How to Start a Graphic Design Business - What You Need To Know To Reach Success

16

Min Read

Tom Smery

A graphic design business is something that can be a great hit these days. Most of these businesses begin with freelancers looking to go pro, but there are certain steps that you will need to take in the process. So, how to start a graphic design business? What is the right procedure to follow?

As long as you are willing to put effort into it, the process should be straightforward. Whether you are looking for particular steps or business advice, here is how you can start a graphic design business.

Note: if you want to be equipped with everything to run your freelance graphic design business, then try Bonsai. Our all-in-one product suite has proposal, invoice, and contract templates as well as tax tools to help you save money. Claim your 14-day free trial today.

What Do Graphic Designers Do?

As their name suggests, graphic designers are responsible for creating the visuals of digital and physical products. This can include marketing materials, logos, signs, and more. Even a simple CD cover may be done by a graphic designer.

In the early days, graphic designers would create images for physical products, such as packaging or paper ads. However, now they also include website elements such as layouts, background art, and many more other projects to help a business become visually appealing.

Types of Graphic Design Businesses

When starting a graphic design business, you need to determine the area you want to activate in. Graphic design is not exactly a "one size fits all," so you should go for the category that matches your skills the most:

  • Branding: Involves creating designs for brands and their brand development, such as color schemes or logo designs.
  • Advertisement: Advertising and marketing materials, such as the image of an ad.
  • Print Design: Print and layout design tasks - are very common when it comes to newspapers, magazines, and other printed materials.
  • Motion Graphics: Creating graphic designs for animations, motion videos, and many more.
  • Packaging: Creating the graphics for product labels and physical packaging, such as for companies that wish to deliver in specific box styles.
  • Website Graphics: Creating images and web design for business owners, both in desktop and mobile development.

The main advantage is that with most businesses moving online, graphic design work is highly in demand. With the right skills and perhaps some good design software, you may easily start your own graphic design business and reach success.

Steps on How to Start A Graphic Design Business

Many people wondering how to start a graphic design business are originally looking into the basic steps to get the business going. Here is what you need to do if you want to become a graphic designer.

Make Your Own Business Plan

Before you do anything, you have to set up a business plan. This plan will contain specific details about your business, such as:

  • What are the startup costs going to be?
  • Who is going to be your target market?
  • What will your business name be?
  • How much will you be charging your customers?

Every detail related to your business will have to go here, from who your first graphic design clients are going to be to whether you will require any business loans or not. It's a map of your business, one that you can use to determine its potential in the future.

This is also where you should be noting technicalities such as proposals, invoice examples, contracts, and many more. You won't have to go into too much detail, just the "how's" of the whole process. Tools such as Bonsai may be quite helpful in this regard. Claim your 14-day free trial and see for yourself.

Create the Legal Entity

Once you have prepared your plan, it is time to make things official and create a legal business entity. This is the point where you decide if you want to be a sole proprietorship, a business partner, an LLC or a corporation.

As a sole proprietor, your own name will be your business name as well. The only downside is that while you have full rights over the business and no one to answer to, you are also fully liable for everything.

On the other hand, if you go for an LLC or a corporation, then you may enjoy limited liability. This means that your personal assets will be protected in the event that your graphic design business gets sued.

Get Your Tax Registration

Now that you have your own business that brings you profit, the IRS will want to know what you are doing. This means that you need to register your graphic design business for state and federal taxes.

In order to do this, you must register for an employer identification number (EIN). This can be done through the website of the IRS, mail or fax.

Once you are done with the EIN, you need to see exactly which other freelance graphic designer taxes you have to pay, and how would you benefit from them. For example, in certain circumstances, an LLC would benefit more if they would be taxed as an S-corporation (S-corp).

Build a Client Base

You have officially set up your graphic design business, but now you have to start finding clients. A well-set client base will ensure that you will always have client work available.

Here are some ideas where you can start gathering clients for your graphic design business:

  • Freelance Facebook graphic design communities
  • Job boards
  • Industry events that you are invited to attend
  • Freelancing websites (i.e., Fiverr or Upwork)
  • Networking with other business owners from your industry
  • Groups and threads on various social media platforms

Even if you know how to start a graphic design business in terms of paperwork, most of that will be irrelevant unless you actually have a client base. Otherwise, you will only have a business and pay taxes, but no revenue will be coming your way - not even the kind needed to cover your business expenses.

Open a Small Business Bank Account

When you start a graphic design business, you will have a lot of money coming and going from your account. As a sole proprietor, you will be tempted to use your personal bank account in order to handle your finances - but to make it easier on you, you may want to open a separate business bank account instead.

