Share on facebook
Share on twitter
Share on linkedin

9 Mistakes to Avoid when Opening your Own Digital Company

Many designers who work in web design agencies dream about opening their own companies. Having a business makes you the master of your professional life and allows you to only take projects you are interested in.

9 Mistakes to Avoid when Opening your Own Digital Company

Let us discuss the common mistakes that novice entrepreneurs make and how to avoid them. Hopefully, this post will help you to build a successful web design agency, just like the ones listed in this article.

Business thinking is a skill that comes with experience. Here you will find some common mistakes that designers with no entrepreneur experience often make when starting a web design company.

1. No financial plan

Where to start with financial planning? At a minimum, determine the break-even point of your company. 

The break-even point is the minimum amount of sales that cover all monthly expenses. If you made more money than this minimum, then you made a profit. If less, then you went into loss.

Join Our Small Business Community

Get the latest news, resources and tips to help you and your small business succeed.

That is why it is important to understand how much you need to earn every month so that the business generates income.

To calculate the break-even point, you need to summarize all the monthly expenses of the company like:

  • salaries of employees;
  • office rental;
  • utilities, telephony, internet;
  • taxes and insurance premiums;
  • advertising costs;
  • counterparty services (accountancy, cleaning, couriers);
  • third-party services (like paid software);
  • other expenses.

If the amount of sales is much less than the costs, then obviously it’s time to change something, either increase sales or reduce costs.

2. Wasting money at the start

You don’t need to rent a huge office at the start or hire a huge team. 

The starting costs should be as small as possible so your business could pay off faster. Rent an office within our means and don’t waste your money.

3. No advertising budget

If you think that you are making an amazing product that does not need advertising, you are mistaken, especially when it comes to a newly opened business.

Before a client comes to you, they have to find out about you. Therefore, save at least 5% of the total turnover for advertising.

4. No sales team

Advertising is good. But advertising without a properly built sales department is a waste of money.

Build a sales plan in advance, based exactly on the calculated break-even point. It should be realistically achievable and sufficiently motivating. It is unreasonable to pay your sales agents no more than 1% of the sales volume.

You will also need a CRM-system for accounting customers. As soon as you begin to maintain a customer base, the sales will grow. 

5. No control system

The leader is always responsible for the actions of their subordinates. Therefore, you need to select people carefully. You also need to take care of the control tools in advance.

Divide each task into smaller ones and check all the subtotals. This will save you from a situation where the task has expired, and the contractor didn’t even start it.

Distribute the tasks among the responsible people and set a fixed deadline.

6. Disorganized business processes

Understanding and automating the company’s business processes is an important task that is rarely thought of in the first place. 

The first thing you need to think about is the stages of sales and the stages of all standard transactions. This will make it possible to close each transaction more quickly and save managers from unnecessary routines. It will also demonstrate your professionalism to clients. 

You, as the head of your web studio, should be aware of what is going on inside your company: always know at what stage the project is and how long it will take to complete it. This way, you will be able to track inefficiencies and update business processes. 

7. No specialization

At first, every novice entrepreneur strives for maximum profit. Therefore it is not surprising that young web studios take on tasks of all kinds. This creates the illusion of profit growth.

In fact, such behavior only “drowns” the company in chaotic and often unprofitable tasks. It is much more effective in the long run to detach from competitors and specialize in one direction.

And the sooner the company begins to do this, the faster it will become competitive and profitable.

8. Badly-made contracts

You can’t just download the ready contracts from the internet. Someone else’s model contract cannot protect you against all disputes with customers and contractors.

Pay more attention to this matter, and it will save you from a lot of trouble and financial loss in the future. 

9. Inability to delegate

If you open a web design studio or a UX/UI design agency, then probably you are a designer yourself. More often than not, the founders of agencies remain the key performers in their company.

You might become obsessed with your job because you have so many responsibilities, from design to management, control, and networking. You cannot afford to go on vacation for a long time and take a laptop with him on every trip. 

If you continue like this, you will not be able to stay motivated. After a year or two, you would be simply disappointed in entrepreneurship or even have serious health problems.

To avoid this, you need to be able to delegate and trust your team.

Final thoughts

Starting something new is always scary. However, if you are warned about the mistakes that you might make and take them seriously, your chances to succeed are high.

Use these pieces of advice in order to build a professional web agency and fulfill your dreams and the dreams of your clients.


Some other articles you might find of interest:

Make your business rock with these business plan writing skills:

Startup’s Guide to Write a Business Plan

Would you like to know how investors value a startup?

How Do Investors Value a Startup?

Join Our Small Business Community

Get the latest news, resources and tips to help you and your small business succeed.