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How To Start A Web Development Company

How To Start A Web Development Company

What Does a Web Development Company do?

Web development company focuses on creating websites using coding based on the provided design. Some companies also offer design services, but they primarily focus on developing user interfaces and back-end services that power the website.

What is the process to start a web development company?

Starting a web development company doesn't require a lot of money or employees. You can kickstart a company with 1 or 2 developers and an ample amount of money for office space and computers or desktops for the employees to work. When you plan to scale up to serve a larger number of customers or deliver complex products, your investment might go up accordingly.

So if you are an entrepreneur at heart and want to start a web development company and are not sure how to do it, you arrived at the right place. Here, we provide you with a quick guide on the process involved in starting a web development company.

Step 1: Planning your business

Like any business, starting a web development company also requires a good plan. You need to understand what are the costs involved in starting and running a web development company. It would be helpful if you understood how the customers are charged and how the developers are paid. Starting a web development company doesn't require a huge amount of money. You need to have office space and the required infrastructure. The costs involved in renting the space and hiring developers can be anywhere between 5000 to 7000$, which is a decent investment for a business.

Once you understand what costs are involved in starting and running a business, you also need to know how your company will generate revenue. A web development company can charge customers for its services, i.e., the websites or applications it develops for clients. A web development company can charge its client either on per hour basis or a flat fee on a particular project. If the company adopts to charge a flat fee, the estimation will be done beforehand and told to the client. In return, the client mentions his expectations from the project.

Step 2: Writing a business plan.

Once you plan your business, it's essential to have it in writing too. It can include the following things:

  • You can define the vision and mission of your company
  • Your financial goals and targets.
  • Short and long terms goals of your company
  • Which industry segment do you wish to serve
  • Who are the ideal clients?
  • Your pricing strategy

Step 3: Setting up the business environment

If you have ever talked to an entrepreneur, you would know that work-life balance is a real struggle for them. So, it's very important to draw a line between your personal life and professional life. It would help if you had a proper business environment to focus on your business entirely when you are in there.

So, setting up an office space for your business so you can get your work done uninterrupted is very important. You can rent a commercial space or carve out some space in your garage. A web development company needs computers or desktops and a few software such as rich text editors, code management tools, project management software, etc., for the developers to work. So, you need to buy the right tech and software licenses so the developers can do their work seamlessly. Being a tech company, you also need to have an active internet connection and power supply without any outages.

Setting up a business phone also becomes very useful for clients to contact you quickly. This also helps in separating your business life and personal life.

Build your team

Every business needs employees to run its day-to-day activities. Once a deal is made with the client, you need developers to develop the website. Along with developers, you also need testers in your team for testing the application. Testers completely focus on testing the application's quality, and they make sure there are no bugs defects in the deliverables. You can either recruit them or hire them on a contract basis depending on the need. You need to acquire the best talent as you can't compromise on the quality of work delivered. This is what separates you from the competitors.

Deciding on the services you provide

You need to have a clear understanding on what services you are willing to offer so it can be marketed accordingly. You can either focus entirely on web development services or also provide design services along with development. You can also decide on the segment you wish to serve. Some companies focus on serving a particular segment only initially as many clients prefer specialists to generalists.

Step 4: Addressing legal requirements

A. Creating a legal entity

Registering your business as per the legal norms will give your business authenticity and protection. Generally, there are three different types of business structures. Sole ownership, LLC(Limited Liability Corporation) and Corporation. Though the sole ownership structure allows you to enjoy 100% profit, it also holds you 100% liable for the debt and in case you are sued. Hence, registering your business as LLC or a corporation would be a better choice.

B. Obtaining necessary permits and licenses

For any business, you need to obtain the necessary permits and licenses as per the state's norms to operate. Failure to do so will result in hefty fines and even shut down too. So, understanding local business permits and acquiring them beforehand will help run your business smoothly and legally.

C. Naming your company

You might think this is not a very important step, but giving your company a proper name and logo help in many ways, such as brand recall and attracting clients. Also, you need to be careful when naming your company, as many companies have trademarks associated with it, and using the same name will bring unnecessary lawsuits to your doorstep.

D. Registering for taxes

Just like any working individual, a business entity is also liable to pay taxes. The tax structure might be different, but they should pay taxes as per the country's regulations. So, you need to register for a variety of state taxes before you open the business.

