“If you’re about to take the leap from being a part-time to a full-time freelancer, then make sure you have enough clients to keep you solvent!”
Many creative people choose to set up shop for themselves. So what steps should you take if you’re opening shop as a designer?
I spoke with Deena Warner, owner of Deena Warner Design. She recommends ten steps a creative person should take before setting up a design business. I think these are fantastic tips for everyone who is self-employed, not just designers.
Worried you might not have the capital for all of these all at once? Here’s what Deena recommended: “I built my company knowing that I couldn’t afford all the things on this list all at once. So, I started with what I felt was most critical.
My top priority, when I decided to become a company, was to form an LLC. I knew I could lose everything without proper insurance so that was my first big goal after setting up a legal business entity. Artist with insurance? Radical idea.
I was lucky in that my husband and I already had private health insurance. Then my goal was to buy errors & omissions (liability) insurance and property insurance for the company, and finally, long-term disability insurance. In fact, you can’t get insurance for your company unless it is already a legal entity of some sort.
I didn’t set out to be so insurance-focused. But, if you look at it you realize that the insurance issue alone can make or break you financially.”
Steps to Take Before You Begin a Graphic Design Business:
1. Have a track record:
Your clients want to know you’re experienced. You need credentials to point to–”I’ve been in print/web design for 8 years, and have worked for advertising agencies such as X and Y.” Even if you don’t have many years’ experience in an agency, be sure to have a well-rounded portfolio to show off.
2. Have a client base:
If you’re about to take the leap from being a part-time to a full-time freelancer, then make sure you have enough clients to keep you solvent! Plan so that you are prepared for payment delays. And pay yourself a salary!
3. Minimize your liability:
What business structure makes the most sense for you? Hire a lawyer to incorporate your business or form an LLC. Legal structures and discipline keep your personal assets separate from the business’s assets.
4. Insurance:
Get the largest liability insurance policy you can, particularly if you’re going to program websites. There are special types of E&O insurance for technical businesses, like ones that protect intellectual property and cover you in case of malicious software attacks.
5. Insurance, part 2:
What about health care and dental insurance? If you’re young and healthy, a high deductible health care plan with a health savings account may be the way to go. It’s a lot more affordable than a traditional healthcare plan.
6. Spend an hour or two consulting an accountant:
How do you set up your spreadsheets? What’s the difference between an “office misc.” expense and an “office supply” expense? How do you pay yourself? Should you escrow for income tax payments? An accountant can help you navigate these issues.
7. Invest in up-to-date software:
When clients send you something in Adobe CS4, you don’t want to be working with CS2. Software is the lifeblood of most modern graphic designers so be sure you can afford legal copies of the necessary tools.
8. Invest in continuing education:
Home-study courses through websites like lynda.com or continued coursework at a community college can keep you current with the latest technological developments.
9. Get property insurance. Your office equipment is your biggest physical asset, so you want to protect them in case the house burns down. An “inland marine” policy will protect your equipment (e.g., a laptop) even if you take it on the road.
10: Have an off-site backup of your computer files. This is good practice because it’s the best insurance. We use xdrive.com, which has automatic “incremental” backups, meaning that you can tell it to scan certain directories every night and then only to back up the files that have changed. Xdrive works most of the time, but there are other off-site backup resources you can purchase. This is also a good way to keep your stuff accessible from the road.
Thanks, Deena. These tips are really useful for anyone starting a business. Some of Deena’s latest work includes author Alan Jacobson’s website, covers for Jazz Improv magazine, and a website for David Morrell’s newest novel, The Spy Who Came for Christmas.
Related:
An Actor, His Wallet, and a Cross-Country Move
How To Return After You Quit
Secrets of Six Superstar Employers
October 20th, 2008 at 6:11 am
Insurance2day Insurance Services Ltd have a specialist combined professional indemnity, public liability and employers liability insurance policy underwritten by Royal & Sun Alliance Insurance plc which is suitable for graphic designers. Cover starts at £200 pore annum and full details can be found on our website at http://www.insurance2day.co.uk/professional-indemnity-insurance alternatively you may call 0800 055 60 83 to speak with an adviser.
October 23rd, 2008 at 11:08 pm
Thanks for the mention of lynda.com. We appreciate your support.
Happy learning,
Steve Johnson
Sr. Online Marketing Manager
http://www.lynda.com
January 29th, 2009 at 8:48 pm
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