If you wanted to hire an agency to build your website, you might search for a term like “Sioux Falls Web Design” or “South Dakota Website Design Agencies”. (Let’s assume you live in Sioux Falls, South Dakota for the sake of this post). Your search engine of choice would present you with more than 75 local freelancers and agencies that would be happy to sell you a website. Given that there only 4,000-8,000 potential local clients for these companies, that’s a lot of agencies that are competing over a finite number of projects.
Why are there so many agencies in Sioux Falls?
There are several contributing factors that has created the glut of agencies that exist:
- There are effectively zero barriers to entry to start a website design business. You only need a laptop, a web-hosting account and a handful of free software tools to get started. You don’t need any licenses, office space or expensive equipment. You could probably start a web design business for under $100.00 if you wanted to.
- The skillset required to build websites is increasingly getting dumbed down. There are a lot of powerful software tools (WordPress, SquareSpace, etc.) that make building a website increasingly easy. I’m aware of multiple freelancers and web design agencies in Sioux Falls that aren’t capable of doing any meaningful back-end programming (php, ASP.NET, database work). I’m pretty sure there’s one that doesn’t even know how to write HTML and CSS. If there’s something you don’t know how to do, there are a ton of tutorials online that will teach you. If you don’t want to learn, there are a lot of hungry freelancers happy to work on your project for less than your client is paying you.
- Web design businesses are very high margin businesses, because generally the only costs-of-goods-sold are the time of the designer/developer building the website. If you’re running a small home-based agency, you might only need to do 15 or 20 projects per year to sustain 2 people full-time.
- There are always new projects out for bid. Because of changing technologies and design trends, most companies and non-profits will have a new website built every 3-to-5 years. That means that there’s just about always someone that out there that will pay you to build them a website if you can market yourself well enough. Given that many of the smaller communities in the region have no marketing and design agencies, a lot of those businesses hire companies in Sioux Falls to build out their web presence.
- People don’t know how to purchase websites. When they look at the websites of potential agencies, they don’t know how to evaluate one agency from another. Clients generally aren’t able to judge agencies based on their technical ability, their quality of support or their ability to get things done. They can only make purchasing decisions based on price and based off the agency’s portfolio page. Because many web design clients can’t effectively evaluate agencies, new agencies and ineffective agencies often get more projects than they should.
What can agencies do to differentiate themselves?
Given that website design is almost becoming a commodity business, I think it’s going to become increasingly difficult to be a generic website design agency in the region (Hint: if your customers don’t know why you’re different than anyone else, you’re a generic web design agency). There will always be more competition, better tools and someone willing to offer a lower price in the future. There are a few different routes that agencies can go to differentiate themselves:
- You can be the best at what you do. There are a few agencies in the area that do fantastic work at reasonable prices. The problem is that every agency thinks they’re the best and will say they’re the best, so being the “best” can only be your differentiator if you have a high-quality portfolio along with case-studies and testimonials showing why you’re better than the other girl or guy.
- You can be the low cost player. Some buyers will make their decision purely on price. I’ve worked for a company that was the low cost player and I wouldn’t recommend it. You end up with a lot of bad and demanding clients that expect a Porsche for the price of a Ford Focus. Honestly, I can’t imagine how you would build a sustainable business being the low cost player.
- You can serve a specific niche. There are agencies in Sioux Falls that work primarily with agriculture companies. There’s one that does a lot of work for automobile dealerships. There are a few that that focus on specialized services such as web video production and infographics. When I was running Matthew Paulson Consulting, I did quite well working with a handful of medical staffing agencies. If there’s a specific industry that you can serve better than anyone else, you can do quite well by being the preferred agency for that industry.
- You can offer added-value marketing services. There are a lot of agencies that can build websites, but there aren’t a lot of agencies that can create effective search engine marketing campaigns, display advertising campaigns or social media marketing campaigns. If you can be the agency builds people’s websites and gets potential customers to their websites, you’ll have some very happy customers.
If you’re thinking about becoming a freelancer or starting an agency…
Instead, consider using that same skillset along with another passion you might have to create a product or services business. I was able to combine the skillset I had used to do agency work along with some basic knowledge of investing and content marketing to create Analyst Ratings Network, a web-based financial news service and research tool. Instead of doing client work, invoicing and waiting for checks to come in, I’ve built an asset that makes money through advertising revenue and recurring subscriptions regardless of whether or not I’m working. Of course, this is just one example. If you have the skillset to build websites and have a lot of ambition, consider other potentially better business models before defaulting to doing freelance website design or agency work.