of design work is so high, that you have to be really, really good to actually get work.”

How to become a web designer: getting started

The good thing about web design is that it doesn’t take very much to start an agency up. You don’t need to put more than a few hundred in the pot, really. Especially if you aim to grow, like so many others, organically from your living room. And you don’t need to have a doctorate in online design or advanced programming, either. Perhaps the most important skills and qualifications for starting in web design are a certain amount of know-how, an open mind and a thirst for knowledge.

That certainly was the case for Ross Williams of Rawnet Ltd: “1998 was a very different time, when we didn’t know if there were boundaries and what they could possibly be. I knew enough about web design and development to get started. But I learned by doing.” Although Ross was IT literate, he says he wasn’t a programmer. He learned web development techniques when clients wanted to add databases and interactivity to standard websites, and so on. This ‘learn as you go’ approach seems to have been quite common, and certainly has worked for a number of web design companies. But it is perhaps a risky way to go if you are entering the tough market of the 2010s.

While you don’t necessarily need to have several letters after your name, or to be a figure in the industry before starting up, it may make life easier if you are well-known – or at least well read – first. It’s not a bad idea to work towards this: why not aim to establish a reputation as an expert in your field? That way you can differentiate your business from the legion already established in the industry.

This approach worked very well for Andy Budd of Clearleft, whose company was named Web Design Agency of the year 2009. The three founders of the company had fairly solid profiles online before setting up shop. “We set up blogs talking about art and design philosophy and our activities, and what we thought made a good website,” Andy explains. “And because of that, all independently, we got fairly good followings. Off the back of that most of us were writing or had written books, which again certified our position as experts. And we had started talking at conferences and events.” By the time it came to the stage of setting up, people were really excited for the company. Which, of course, is a big help for any start-up.

But it’s not a personal brand thing – it’s about the company’s profile. “I personally think that if you want to set up a company that really focuses on doing quality work, you have to get yourself known as a quality agency,” Andy Budd explains. “Being perceived as the expert in the particular field, whether it’s the UeX field, which is what we’re offering, or experts at Java Script interaction, or HTML5, or expert design; if you get perceived as an expert, then you get the benefit of word-of-mouth marketing. If you don’t have that, I think it’s much more difficult to get a foothold.”

Christian Stanley of Crumpled Dog, specialises in design in this way. But it was traditional design rather than web design that was the focus first off. For a business that was originally started by his father in 1968, this is perhaps no surprise. “Web was a natural evolution and came out of a realisation that traditional design and artwork was a shrinking marketplace,” he explains. There are many design agencies that add web design as a string to their bow like this, and make their name in the area. Anyone can build a website after all: but a good web design agency sells an idea, a strategy, a look and a feel – not just a vanilla build.

Web design or web development?

Not everyone specialises, though. There are a lot of generic agencies out there that do everything. Their offer includes the design, the front end programming and the back end programming. Sometimes they do the marketing and the SEO as well. But establishing yourself as a one-stop-shop is not necessarily the best idea. “I see a lot of generic agencies trying to do it all,” says Andy Budd or Clearleft, “and what tends to happen is that if you try to do everything, you don’t do anything particularly well.”

Web design and web development very much go together. But they are very different skill sets. It’s worth noting that not all of the web design agencies we spoke with specialise in programming. Or even development and build.

“In the beginning, Rawnet focused on both web development and design as the business was just me and the two go very much hand in hand,” Ross Williams says. “I worked with my clients to find out what it was they wanted and provided them with creative solutions that I knew were possible based on my web development skills.” But later, when it became possible, Ross sought out employees with specific skills, including a web developer and a creative director.

“Web design agencies are like architects for websites,” Andy Budd of Clearleft explains. “A lot of detailed planning goes into what we do. We’ll try to help the client create a whole concept to their site and map out all the interactions, and work out a persuasive flow of information for the site. We develop a website blueprint, with diagrams and stuff like that to give the design context.” But they don’t do the build.

Clearleft pass their plans over to particular engineers and programmers to construct the site. Specialist designers focus more on the strategic side of the website. “We realised that we were never going to be the best programmers in the world,” Andy says. “So rather than selling a service and offering brilliant design, but giving our clients a lesser service in programming, we decided to focus on just one particular thing.” If you choose to go down this route, you can work with a variety of different developers to programme in different languages, or builds. And lots of the bigger clients have in-house teams.

If you are planning to focus mostly on design, having a house style isn’t such a bad idea. Just be aware that if you do focus on one particular style, if that style goes out of fashion, your agency will go out of fashion as well!

Pricing and how much can you earn as a web designer

Pricing is a bit of a sore point in web design. As Christian Stanley of Crumpled Dog design explains: “Everyone believes they can buy a website for a few hundred quid online. Which they can! But design and bespoke consultancy then goes out the window…” Costing projects can be a nightmare. The infamous ‘scope creep’ is always an issue. “A brief morphs during the production process,” Christian explains. “The market moves fast and the possibilities seem, and indeed are, limitless. Cost control becomes a major factor.” Cost control can be blamed for the demise of many start-ups.

To save your fledgling company from this fate, remember: everything has a value. Ideas are currency and time is money, so the idea is to charge for ideas and time. Some ideas have intrinsic value, some are just part of an hourly rate.

A lot of people don’t know how to price for their work. When you’re starting out, make a point of understanding how web design agencies price their work. “You should research what the average daily rates are, and be firm with how much you charge,” advises Andy Budd of Clearleft. “You have a lot of creativity and you should be charging a decent amount of money for it.” In the web design field, there are a lot of new designers who are charging £500 for a whole website. But if it takes two weeks, and you’re charging £50 a day, that is really not enough to cover your costs, let alone make a profit on skilled labour.

