How to Start a Graphic Design Business

Part 1 - How to start a Graphic Design business - Background

Graphic design professionals create or maintain a visual look that might be carried out in signage, letterheads, ads, sales collateral material, website and digital content and virtually all other internal and external communications. This can involve logo design, fonts and typography, color and imagery selection and layout. The owner of a graphic design studio might work alone or have one or more employees to generate new business, work on existing projects and support the enterprise.

You may also be interested in additional side hustle ideas.

Our guide is in 3 parts:

• Part 1 - How to start a Graphic Design Studio business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a graphic design business?

Many graphic design businesses start at home, with no employees. Your main expenses in that case will be the computer and design programs required to get the work done. Those programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others.

You can now buy Adobe on the cloud for a monthly subscription fee of $40 or $50 depending on the bundle. Also, check out this article about the availability of free graphic design software. You might have additional costs for development of your own website and for printing sales materials such as business cards, brochures or promotional items.

Even with all of that, it’s easy to imagine being able to open for business after spending less than $2,000. Just remember, unless you can generate revenue immediately you should also have a nest egg large enough to support you before you start seeing a steady income stream.

What are the ongoing expenses for a graphic design business?

In the beginning, you’ll probably work alone and from your home. As your business grows you might eventually have ongoing expenses related to studio rent and employee costs—including taxes and healthcare benefits.

You might have monthly subscription costs of less than a hundred dollars for your graphic design software. And you’ll have to pay vendors such as freelance designers, photographers, illustrators and copywriters. While those expenses will be billed into your invoice, you might have to pay the vendors before your clients pay you. (That’s one reason it’s such a good idea to get a portion of the project fee paid in advance.)

Who is the target market?

Some graphic design studios get the bulk of their work from advertising agencies while others promote their services directly to clients. Many work for both client types. Some studios might specialize in a certain type of client, such as non-profit organizations or business-to-business firms. Others might focus on a particular practice, such as logo development or packaging design.

How does a graphic design business make money?

Graphic design studio owners charge their clients an hourly rate or bill by a flat fee based on their hourly rate. If there are ongoing assignments they might negotiate a monthly retainer.

How much can you charge customers?

First, establish an hourly rate. For some client relationships, you’ll keep track of your time and charge that rate. But since many clients will feel more secure knowing the cost upfront (and you’ll avoid arguments after invoicing) you might be better off charging a flat fee for every project based on your estimation of how long the project will take.

Many graphic designers and studio owners charge an hourly rate of somewhere between $75 and $100. You probably won’t want to go lower than $75 unless you’re guaranteed many billable hours. And you might want to go higher if the competitive situation allows a higher rate.

Here’s a good article on what several graphic designers charge and how they bill their clients. You’ll see that it’s fairly common to get a third to one-half of the flat rate up front, especially if it’s a costly or long-term assignment.

How much profit can a graphic design business make?

Experts say that a graphic design studio must make at least a 15 percent profit margin and that a preferred rate is 50 percent or higher. That’s based on the rate you’ll charge your clients minus the out-of-pocket costs to get the job done: your employees’ hourly rate or the costs of hiring freelancers to complete the job.

How can you make your business more profitable?

Graphic design studio owners sometimes develop sideline businesses that also use their artistic skills. This might include art and jewelry design, t-shirts, book jacket design, web development and photography, to name a few possible areas of expansion. You might also consider partnering with a copywriter and forming an advertising agency.

Day-to-Day and Growth

What happens during a typical day at a graphic design business?

Here’s how your day might typically be spent:

• Developing new business on the phone or at business networking or social events

• Connecting with photographers, illustrators, freelance graphic designers and others with whom you might collaborate now or in the future

• Executing projects for clients

• Supervising the creative work of employees or freelancers

• Handling the day-to-day responsibilities associated with running a business, such as billing clients and paying bills

What are some skills and experiences that will help you build a successful graphic design business?

Graphic design studios are run by individuals with an artistic flair and an eye for visual composition. You must be adept at networking and pitching client business and should have at least a basic understanding of the work of photographers, illustrators, copywriters and other creatives who might take part in projects.

You should understand and have the ability to bring to life the design aspirations of clients. You must also be able to manage the work of others who are involved in client projects, whether it involves employees, freelancers or outside vendors. And have the entrepreneurial skills to grow their business.

Graphic designers usually have bachelor’s degrees in graphic design or related fields. Before going on their own they often get experience and make valuable connections by working at ad agencies, in-house corporate creative departments or other studios.

What is the growth potential for a graphic design business?

Many studios are sole proprietors or small partnerships. They operate on their own, hiring project help when needed. However, there’s virtually no limit to growth potential except your sales success. You can hire talent and support staff as your reputation and your business grow. The largest are multinational firms with offices in major cities across the world and rosters of Fortune 500 brands.

How and when to build a team

While you’re likely to start business as a sole proprietor, you’ll recognize the need to start growing a team when you find yourself working too many hours or even having to turn work down because there aren’t enough hours in the day.

The safest way to start expanding your workforce is by partnering with dependable freelance talent. That’s because you’ll never have to pay them for downtime—you only hire them when you’ve developed business for them. You’ll also be free of the responsibility to withhold taxes and pay for healthcare benefits, vacation time and associated expenses.

At some point, you might see the importance of having people report regularly to you so that you don’t have to worry about not being able to find freelancers available when you need them. Discuss it first with your accountant just to make sure you’re in a strong enough financial position to take on full-time help.

Part 2 - Is a Graphic Design business the right fit for you?

Part 3 - Action plan to launch your Graphic Design business in 90 days