You, Inc: Going from Developer to Digital Agency

As you progress in your professional life as a web developer, you’ve probably considered starting your own web agency. Maybe you’ve had a few paid freelance jobs. Or perhaps you’ve been honing your skills in your free time. However you arrived at this point, the logical next step is to start a web agency.

But that next step is a big one. Being a great developer doesn’t necessarily mean you’re great at sales, marketing, management, or accounting. If you’re willing to develop some new skillsets, though, you can drastically increase your potential for success.

Jeffrey Zeldman SpeakingWe asked Jeffrey Zeldman, founder of A List Apart and Happy Cog design studios, about the things to consider as you go from being in business to being a business. Zeldman, who’s also authored Designing With Web Standards and A Book Apart and co-founded design conference An Event Apart, started Happy Cog as a one-person studio. He had plenty of advice to professionals on starting an agency, staying original, and riding out the lean times.

[Related] Finding New Agency Clients

Define Your Market

The first step in thinking like an agency is to define your market. You’ll need to be strategic about the type of clients to approach and the services to offer. The two key questions to ask at this stage are:

  1. What is your area of expertise, and what are you willing to take on? Zeldman advises web agencies who are  just starting out to “start strategizing how to get the clients you want to work with, instead of passively waiting to see whose RFP comes over the transom.” Focus on customers who want what you’re best at providing. If you’re asked to venture out of your comfort zone on a project, be honest about the extra time, money, or additional team members it will take.

  2. Who is your target audience? When considering your potential client base, consider Zeldman’s suggestion—“Your reputation is more important than your cashflow. It’s better to turn down a project you don’t believe in than accept it and burden your people with six months of grueling work.” Whether it’s staying narrowly focused on a specific industry or dedicating your time to a charitable sector like nonprofit work, spend your time going after projects you can get behind.

Choosing projects you believe in, for clients you admire, will inspire you to put in the extra hours that make the difference between good and great…the happier you are, the better your work will be, and the happier your client will be.

A good way to define your audience is by identifying buyer personas—HubSpot’s templates can get you started—and align your marketing efforts to reach these people.

Set Guidelines for Pricing and Project Management

You’ll learn from every project, no doubt tweaking pricing and handling clients differently each time. But when your first big client asks about your pricing and what you offer, a confident answer can get you the job. According to Zeldman, the bottom line for a new agency is to estimate what your project will cost to produce, then add 25%. “There’s always extra work you forgot to put into the budget…I’m in no way advocating padding budgets. But after decades of experience, [I recommend] beefing up your estimate of the amount of work any job will take—because it always takes more than you think.”

There are several good guides to pricing web development online that can help. Decide which work you’ll charge for by project and what will fall under an hourly rate. Be clear about the time you’re willing to spend on site and in review meetings. Sketch out the steps of a project so you can walk a potential client through what to expect—like an audit, in-person meetings, milestones, deliverables, and payment.

Anticipate Expenses

“Everything is easy to overlook when planning the budget for a new web agency. That’s why it’s best to start not just small, but tiny,” Zeldman says. There are plenty of costs, both hidden and obvious, when you’re getting set up. Here are a few major ones to anticipate.

Work Environment:

Set yourself up with a good space to keep things zen and productive. Whether your style is a buzzing shared workspace, a comfy home office, or a professional rented office space, you’ll need to budget quite a bit for hardware. Make a list of must-haves and nice-to-haves, but plan for at least a laptop, phone, and all the accessories you’ll need to do your job. Decide whether you’ll buy things like a printer or scanner or if you have a reliable resource for them when needed.

Software and Services:

Start with the basics that will make your life easier, and put the big, cool tools on the backburner as rewards for landing new clients. Here are a few to think about:

  • Design—these can add up, so start with what you need to work and collaborate well. Spring for software like Adobe Creative Cloud, OmniGraffle, Sketch 3, or Pixelmator, then stock up on cool free tools like InvisionApp for prototyping.

  • Website hosting and management—this article compares several free solutions for when you’re starting out (it’s focused on Drupal, but provides a good general overview).

  • Accounting—cloud apps like Wave and Xero offer free or low-cost solutions and are all you need as you’re getting started.

  • Legal—if you’re not a paperwork person, you can use a service like LegalZoom for basic business filings, forms, and requirements. Use to it avoid major fees for missing deadlines or making mistakes.

  • Organization—capture everything in Evernote, manage time with Timely. Both have free options, so stay sane from day one.

