3 Things I Learned Through My First Design Business

Graphic Design Business Lessons

My first foray into the graphic design business was an attempt at starting a multi faceted design agency while in college. I considered myself a Renaissance designer so I figured why not. Leading with web design as my high ticket item, I started offering a variety of design services. The plan was to upsell customers with add-on services like logo and collateral design. I was savvy enough to have identified a niche to market to at the time. Since I had built up a pretty respectable portfolio for my age I was pretty sure this would be a walk in the park.

Unfortunately for me, I didn’t net millions of dollars through my first design agency, like I was expecting. What I did gain, however, was experience points and a more sophisticated outlook on the business of design. The type of thing you can’t get from reading a book or listening to a podcast. Sometimes you just gotta dive in not knowing how to swim and build your own floatation devices. You walk away from every unsuccessful business attempt with money lessons. Luckily, I wasn’t dealing with large amounts this first time around, but these were the key things I left with.

Design in phases

One of my early mistakes was a poor payment structure that left me vulnerable. I charged my clients on a 50/50 payment plan. Fifty percent of the total cost of the project upfront, the other 50% after the work was delivered. It sounded fair for both parties, and no client ever had a problem with it.

I was naive to the reality of the disappearing customer. It happened to me a couple of times that I’d get my upfront deposit, complete the entire project with regular communication with the client along the way, and deliver the final project, only for the client to stop responding to my emails come time to pay the 50% balance.

“Could he have died maybe? Yeah that’s gotta be it.”

Guess how many times I actually ever heard back. Zero! Vanishing clients put me in one of the worst situations you can ever find yourself in as a freelancer– completing 100% of work and only being compensated 50%. I knew there was a better way to approach invoicing, so I devised a different payment structure. The 30/30/30/10 payment plan.

Ever since I started putting clients on my 30/30/30/10 payment plan I never felt like I got burned, even if the client did disappear. Breaking every project down to phases like this keeps you paid in advance. Here’s an example of what this looks like on a web design project.

  1. 30% to start initial design comps
  2. Another 30% to finalize design comps
  3. Last 30% to transfer design files
  4. 10% upon review and completion

At no point could I finish the entire project and not be compensated for the work that was done, because each phase starts with a pre-payment. There’s also more transparency for the client on the timeline of the project.

Increase rates as you go

It seems almost impossible to find out what other designers are charging for the services you offer. I’ve always found this a bit odd, but everyone’s been hush hush about their rates for some reason. A combination of not know what to charge and being happy with whatever I could get for my work lead me down a dark path of low balling.

“Everyone’s been hush hush about their rates for some reason.”

Think $50 for a logo. $250 for a website. It’s scary looking back at it. But I had no clue what the going rate was for this stuff, and as a starving college student, $250 was a whole lot of money. It wasn’t until I came across some forum thread by some angry designer scolding new designers who are undercutting the market and making things bad for everyone else that I realized what I was doing. But at the same time, I didn’t really care because at least I was making some money.

That post always stuck with me though, so I decided I would increase my prices. Not only to help the market, but because as I got more clients and got better at what I was doing my work was definitely worth more. Maybe I can’t charge the same rates as a big name agency or major league graphic design business but I could at least double my initial rates. Scary at first but totally worth it. A solid business move overall.

Save for emergencies and expansion

No matter how low my rates were or how busy I was with work on any given month, I should have designated percentage of my profits to tuck away for the future. When you start seeing your design work pay off and make money in large amounts you never thought possible it’s easy to forget about the best ways to manage that money.

If I had saved a portion of my profits from day one and made strategic financial moves, that worldwide design agency I dreamed of would probably be flourishing by now and I’d be so stinking rich. Getting on the right track with a freelance savings plan is a great way to have the funds needed to grow your team, get new equipment when needed, and overall have a buffer for when things go bad and you didn’t earn enough through any given month to pay the landlord.

“Have the funds needed to grow your team”

As years progressed, I started investing more into my graphic design business. To stay afloat I progressively increased my rates and was sure to maintain a better relationship with clients. It’s been awhile since I’ve witnessed a disappearing act, and despite whatever flaws may still remain, I’ve graduated to a more sound position thanks to the growing pains of my first design business.

That global design agency is still within reach!

What are some of your best lessons learned running a graphic design business or as a freelancer?

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