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.
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.
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:
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.
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.
Before you do anything, you have to set up a business plan. This plan will contain specific details about your business, such as:
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.
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.
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).
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?