When you are in the beginning, it is always better to keep your personal finances separate from your business finances. This way, you will be able to differentiate between expenses once tax season comes around the corner.

You might want to go for an account that makes matters as simple for you as possible. For example, we offer Bonsai Cash for those looking to open a business account.

Bonsai Tax is a useful accounting tool that will bring and track all of your expenses to one place.

Set Up an Accounting Measure

When you start a new business, it is crucial to understand the nature of your expenses: where the money is coming from, necessary expenses, all of these will gather up to inform you of your financial performance.

Freelance designers with a bigger client pool may be able to afford an accountant, but if you just started as a small business owner, then you may want to go for accounting software. Bonsai Accounting has all it takes for you to run a successful business.

Obtain the Permits and Licenses

Depending on your business structure, you may or may not need a business license. For example, in most states, sole proprietors do not need a license in order conduct their business online. These licenses are only required for LLCs and above, or if you have a DBA.

Not having this license when it is necessary might lead to you getting a hefty fine, so it is one step that you do not want to skip.

Aside from state licensing, you may also have to meet local regulatory requirements for a local license. Depending on where you live, a zoning permit may be necessary for you to continue doing business at home.

Obtain Business Insurance

Business licenses are not the only things necessary for you to operate in a lawful manner. When you start a graphic design business, you also need to set up business insurance. This will be your safety net in case your business gets sued.

Without business insurance, your personal assets will be at risk if you face a lawsuit. However, if you have business insurance, then the risk will not be as high - you will have your business insurance to fall on.

Small businesses can choose from a variety of business insurance policy types, but if you are just starting, you could go for General Liability Coverage. It is a good type of insurance when you don't know exactly what to expect.

Define the Brand

The next step on how to start a graphic design business is to define your brand. This is very important because the image of your brand will help serve your marketing plan and bring potential clients.

Start with your logo design. You are a graphic designer - it might be a good opportunity for you to show off your skills at this point. After that, you should come up with a business strategy that can help you market your brand.

The more you showcase your brand and logo design, the more chances you have for your potential customers to contact you. A good tip would be to start with ad agencies or companies working with printing materials, as this will help create an outline of your brand.

Set Up a Business Website

After your brand has been properly defined and you have a good image representing you, it is time to set up a website for your business. Nowadays, every client will look for services online. So, if you want to appear reliable and legitimate, your graphic design business will need a website.

You don't have to go for anything super fancy, nor it is mandatory to get a website developer to help you. All you will need is a website builder that can help you turn a basic website into a relatively more decent one for your business. Also, make sure it is mobile-friendly because most people are using their phones to browse the Internet.

Set Up a Contact System

Aside from working on your business model, you also need to work on your support system. This is why you must set up a contact system as well. How many clients you get will depend loosely on how many ways they will have to contact you.

Ideally, you should add email, telephone, or live chat as a way to be contacted. Clients love being given a sense of variety, and they can choose the method they feel more comfortable with.

If you set up a phone system, then you may want to get a separate number or phone for business purposes. This will offer your business a deeper sense of legitimacy.

DOs and DON'Ts when Starting a Graphic Design Business

As the owner of a graphic design business, following the setup steps is not the only thing you should focus on. Aside from doing things by the book, there are also a couple of extras that you must keep in mind. Here are some do's and don'ts that should get you on the right path.

DO Make the Business Plan as Early as Possible

Many small business owners leave the business plan until the late stages of their business setup, using their main idea to first "wing" the problem. However, by doing this, you might end up getting sidetracked in your design business before you even get started.

If you are planning to make a living out of graphic design, you need to get a business plan set up as early as possible. Think about who your partners will be, how you will be running your business, or who your graphic design clients are going to be.

Freelance graphic designers need a plan to make sure people know about their work. They will also require a plan to ensure they don't go all over the place in their pool of thoughts.

Don't rush the creation of your business plan. If several weeks will be needed for you to go over every detail, then that's exactly the way it should be.

DON'T Underestimate a Good Portfolio

You have made up a business plan, and you have already established a reliable line of graphic design clients. These people are continuously leaving reviews for your work, so you can expect other people to trust their referrals as well.

The problem is that nowadays, many graphic designers rely on their reviews to get clients, and do not place enough effort into creating a strong business portfolio. At some point, that portfolio will speak for itself, and it will act as constant advertising for your business.

Think about it this way: before clients pay for a project, they want to know that your graphic design style is the one they are looking for. Even if you aren't fit for that specific project, they may remember seeing your portfolio when they have a different project.

Your portfolio is like that product you put in the window of a shop, compelling people to come in. Without something good to look at, they will start looking elsewhere.

