How to start your own design agency: lessons from experience
Some of the most important lessons I learned over the years running Phage were all the non-design aspects of running a creative agency.
It’s always good to get a bit of experience and learn from other people before going it alone, but you don’t have to — as long as you’re quick to learn from your mistakes!
Here, I share my own top five lessons from experience…
Lesson 1 — Build Your Team
“When it comes to running a design agency, relationships are as important as ideas and creativity. From clients and suppliers, to business and creative partners, the people you collaborate with will play a major role in either the success or failure of your company.”
Decide whether to go it alone or team up
So, you’ve decided to set up your own design agency, but do you want to go it alone or team up with someone else? Some people will enjoy the freedom of working alone, but teaming up can also bring enormous benefits. Having a business partner (or two) means you have someone to share decisions and responsibilities with, someone to bounce ideas off, and someone to keep you motivated when you need it!
Deciding whether to team up with someone with a different skill set — a business or an accounts person for example — or someone with the same skills as you, is the first step. Both have their merits, and it really depends on your own experience and preferences.
At Phage we found that having slightly different skill sets provided a good balance: We both came from a background in branding, but whereas I’d worked primarily in print, Danny’s background was in digital. These different perspectives and areas of expertise helped fuel new ideas, as well as helping us to provide a more integrated service to our clients.
Differing skills can also help you increase your offer. But make sure that there’s an even balance in workload so that one partner doesn’t end up being flat out while the other one sits around twiddling their thumbs!
Whatever your individual skills, a shared vision for the business is crucial. It’s also essential to define your roles: agree who is responsible for what within the business, who the client deals with — is it always the same person, or a different person for different projects? — and which decisions can be made individually, and which need to be made together.
Find good suppliers and nurture them
Your work is only as good as the final delivery so, unless you are designing and producing everything yourself, good suppliers are essential. Look for experts, not sales reps, who support your vision and ethical practices, and then build long-term relationships with them.
By nurturing these relationships, your suppliers become an extension of your team. You’ll get better service and better terms, and you can relax knowing that if something does go wrong (because occasionally it will!) your suppliers will work with you and handle things professionally so that your clients aren’t let down.
Have fun collaborating
It’s great to work with other creatives, particularly as a small agency. People with different skills and disciplines — photographers, illustrators, copywriters, videographers, architects — all bring a fresh perspective to your practice and can increase your ability to take on larger projects. So embrace collaboration, and keep things fun!
Lesson 2 — Manage the Money
“Get to grip with your finances: as a service-based business you’ll be selling your time, and if you don’t know how to charge accurately for it you won’t make any money!”
The first thing you need to do after taking the leap into the unknown and deciding to set up your own design agency is to work out how much you’re going to charge. Here’s how:
Work out your survival budget
Work out an annual minimum survival budget based on how much you need to eat and to pay your bills, and then add on any business overheads such as telephone, software subscriptions, and studio space or desk rental.
Base your estimates on time
Once you have your annual minimum survival budget, you can work out a sensible hourly rate based on the number of hours you have available for billable work. For example, if you work eight hours a day, five days a week, and take four weeks of holiday a year, that adds up to 1,920 working hours per year.
Around 40% of those hours will be taken up with the day-to-day running of your business — finding new clients, keeping the books, planning, etc. — which leaves 1,152 hours left for billable client work.
You can then divide your survival budget by your available billable hours to get your minimum hourly rate. For example, if your survival budget is £30k per year and you have £15k per year business overheads, you’ll need to make at least £45k per year to survive. By dividing £45k by your available billable hours (1,152), you can see that you need to charge an hourly rate of at least £39 to stay afloat.
Make your goals realistic
Keep things modest at the beginning — bear in mind that you’re unlikely to be working at full capacity from the get-go, so invest in what you need rather than what would just be nice to have.
We saved money in our first year by working from home and meeting clients at their offices before moving into our own studio space, but flexible desk space is another option if you aren’t ready to splash out on your own studio space just yet.
And don’t forget that you will have to pay tax on your income. While you can claim legitimate business expenses, you won’t get a refund from HMRC like you would from your boss (remember, you’re your own boss now!), but anything that’s part of the cost of running your business should be put through your books and will help reduce your tax bill at the end of the year.
Keep time sheets
Once you’ve worked out how much you need to charge per hour to stay afloat, you need to be able to accurately estimate how many hours a job is likely to take.