  • CRM—you may not be ready for Salesforce, but find a way to organize and track your potential customers with tools like Insightly or Capsule CRM.

  • Marketing—be realistic about whether you need it yet, but get started with a service like MailChimp or SendGrid for marketing and transactional emails.

Insurance:

You’re providing your own health insurance now, which can be costly, so it’s worth doing research to get an idea of what to budget for. If you rent office space, you may also need liability insurance. For a home office in a rental property, you’ll want rental insurance to cover your new office equipment.

People:

Doing everything yourself can be stressful, but don’t rush out to hire seven assistants just yet. There are plenty of automation tools available for small businesses to reduce the load. If you need a human touch, consider sites like TaskRabbit for low-cost help that doesn’t expand your payroll.

If you do need to bring on more talent for a project, take a cue from Zeldman: “I did everything from research to design, from code to copywriting, from managing client relations to balancing the books. As soon as I had a project that justified it, I teamed up with a freelance consultant, Brian Alvey, who tackled the backend programming while I did everything else. As Happy Cog's reputation grew and we got the chance to work on larger projects, I began working with small teams of freelance designers, developers, information architects, editors, writers, and content strategists.”

Develop Your Business

Once you’ve covered the basics, it’s time to find some clients. Beware of people who ask you to work for exposure or a good portfolio piece. All they’re saying is they want the expertise you’re selling, but they’re not going to pay for it.

Instead, you can:

  • Start with your personal network. Ask for referrals from family, friends, past clients, and colleagues. Post about it on your social networking sites. The people who already want to see you succeed will be good allies.

  • Do portfolio work only if the client can truly offer you exposure. It’s worth considering working cheaper for a major company whose logo will help you get big paying clients.

  • List your services on sites like Elance or Guru.com. Just be aware that they’re a buyer’s market, and you may find your services are undervalued.

  • Look into conferences for networking opportunities. It may be more effective to go to a single big event than multiple small meetups.

  • Set up informational interviews with people who could potentially hire you. Don’t ask for work, though. Just invite them to coffee and absorb their wisdom about the industry. It’s a way to learn, build your network, and potentially get business down the road.

When you’re out looking for new clients, be prepared to come across what Zeldman calls the "Russian nesting doll" problem. He explains that every client wants something original, and every client wants it to have worked for five other companies before they try it. "There are companies that will only hire you if your portfolio is filled for businesses identical to theirs", says Zeldman. "With each piece you show them, you explain how you solved that client's unique problems with innovative features based on diligent design and business research. At the conclusion of your presentation, the client says, 'We're a Russian nesting doll company. How many Russian nesting doll websites have you designed?' If the answer is none, the interview is over."

But that’s okay, he suggests.

You don't want someone to hire you because you've designed twelve things exactly like the thing she needs you to design. That's how studios burn out. You want someone to hire you because you do better research, ask better questions, and come up with better solutions. Don't be a one-trick pony. Be a designer.

Manage Your Time

If you’re not used to setting your own pace and goals at work, schedule your day to keep yourself on task. Whether you track every minute or just block off time for specific tasks like, “30 minutes for prospecting on social networks,” a little structure can help keep you productive.

It’s a good idea to keep track of your time when you’re working. Even if you’re not billing the client hourly, you’ll want to know how much time a task takes. That’ll let you estimate for clients and set smart deadlines. It can also provide a guide for how much to charge for a specific task. Sites like Toggl are good for keeping track of how your time is spent.

Avoid Tax Trouble

We’ll get deep into the legal and accounting challenges of owning a business in future installments. Here are a few things to think about when you’re getting started:

  • Make sure you put money aside for paying income tax and social security.

  • Start a separate bank account for your business. Try not to use your personal account for business or vice versa.

  • Keep receipts for all of your business expenses; they’re tax-deductible.

Be the CEO of You, Inc.

If you’re secure in your professional abilities as a web developer, you can start your own agency. It’s a career path that offers plenty of challenges, but the rewards for success make it well worth considering. Throughout this series, we’ll arm you with resources to meet the obstacles that confront fledgling web agencies. Once you have your business running smoothly, you can concentrate on the business of being you.

This post is part of a series on starting your own digital agency. Read the next post, Birth of a Salesman: Finding New Agency Clients.


Related Information: 

Topics Agencies, Digital Agencies, Growth & Scale, Agency Partners

Let’s get in touch

855-927-9387