If you are in the beginning and do not have enough work under your name to set up a portfolio, then you might want to consider doing some pro bono stuff. There are many small business owners out there that are looking for this, and in return, you also receive free exposure. Read our guide on building a graphic design portfolio.

DO Remember the Value of Your Work

As sad as it may seem, many graphic designers do not know the value of their own work. As a result, they keep undercharging for their products and cutting prices so that they can actually make a sale.

As a freelance graphic designer, you need to know your worth and stop selling yourself short. In the graphic design industry, cheap clients are very common - and they will drain not only your time but also your talent and energy.

Don't go for the ones that minimize your value. If you want to run a successful design business, you must find graphic design clients that can recognize your value. Discover more tips for a graphic design contract.

DON'T Expect Success to Be Instant

We see a lot of people who own graphic design businesses and make a lot of money, but this won't bring you instant success from the very start. Even the biggest companies started from rock bottom, without a dime to their name.

You can expect months with no profit, and barely enough revenue to pay off your business expenses. A senior graphic designer will typically begin to see success within 3-5 years.

DO Get a Mentor

As a beginner graphic designer, you might not be too savvy about what makes the graphic design world spin. Therefore, you should not be afraid to get a mentor to help you and show you the way.

There are many professionals out there that gained success with their graphic design business, and they are often more than willing to help out. You may also want to take advantage of automation solutions that copy the moves of successful graphic designers, giving you a start.

Bonsai, for instance, has a variety of tools allowing you to set up graphic design automation. This can help when it comes to proposals, tax management and many more. Plus, in the Bonsai community, you are bound to find a mentor that can help you with insider tips.

DON'T Just Focus on Exposure

Many new business owners that start a graphic design company will do a lot of work they don't particularly want to, just so they can get some exposure. It may be a company that asks you to do free work for advertising, or someone asking for a project they are not particularly happy about.

That being said, exposure is not the only thing that you should focus on when you have your own graphic design business. If your heart is not into it, then it might dull your senses as a graphic designer, affecting your creativity and possibly killing every bit of joy that you had when you became a business owner.

DO Listen to Your Instincts

When you have your own business, you won't have employers telling you what you should do - therefore, you should learn to listen to your own instincts. Indeed, we all make mistakes when we set up a startup business, but as the business grows, we need to learn from those mistakes.

When you are making a decision and your gut is trying to tell you something, you might want to listen to it. Even if that decision takes you way out of your comfort zone, it will help you grow even more as a business owner.

DON'T Forget Your Goal

When you are just starting a graphic design business, it can be fairly easy to lose track of your goals, especially when you see multiple doors and possibilities opening up. That being said, while there is nothing wrong with taking on new challenges, it is important not to lose sight of what your "why" is.

Knowing your business and deciding to just figure it out en-route won't be too convenient for you in this scenario. You must know exactly why you are doing this. What is your final goal? If you fail to set that straight, you might just end up falling victim to social pressure and inconsistent trends.

DO Choose a Niche to Specialize In

Graphic designers can take on a wide variety of jobs, all focusing on different niches. To get as many projects as possible, you might feel tempted to work in various graphic design areas.

That being said, even if you have a new graphic design business, you might want to determine your niche from the very beginning. Most clients picking graphic designers from freelance job boards simply steer clear of companies that seem to be all over the place.

They want someone who has enough experience with their particular problem. Therefore, you'll be more likely to score prospective clients when you adhere to a particular niche. 

DON'T Just Accept Every Project

When you start a graphic design business, you might feel like you have to take on every project, regardless of how small it is or how much you dislike that particular subject. That being said, you do need to learn to say no every now and again if you want to maintain your sanity as a graphic design professional.

Choosing projects that you might not feel comfortable with may not only cause you to lose your personal life, but it can also backfire and damage your rating.

For instance, let's say that you accepted a job that you didn't particularly like, from a client that seemed difficult from the first time you talked to them. You took the job simply because the money seemed good. In the end, the client became fussy about the project and gave you a bad review.

It is ok to say no every now and again, even when you have just started your graphic design business. Chasing after the smaller, less significant projects might cause you to lose bigger opportunities. You already have an image for your business, so make sure that you stick to it.

The Bottom Line

Learning how to start a graphic design business might seem rather challenging at first, especially for those that never had their own business before.

However, as long as you follow the right steps and make the right decisions, becoming a graphic design professional should be easily achievable and hassle-free.

Tom Smery
Tom Smery is a certified CPA for over a decade. In his free time, he writes articles to pass on his expert knowledge on taxes and accounting. Thomas has a wide range of deep knowledge on 1099 taxes, and finance topics. You can find him fishing when he is not preparing taxes for his clients or writing about accounting.

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