How to start a graphic design business

Decide on a name

Your first step is to think of a name for your business. You want to think of something that’s easy to remember and spell, but you also want to make it clear to potential customers what type of business you run. 

Additionally, you must make sure your company name is unique and not too similar to an existing company. It’s worth carrying out a search on Google and checking the Companies House register for a list of businesses with similar names.

Once you have made a decision, you’ll need to choose a legal structure. The simplest option is to set up as a sole trader, but you could also choose to set up a limited company. Sole traders must pay income tax on their earnings, whereas limited companies pay corporation tax on their profits. If you’re a higher-rate taxpayer, this could work out cheaper. 

It can also make more sense to set up a limited company if you might hire staff as you can pay salaries through the Pay as You Earn (PAYE) scheme. 

Before you start trading, you must register with HMRC to be able to file a self-assessment tax return if you’re a sole trader, or corporation tax if you’re a limited company. You will also need to register for National Insurance and potentially VAT if, by the end of any month, your VAT taxable turnover exceeds £85,000 in the last 12 months. Make sure you register quickly as registering late can result in fines.

Develop your business plan

Next, you need to write a solid business plan. This will provide you with a roadmap to help you keep on track, but it will also be a requirement if you need to apply for funding or investment later on.

Your business plan will need to cover a lot of information and should include the following:

• a description of your business and the services it will offer;
• your target audience and the industries you want to focus on, such as fashion, health or software;
• a market analysis and competitor research to show that there is demand for the service you’ll be offering;
• your plans for marketing and advertising the business;
• financial projections;
• the amount you’ll charge for your services.

Set up a basic website

Once you’ve got your business plan in place, it’s time to set up a website. Don’t spend hours worrying over this as it’s easy to set up a basic website using a website builder such as Wix or Squarespace. These will guide you through the whole process, helping you to register your domain name and design your website. You won’t need any coding knowledge. 

Your website can help you showcase some of your work, but it’s best to start small and add to your portfolio as your business grows.  

Decide on your pricing structure

You need to consider whether you want to charge clients by the hour or by the project. Charging hourly is often the most popular option as it’s easier to manage, particularly when you’re just starting out. Clients simply pay you for the hours you spend on the work. However, this also means you need to track your hours carefully and it’s not always easy to predict your income. 

Charging a fixed fee for a project, on the other hand, can help you to project fees for months to come. The downside is that if the project takes longer than you originally anticipated, you’ll be out of pocket.

Whichever pricing model you select, make sure you include any client communication in your calculations and cap the number of edits permitted to two or three.

Acquire your first graphic design clients

Now you can start looking for potential clients. It’s worth telling everyone you know that you’re setting up your own business in case they can send any clients your way. It can also be worth setting up social media accounts on Twitter, Facebook and LinkedIn and using these to promote your new business.

In addition, think about attending industry events, registering for freelancing sites such as Upwork or Worksome, and joining freelance graphic design groups on Facebook.

You might also want to set up a Google Business Profile so that you get found in local search results and consider advertising through flyers and posters. 

Regularly communicate with your clients

Communicating regularly with your clients is a key part of running your business. As well as being a graphic designer, you will also need to be the bookkeeper, account manager and marketing manager. That means you need to be able to talk through everything from designs to costs with your clients, and be prepared to promptly respond to any queries they have. You can do this through email, over the phone or even by direct messaging on social media. 

Keeping the lines of communication open will help you to build good relationships with your existing clients and help you to attract new ones too. 

Deliver high-quality projects on-time

As well as being professional in your communication, you also need to be professional when it comes to delivering projects on time. This will help you to gain a good reputation and can lead to recommendations so that you build an even bigger client base. This is particularly important when your business is just starting out, as bad reviews or bad word-of-mouth reviews can be a real setback. 

If you struggle with organisation, it can be worth investing in project management tools to help you stay on track. 

Send professional invoices

Once you’ve completed the work, you’ll need to send out invoices in a timely manner and ensure they look professional. You can choose to create your invoices in a Word doc, InDesign or a Google Doc and send them via email. However, it can be easier to use a professional invoice tool, such as QuickBooks or FreshBooks. These will automatically send out professional invoices for you as well as chase up any invoices that have gone unpaid. This can help ensure you get paid on time and help you keep track of your finances.

Streamline payment collection for your clients

Chasing payments from clients is never fun, so to make it less awkward it’s worth looking into ways to streamline the process. 

As mentioned, there are a number of tools that can make this easier for you. As well as automatically reminding clients about unpaid invoices, you might also be to set up a ‘pay’ button on your invoices so that clients can instantly pay by debit or credit card once they’ve opened the invoice.

QuickBooks also enables you to set up faster payments with its partners PayPal and GoCardless, while both QuickBooks and FreshBooks support recurring invoicing so you can set up an invoice for the same amount on a set schedule. All of this will make the process much easier for you as well as your clients, helping you to get paid faster. 

Secure funding to set up or expand your business

If you don’t have the funds to hand to help get your business off the ground or expand later down the line, or you can’t convince any friends or family members to lend you some cash, you’ll need to think about other financing options. 

Some of the best options are outlined below:

A business loan

A business loan enables you to borrow a lump sum of cash that you then repay in monthly instalments. You’ll repay the loan over a fixed term, with interest added on top. 

Many high street banks and online lenders offer business loans, but you might find it harder to get accepted if you haven’t been trading for long and you don’t have much of a business credit history. 

A startup loan

If you’re just starting out, you could consider a startup loan instead. This works in the same way as a standard business loan, but is specifically aimed at new UK businesses to help them launch and grow. It can help pay for concepts, testing, designs, machinery, premises and more. 

You’ll need to be at least 18 years old and living in the UK to qualify. Your business must not have been trading for more than 36 months and you’ll need to be able to show you couldn’t obtain a loan from alternative sources. You can usually borrow between £500 and £25,000 over one to five years. 

Crowdfunding

Crowdfunding enables you to collect money from a pool of investors via online platforms such as Seedrs, Crowdfunder and Crowdcube. In return for their investment, these people might get a share in the company or a reward. Crowdfunding can help you to gain the funds you need and also raise the profile of your business. 

However, crowdfunding campaigns don’t always succeed and you’ll need to be prepared to show why you need the investment and what your business has to offer. Generally, you might have better luck if your business has good growth potential and doesn’t have a traditional business model. 

Invoice finance

Invoice finance can be another option to explore as a graphic designer. Rather than waiting for your invoices to be paid, a lender advances you a large percentage of the invoice value upfront – usually up to 95%. The unpaid invoices are the collateral and when the invoices are due, the lender collects the amount owed directly from the customer. It then deducts fees and charges before paying you the remaining balance.  

Business credit card

A business credit card enables you to borrow flexibly up to your agreed credit limit, making it a great option for unexpected expenses or to cover the cost of essential equipment. You then repay the amount borrowed in flexible monthly instalments, usually with interest added. 

Asset finance

Asset finance can help you to acquire any equipment you might need without paying for it upfront. If you choose hire purchase, you’ll hire the equipment from the lender and then make the agreed monthly payments. At the end of the term, you’ll own the equipment.

Alternatively, leasing lets you rent the equipment from a finance provider and you then pay a regular fixed fee over a set term and interest is paid on top. Once the term ends, you can choose to pay a lump sum to buy the equipment, carry on leasing it or return the item and cancel the agreement.