The Secret Of Running A Successful Web Design Business

The Secret Of Successful Web Design Businesses

The designers who run successful web design businesses do a couple of things differently than others:

First they make sure they have effective systems in place that helps them run their business as efficiently as possible.

Second, they work with contracts.

Here’s why they work with a contract:

They know web design projects are inherently difficult and things do go wrong.

They also know that things change:

  • Companies run out of money
  • Companies get acquired
  • Key employees quit
  • People misunderstand you
  • People get sick
  • People go crazy etc

A contract also protects both sides.  It makes sure that, if stuff happens, there’s a system in place which makes sure that all involved parties knows what’s expected of them.

This might come as somewhat of a shock to you.

You, the designer, setting up contracts! You’re a designer, not a lawyer!  And if you start demanding clients to sign contracts, they’ll chose to work with someone else. They’re fair objections.

But, you know what?

Your client probably have multiple standard contracts signed with other partners and providers.
He won’t be that surprised if you ask him to work with you on a contract.

Here’s what you could do:

Start drawing up a blueprint of a standardised master service agreement. A contract. But expect this contract to change. Think of it as a blueprint.

Because depending on the type of project, both you and your client will probably want to make changes. Just make sure you don’t spend too much time on it.

Also make sure to communicate to your client that the longer you both take in defining the contract, the further away the deadline.

Include at least these two clauses:

  1. The Kill Fee
  2. Terms Of Payment.

Maintain a healthy cash flow by including a terms of payment clause in your contract

If you’ve been running your web design business for a while you’ve probably noticed that the margins are not very high.

But that doesn’t mean your cash flow should suffer.

That’s why you want to include a clause for payment terms in your contract. It’s there to ensure you have a a healthy cashflow.

Start with making sure you ask for a deposit based on percentage of the total budget before you start doing any work.

How much?

The percentage varies depending on the size of the project and the size of your team, but it usually is between 25% – 50%.

95% of clients don’t have any issues with making an initial deposit.

Some might ask you why the hell they should pay you for work that’s not even been started.

If they ask you this, simply remind them that:

They’re making a reservation of a limited resource: your time.

You can also remind them that paying upfront is common business practice (tickets to an event, airline tickets etc).

Some projects are bigger than others so sometime you need to include payment instalments that are due on the completion of  previously agreed upon milestones.

 

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Now, what defines completion is tricky but make sure you do this:

Make sure that completion means actual deliverables.

For example, if you’re a freelance illustrator, the icon set you designed should be paid when they’re delivered to the front end coder.
Not when they’re implemented into HTML.

When you finish up HTML templates and hand them off for implementation to the outsourced Rails developer who lives 2000 miles from you. You should get paid when you hand off the HTML. Not when the web-app is launched.

Next clause to include is the kill fee:

Get paid even if the project gets cancelled by including a kill fee clause

The kill fee basically stipulates that:

If the client hire you and she wants to get out of the contract for reasons that have nothing to do with the quality of your work or service, they will owe you a percentage of the remaining project budget.

It might sound harsh but let’s explore why:

When you take on a project:

  • You’re reserving time and attention to this unique project.
  • Which means that you, the designer, is giving full attention to your clients project and nothing else.
  • Which in turn means that you’re not looking for other jobs.

So the reason is simple. If a project is cancelled you’re now spending work days not on work, but on finding work.

You need to have at least some protection against that.

If the client hire you and for some reason she wants to get out of the contract for reasons that have nothing to do with the quality of your work or service, they will owe you a percentage of the remaining project budget

Look at it like this:

When the health care center charges you for skipping an appointment without giving proper notice you have to pay right?
The kill fee works exactly the same.

If the project is going along nicely and they decide to pull out for reason that you as the designer can impossible control, the kill fee clause is activated.

This kill fee clause should also work the in the reverse. If you the designer is doing a bad work, the client can fire you.

The kill fee is controversial, no doubt. But don’t skip on this. Things happen and projects gets cancelled. Make sure you’re protected.

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Conclusion

As you can see, working with a contract protects both you and your client. Don’t be afraid to draft up a contract and present it to your next client. And if you include anything, let those things be terms of payment and a kill fee. Oh, and get a lawyer. They’re not an expense, they’re an investment. (It’s not like you will keep them on staff)

 

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