It’s a bit boring, but keeping time sheets really helps with this. Time sheets make costing quicker and easier because you can base your quotes on similar previous projects.
Time sheets also help you to explain your costs to clients when asked, and will help highlight when a project is running over budget. Over time they will also provide valuable insights into which types of work (and clients) are the most profitable, and will help with your future planning.
By basing quotes on estimated hours you also give yourself a bit of flexibility to go back to your client if the project scope creeps or if they start asking for things that weren’t in your original proposal (more on that in lesson three).
Invoice in stages
Once you’ve set your hourly rate and worked out how many hours a job is likely to take, you need to make sure that you get paid! We found that the best way of doing this was to break down a project into key stages — design concept, development, implementation, etc. — and to invoice on completion of each stage.
If a client misses a payment, you’re more protected than if you wait to invoice everything in one go at the end, and it’s a great way of closing off each stage of a project. It also helps with cash flow and forecasting, enabling you to plot when you expect different jobs to be paid.
Make exceptions
Remember that it’s not always about the money. You might offer a lower rate for a project that will build your portfolio in an area you want to break into, or for a client that you really want to work with. Or maybe it’s for a charitable cause that you support.
Be critical, though. Design is competitive, and there are a lot of potential clients out there who will take advantage of this.
Be cautious of clients who try to negotiate you down on price with the promise of lots of future work. The carrot rarely materialises, and when it does you may find it difficult to charge a fair price for it once your client’s had a taste of your discounted rate.
Lesson 3 — Prepare Solid Proposals
“A good proposal can save your ass. Explain clearly, be transparent, prepare a (realistic!) schedule, and don’t overlook your T&Cs — if you can’t iron out and agree on exactly what’s achievable before you start work, it’s probably better not to start!”
With any client, there are a few things you need to agree before starting work. These are generally summed up in a written proposal or contract, but what should you include?
Explain clearly
When writing your proposals, remember that a lot of clients are not creative people and some may never have commissioned design before. It’s important therefore to explain your project stages and work processes clearly, and in a way that is easy to understand.
It’s a good idea to start with the project objectives and an overview of the brief: What is the work aiming to achieve? Who is it for, and how will it be measured?
Include a full scope of work, and provide details of how the project will be delivered: Who will do what and when? How many meetings will you have? And what does your client need to do their end to keep the project on track?
Be transparent
Be precise about deliverables. Tell your client exactly what they will get at the end of the project, how much it will cost, and when you expect them to pay. If you are invoicing in stages, as recommended in lesson two on money, then outline what those stages are, and what they are contingent on. And be clear about what is out of scope and what will cost extra.
Prepare a (realistic!) schedule
Always include a schedule in your proposals. Time sheets will help you when planning these — knowing how many hours a typical job or project stage will take — but also consider other projects you have running at the same time, and try to avoid bottlenecks.
Your schedule should include indicative dates for key project milestones, such as kick-offs and progress meetings, when design progress will be shared, and when you will need content or feedback from your client.
Make sure you also ask your clients if they have any hard deadlines they need to meet, or holidays booked when they won’t be able to feed back to you, so that you can plan around them as well. It’s important that your schedule works for everybody.
And most importantly, don’t over-promise! It’s better to build in a bit of contingency time and then deliver early, than to disappoint client expectations and risk damaging your relationship.
Don’t overlook terms and conditions
If you have a solid proposal then your T&Cs are really just there as a backup for those (thankfully) rare but difficult scenarios — like if a client pays late, suddenly puts a project on hold, or decides to cancel a project halfway through.
There are lots of off-the-shelf T&Cs for creative agencies available online that you can use, but be sure to read through them thoroughly, and adapt them to suit your own business.
For example, if you work in digital, then you should include information on what browsers you support, and what (if any) ongoing technical support you provide. And if you work in print, then be clear about who is responsible for proof-checking final artwork, and what sign-offs you require from your clients before artwork can be sent to print.
T&Cs are also an opportunity to outline permissions and releases, copyright, and terms of ownership of your work before you start. You never know when you might need them!
Lesson 4 — Talk to Your Clients
“Never be afraid of asking too many questions. It’s essential to understand what your clients need, otherwise you can’t deliver it. If they understand where you’re coming from, and you understand where they’re coming from, everything will run a lot smoother.”
Start a conversation
Talk to your potential clients in detail to find out exactly what they’re looking for before writing any contracts or quoting for a project. Trust me, it will save you a lot of time!