In terms of industry standards, the Design Business Association advises businesses to divide turnover by the number of billable hours (not 7 days a week and not every hour of the day – don’t forget holidays also!) by the number of people. This tells you how much each person is turning over and what percentage of available billable hours are being charged. It will be a lower percentage the less profitable you are.

Be aware that there is no easy money in the web design game. There is a pretty solid glass ceiling. Companies such as Clearleft which create websites for major companies, such as Mozilla, Gumtree and WWF, can charge “tens if not hundreds of thousands”. But new people in the industry are charging very small amounts of money.

“At the lower end of the market, the companies small web agencies deal with only have a small amount to spend,” Andy explains. “And it’s very hard to develop a great website on such a small budget!” Clients do not want to hear this: they want to squeeze the maximum value from their money. And somebody else behind you will always be doing it cheaper. Andy’s advice? “If you’re constantly competing on price in a commodity market, you’re never going to get out of that. So don’t focus on price! To run a web design business, you need to distinguish yourself.”

The quality and service you give your clients will reflect what you charge. As Ross of Rawnet Ltd says, “The price should be based on the value to the customer rather than your cost.” The only thing to do, as you offer a better and better service, is start charging more. And you can only do that if you are constantly pushing and striving to get better clients who are willing to pay more for better services.

If a client is playing hardball, don’t be afraid to push back. “A lot of the time, if you can go back to your client and you explain why your work is worth the money, it will bring more value to your company,” Andy Budd advises. But be warned: a lot of people get fed up. Pricing really is a big issue.

Growing your web design business

In an area as fast moving as web design, keeping afloat requires you to grow. Not necessarily in terms of staff numbers or turnover – these are just general business indicators. Particular to the web design industry is the imperative to grow your knowledge base. You will put yourself at a serious disadvantage if you do not keep abreast of new trends in design and technology.

Luckily enough, as Andy Budd of Clearleft has it, generally people in the web design field are creative people who are willing to relinquish some of their earning potential in exchange for doing work they really love. And because of that, you find people are constantly wanting to learn more and expand their abilities. Fine tuning your expertise is part of growing and developing your business. So buy books on a regular basis; subscribe to regular magazines, like .Net, or Wired magazine. Consume a wealth of websites in your field. Browse agency blogs and industry online articles and magazines – read all the information. Go to workshops and to conferences and learn about new technologies. This will give you the edge over your competition. “Your ability to learn is directly related to your knowledge and your skill,” Andy explains. “So if you want to earn more money, you just need to be better!” Conferences and workshops are more than interesting and relevant: they are an investment in your business.

We should note here, that Andy has declared an interest: he runs a conference called ‘d.Construct’ in Brighton every year for web design professionals. But he makes a convincing argument: “It’s a really good way of learning about how to get into the industry, learning about what hot topics are coming up, getting your information about what way you might want to go. It’s also a really good way of meeting other designers, and sharing tips and sharing tricks. A lot of conferences involve workshops, where you can learn new skills.”

Looking at continuing education and development from a business perspective, if you’re running a business, it’s not a bad idea to offer your staff that kind of activity. It gives staff something above and beyond a salary to motivate them. One of the things Clearleft do, is to give everyone in the company a £1,000 training budget to spend it however they want. “It might be going to workshops to pick up new skills they want to learn, or it might be to go to conferences,” Andy says. “But giving people a motivation to learn is really important, particularly if you want to be one of the best practitioners — you can only do that if you have the best people. And you can only keep the best people by constantly keeping them motivated and learning.”

Christian Stanley of Crumpled Dog agrees that new ideas and approaches are key: “Employ young, enthusiastic people with passion, they will bring ideas and technologies. And use the core team to monetise that enthusiasm!”

Of course, like any business, when you’re starting out in web design, the best and most effective way to establish and promote your company is by word-of-mouth. “A good recommendation will secure you more business than any advertisement,” advises Ross Williams of Rawnet. “Focus on delivering high quality work within agreed timelines and your customers will do your advertising for you.” Networking, or, as Christian Stanley of Crumpled Dog puts it, “tarting at network events” can work wonders, too. LinkedIn Groups are a great way to make connections along with networking events and collaborative working spaces such as TechHub and Lemon Studios.

Just don’t grow too fast. “We always wanted to be a successful business,” says Andy Budd of Clearleft, “but we’ve never wanted to be huge.” A lot of web design agencies grow too quickly. If you get popular, you may end up turning down a lot of work. Take it on the chin. It’s best to grow at a manageable pace. Learn from others’ experience: “Back in the dot com years, I saw a lot of agencies grow too quickly,” warns Andy. “They were adding extra staff on in preparation for this massive rush of people…. But when the downturn came, they had to lay off half of their staff. And that can be very costly.” It’s fair to say, he’s talking reputation as much as anything else. As your web agency establishes itself, just make sure to keep your ambition in check – for the sake of your business.

Tips and useful contacts

Tips for success

Specialise – Choose to focus on a particular sector: so you could go after the museums or charity sector, for instance. By doing that you get really in depth information and a real understanding of the sector. You can become known in that industry as the best premier designer for universities, museums, etc. Having that specialism, from an industry point of view, and also from a company’s point of view, is a really good idea: it’s a brand value.
Watch out for ‘scope creep’ – Sign off spec, and sign off each stage of production. Changes later drain resources and demoralize. Know your limits, and get paid help if you are going beyond them.
Have a good website – A website is your shop window, whether you’re selling goods or services online. Web design and development business are selling creativity, skills and technology, so they need to make sure that their website shows off their capabilities. Customers will not trust you with their website if you’re not able to entice them with your own.
Control cashflow – Take a deposit, invoice in stage payments and spend at least some money on regular targeted sales activity. Play to the areas you know – nothing works better than a relevant case study.

Useful links