Several years ago I had a web development and design business. I’ll be the first one to tell you that I do not know how to code. But that did stop me. I saw an opportunity to leverage other people’s skills and turn it into a profitable company. So if you are looking to start one your own, the following is everything you need to know about opening one. In this post, I will show you the various ways of going about starting your own web development company.
First off, the legalese
In order to protect your personal assets, you will first need to establish an entity for your business. You can do it as a sole proprietorship, a partnership, a limited liability company (LLC), or a small corporation (S corp). The choice is yours. But it seems like most people starting out seem to opt for either a sole proprietorship or an LLC. When I first started, I went ahead and did the paperwork to establish my LLC. That way, my personal assets are protected, I can do business under my own name, and I do not get boggled down with the extra paperwork and headaches of a corporation. You can establish your paperwork by going to your state’s website or going to legal sites like LegalZoom.
Going Solo, Hiring In-house, or Outsourcing
There are three ways to get going when it comes to your web development business. One, you can start by just opening up a one-man shop. The second option is hiring employees. The third option is outsourcing to a contractor. Below, I will go through the pros and cons of each option.
Doing all the work yourself
- Quality assurance is simple
- No startup cost
- Easy to manage your own schedule
- No headaches of dealing with paperwork and salary negotiations
- Your profit is limited by how much work you do
- Your skillset is limited in scope so the projects you take can be limited also
- Working on projects cuts into time for planning on how to grow your business
- Can work without continuing guidance and directions
- Ability to delegate tasks when you are away
- Ability to fully vet the person you are working with
- Lower salary/wage than contractors
- Leverage others for more profit. Your income is no longer limited by how many hours you can work
- More paperwork to hire an employee than a contractor
- Startup costs are more expensive
- More legal obligations to your employees than contractors
- Interviewing people sucks
- Cheaper overall cost than hiring employee
- Can work with multiple people without long-term commitment
- Greater flexibility in working with people that have specific skills
- More affordable to hire a highly skilled person since they are paid on a per project basis
- Leverage others for more profit. Your profits is no longer limited by how many hours you can work
- Tough to find reliable people
- Harder to keep track of production timeliness
- Interviewing people sucks
As for me, I went with hiring contractors from the start and is the style of business that most people go when running a web development company. This was more of a necessity for me rather than a choice. I do not know how to code and did not have enough money to hire full time employees. So what I did was become the salesman of the company by trying to get contracts and then handing the contracts off to other people.
You will find that people in developing countries are much cheaper than people in the United States and Canada. And this is the hardest part. If you choose someone overseas, you will have to coordinate hours and there is a huge language barrier. Quality is also another factor you have to figure out—from my experience, quality of designers and coders in first world countries are much better than a lot of the cheap developing country programmers. But that doesn’t meant there aren’t any cheap quality programmers available. It’s just that you will have to do your due diligence.
I found that it was possible to have the best of both worlds. For several jobs, I was able to hire an American who now lives overseas. So I was able to get quality work for a very affordable price.
Things You Need to Start Your Web Development Company
So you definitely want to start your own web development company, so now what? What do you need to get started? Here are some of the things you will need to get started:
Website: Of course the first thing you need for a web development company is a website. It is the storefront of your business. I found Bluehost and Namecheap to be really reliable (and inexpensive) webhosts.
Invoicing Software: You will need something to bill your clients. You can use Excel worksheets at first but they aren’t ideal long-term solutions. Many small startups and self-employed people use Freshbooks to do invoicing. You can try it free without a credit card for 30 days. And if you decide that you want to use it, you can start for as low as $15/mo.
Contracts and Proposals: For contracts and proposals, I used boilerplate contracts from a company that is no longer in business. However, Web Design Law has some nice contracts you can use for this purpose. You should not need a lawyer to draft up unique contracts and proposals.
Laptop: You need a powerful laptop. This laptop must be able to code and test the product that you are coding for your client. The laptop must also allow you to seamlessly communicate with your clients and contractors/employees on all fronts. To accomplish all this, I recommend the Lenovo Yoga. It is a 2-in-1, so it is both a tablet and a laptop. It’s a pretty fine piece of equipment and a great price for what you have to do.
Business Cards: If you plan on marketing your business locally by word-of-mouth, you will need business cards. I get my business cards from Vistaprint. They have an interface for you to design your own cards. Best of all, you can get 500 business cards for under $10, which is a great deal. And it’s great quality too. It will cost you twice as much and half the quality if you do it at your local Fedex/Kinko’s.
Marketing Your Web Development Business
When I first started my web development business, I found early success in Facebook advertising. I marketed to local freelancers and my first $10 got me two contracts with a photographer and a painter. I don’t know what the numbers were for after the first $10 but they weren’t astronomically profitable. But the online marketing landscape has changed drastically since I first started the company. That was five years ago, when mobile advertising wasn’t even available yet and most people still accessed their internet via the computer.
If you want to market your business, here are the several avenues you should hit up:
- Business/Networking Events: There are a lot of business/networking events catered to already successful or aspiring entrepreneurs. Go to those events in your area. Hand out your business cards. Make connections. 80% of these events are filled with people who are in the planning stages of starting a business, but haven’t pulled the trigger yet. So your leads at these events are very warm. Most of these events are free so your leads are essentially free. All it takes is time—and possibly a dinner or two on your dime to schmooze.
- Online Advertising: This takes a lot more effort than the method above. It takes awhile to learn how to do online advertising the right way and the vast majority of people burn a lot of money fast. If you are going to head this route and have some spare cash, hire someone to do it for you. This involves not only the bidding side of online advertising, but also optimizing the page that users land on (called the landing page) once they click on your ad.
- Blogging: In the long-term, blogging is probably the cheapest and most effective way to garner business. Although starting a blog and gaining traction is not always easy and fast, it is worthwhile in terms of the return on investment. The only real monetary cost to you is the web hosting and a lot of sweat equity. Blog well and be known in your niche. Network with other bloggers. Over the course of years, you will start seeing an uptick in traffic and some of those visitors will undoubtedly turn into customers.
- Bid on jobs online: You can choose to join freelancing sites like Elance and Upwork to bid for jobs. But keep in mind that being new and from a developed country, you will face some stiff competition, both on the experience and price front. You will have to compete with well-known freelancers who have hundreds of reviews and developing country contractors who are willing to work full-time for $500 a month. So if you go this route, be prepared to be get paid next to nothing on your first few jobs. Then gradually, as you gain experience and good reviews, you can increase your rates.
Of course there are other ways to market your business and get jobs, but these four ways are probably the most effective ways to get contracts for your web development company.
There you have it. If you want to start a web development and design company, this is a cliff note of how to do it. Good luck with your venture!