Most clients are more than happy to talk through a new brief with you, but if they really don’t have the time, then make a call based on what you do know, and on how much time you’re willing to invest in pursuing the work yourself.
Either way, you should never be afraid of asking too many questions. It’s essential to understand what your clients want, otherwise you won’t be able to deliver it!
Rewrite the brief
Very few clients will come to you with a well-crafted design brief, and even when they do, it’s a good exercise to rewrite it. By putting the design brief into your own words, you can make sure that you’ve understood your clients’ aims and objectives for the project.
It also provides them with an opportunity to flag up any misunderstandings or missed points before you start work on the creative. It’s far better to get all the information correct at the beginning than to waste time designing something inappropriate or way off-brief!
Involve your clients in decisions
Very simply, if your clients are part of the design process, they will be more open to your ideas. And if, as co-creators, there is a sense of joint ownership over the project outcomes, they can become your biggest ambassadors.
By becoming more of a partner to your clients, rather than just a supplier, you can achieve better outcomes for everybody — your projects will run a lot smoother, people will enjoy working with you, and you’ll be rewarded with more repeat business.
Take an interest
Remember, your clients know their own clients and businesses better than you do. Learn about their business, find out what they need, and then offer solutions that will make a real difference.
Sometimes you’ll find out that what they really need is not what they came to you for in the first place, but by taking an interest, and offering advice where you can, you’ll be doing them a service that they’ll thank you for.
Lesson 5 — Learn to Say No
“Your business is you, so maintain your integrity. Sometimes it’s better to say no than to risk your reputation, your client relationships, or your sanity! Don’t spread yourself too thin either. Remember you’re your own boss — don’t forget to take advantage of that occasionally!”
When you’re working for yourself it’s hard not to jump head first into every new brief that comes your way — after all, if you’re not working then there’s no money coming in — but one really important lesson we learned over the years is that there are some briefs you should really just walk away from. Consider saying no when:
You don’t have the time
Don’t spread yourself too thin. If you’re already very busy with other projects, you’ll end up letting both existing and new clients down by taking on even more work.
Remember, too, that you can always ask a client if they are willing to wait. If they don’t have an urgent deadline and are keen to work with you, you could end up lining up work in advance, which is an enviable position to be in!
You don’t have the skills
Be honest with yourself about what you can achieve on your own. If you don’t have the necessary skills or expertise for a particular job, and no means of obtaining them or bringing someone else on board, then the professional thing to do is to say no and to let the client find someone better placed to fulfil their brief.
Your client’s expectations are unrealistic
When a potential client has unrealistic expectations of what is achievable within their budget or their timeframe, or has outlined unrealistic results and outcomes for a project, you’re going to have an uphill struggle to meet their expectations. If you can’t iron out and agree on exactly what is achievable before you start work (see lesson three on proposals), then it’s probably better not to start!
Something is unethical
Your business is you, so maintain your integrity. We wouldn’t work with clients who had unethical business practices, and we wouldn’t work with anyone who asked us to breach someone else’s copyright. You will have your own lines that you’re not willing to cross, but if something doesn’t rest well with you, don’t be afraid to say no.
The chemistry isn’t there
As in any relationship, chemistry is crucial. Being able to work with and manage a wide range of people and personality types is a valuable skill, and one that you will learn running your own agency. But if you really don’t gel with a potential client, sometimes it’s better just to walk away.
Some Final Tips on Staying Sane
Running your own design agency can be a bumpy ride. There are moments of sheer elation and joy, and moments when you hit rock bottom and it feels like you’ll never be able to pick yourself back up again. But have conviction. It’s a cliché, but no one will believe in you if you don’t believe in yourself.
And be a bit stubborn and bloody-minded, it will get you through the tough times!
Nurture your optimistic realist — as I mentioned in lesson two on money, you’re unlikely to be working at full capacity or winning your dream clients from day one. So assess your success on a yearly timescale, not a monthly one. It’s easier to recognise your achievements when you take a longer term view.
Remember too, that you’re your own boss — don’t forget to take advantage of that occasionally.
And finally, stay enthusiastic! After all, if you’re not enjoying it and creating good work, then why are you doing it?
A version of this story was first published by Design Council UK in 2015 as a companion series to a talk I presented with Danny Brooks at New Designers, London. You can view the original article here.