E. Acquiring insurance

Just like registering your business as a legal entity, acquiring insurance is also mandatory for a business to function as per legal norms. It also protects your business in case of any loss and helps in improving the company's financial health. So, talk with your agent and get the best insurance coverage that suits your business.

F. Opening business bank accounts

If your business faces any lawsuit, your personal assets might be at risk in case your personal and business bank accounts are mixed. In order to protect and differentiate your personal assets and business assets, it's better to have a separate business bank account for carrying out business transactions. This will also help in tracking the cash inflows and outflows efficiently and makes accounting easier.

Step 5: Service agreements between the client and the company

It's very important to have a pre-defined agreement between the client and the company before delivering the product. It defines the business and legal relationship between you and the client. It also defines the client's expectations and the compensation that is mutually agreed upon by both parties. It also describes who would own the final website once the development is done and delivered to the client. It makes sure that you get paid or else holds the client liable in court. Drafting a proper service contract will help both parties avoid unnecessary lawsuits and set the stage for maintaining a healthy relationship.

Step 6: Creating a company website

Owning a website became cheaper over time. So, every business, irrespective of its size, has its own website. Also, in a growing digital world, digital marketing has become an important form of marketing. Being a web development company, it's important for you to own a website. This will help the clients understand the services you provide, what segment you specialize in, and your achievements or best works if any. It will also help clients in reaching you, and having social media accounts such as LinkedIn, Instagram, etc., are not a replacement for owning a website. It has its own advantages, and it has become significantly cheaper than in the last few years.

Step 7: Utilizing project management and communication tools

Once a deal is made with a client to deliver a project, it is important to deliver it on time. Failure to do so will affect the reputation of the company. So tracking the time and progress of the project is very crucial. So you need the right tools and processes for project management. There are many project management tools such as Jira which can be used to effectively track the progress of the project. Without proper communication, progress cannot be made in the project. So make use of communication tools such as Slack, Jabber, Teams, etc., for effective communication among teams.

Step 8: Marketing your web development company

Once you set up your business and get all the required legal permits, you need to find clients. For this, you need to start promoting your company. Promoting your company will take a lot of effort. It's very difficult to find clients in the beginning, but with a proper marketing strategy, you can make your chances better. You can look for small businesses which doesn't own a website yet and send them a quote. Email marketing can be extensively used here to persuade clients.

Market segmentation:

We can divide the client market based on the scale of the company i.e., small businesses or large businesses. You can also divide them on the industry type and provide services to the industry you are interested in.

Selecting the target customers

If you are just starting a web development company, big clients won't be willing to work with you. Starting with small businesses would be the best option. There are many companies that are in need of software or applications that require extensive coding but don't have the labor or infrastructure for it. So these are the ideal clients. Look for such businesses which are moving towards digital transformation and send your offers to them.

Positioning your company:

Many clients are willing to work with specialists rather than generalists. For example, if you specialize in providing website development services for consultants, it will be easier for you to dominate that market. So, position your company accordingly.

Using digital tools to bring customers to the website

There are many tools such as Google Adwords, Facebook, and Instagram ads to promote your company. Use these tools effectively to raise awareness about your company and bring customers to your website

Build your online presence

As the world is becoming more and more digital, showcasing your work to attract new customers also shifted to digital media. Every company owns a social media account which is used to promote the company and roll out important updates frequently. So, it's essential to build an online presence for your company.

Step 9: Providing client-side launch process and maintenance services

Everything needs to be made absolutely sure before launching a website. There are many aspects that need to be checked before launching, and the client should understand how the site works(not the technical details but the application's business functionality). So, the client needs to be given a complete brief about the business functionality of the website. Though the application is extensively tested for bugs, there might still be some load balancing issues that will only be revealed during production. So, if your web development company provides maintenance services, it would be an added advantage and separate you from your competitors.

Growth potential for a web development company

There is great potential for a web development company as many new businesses are coming into existence daily, and many old businesses want to enhance their websites. Use efficient tools such as CRM (Customer relationship management tools) to track whom you are contacting, responses of that contact, and potential follow-up opportunities.

As your company grows, you can hire more developers, testers and other employees needed. You can work on multiple projects at a time. As web development has been rapidly improving day by day and new technologies are coming out regularly, you need to stay updated on the technologies and encourage your employees to be updated with these new technologies so your company won't fall behind.


Sudipto Mukherjee

Sudipto Mukherjee is an Engineer by profession and works as a Web Developer and considers writing to be his passion. He like to keep himself updated with the latest trends in the tech community and interact with people in this space.

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