Unlike most businesses, a Web development shop, at least a small one, doesn't need much in the way of facilities. Many a successful Web design company has started out with nothing more than a small office and a few computers (and even the office is sometimes dispensed with). We should be able to cover the physical requirements in a few paragraphs. Likewise, there are some administrative things that have to be done to set up any small business, but setting up a Web design firm is a lot easier than setting up a butcher shop or a funeral parlor.

Setting Up Your Business

Nowadays, most people don't go into business without setting up a corporation, because of the threat of lawsuits. Thus far, the Internet business world has not attracted a lot of lawsuits, but that will soon change, as enterprising lawyers take advantage of new opportunities. The Web raises a lot of touchy legal issues, especially in the area of copyrights and trademarks, so it's unfortunately fertile ground for predatory lawsuits. Why should you be sued? It doesn't matter - all that matters is whether you have enough money to make it worth someone's while to sue you. Most Web shops don't make any money, so the likelihood of being victimized by a lawsuit is actually pretty small. You're always better off safe than sorry, however.

There are several types of corporation you can establish, each with different tax implications. Talk to a tax accountant, then to a lawyer. Setting up a corporation is something a lawyer can do for you easily, and at a reasonable cost. Once you've got a corporation, you'll need to open a corporate bank account. Shop around, as the deals offered by different banks vary greatly. Often a small local bank will give you much better service at a better price than one of the megabanks.

For an Internet company, registering a domain name is a crucial first step. What's in a name? Plenty, so choose something that's easy to remember and communicates to people what business you're in. Some people go for domain names that begin with "A" or a number, to maximize ranking in search engines. For a Web design shop, this is less important, as few potential clients will be finding you through search engines (and anyway, any major search engine will probably come up with well over a thousand Web design shops beginning with "A"). I recommend a name that's easy for people to pronounce and remember, so you aren't constantly having to spell it out.

What about trademarks? For a Web design company, I really don't think this is something you need to worry about. Registering a trademark is time-consuming and expensive, and all it accomplishes is to strengthen the claim that you already have to the brand name that you use. Having a domain name gives you a pretty strong claim to using that name, even without a registered trademark.

Thanks to various well-meaning government bureaucracies, having employees means a Herculean record-keeping scene. If you have even a few employees, plan on having your bookkeeper spend around half of his or her time keeping track of all the required paperwork. Nowadays, most small companies outsource their payroll - that is, they hire a company to take care of paying the employees, and making sure that you're in compliance with the labyrinth of laws. Another option is simply to call everyone an independent contractor, relieving you of almost all of the onerous record-keeping. Consult an accountant to find out if this is an option for your company.

Keeping your financial records well-organized is critical. Very small companies may get by with a simple accounting program such as QuickBooks, but larger ones will want to go with one of the "commercial" accounting packages. Make sure you have someone on your team with an accounting background. Such a person can save you a lot of money in many different ways.

The Team

The critical factor in the success of a Web development company, and the topic that will take up most of this article, is people. Talent and ideas are what you're selling. Designing and building Web sites requires a very eclectic set of skills, all of which are seldom, if ever, found in the same person. You need technical skills, creative talent, and business acumen. In other words, you need a propeller head, a ponytail and a suit. Unless you're a "captive" shop - one that is a subsidiary of a larger company - or have some other guaranteed flow of work, you'll also need a rainmaker - someone who can stir up business. It's common for one or two talented people to start up a company, only to realize that they are lacking in one of these essential areas. They'll need to find the missing piece of the puzzle, or their company won't be able to compete in the jungle of the Web dev marketplace. The strongest model for a Web shop is one with three or more partners, each of whom exemplifies one of the three Web dev personalities - prophead (programming and network administration skills), ponytail (graphic design and publishing) and suit (business and marketing). If you don't have all these talents on your ownership team, then you'll need to hire people who have what you lack, either as employees or on a contract basis.

Web developers tend to be jacks-of-all-trades, and that's good. However, you must resist the temptation to think that you excel in all three of these areas. You don't need adequate graphic design skills in your company, you need awesome design skills. You don't need someone who can get by programming in Perl, and knows the basics of Web servers - you need someone who eats, drinks and breathes this stuff! Being a suit, ponytail or prophead is not just a matter of skills and experience. It has to do with a person's basic personality. My apologies to my fellow Web developers, but the most creative and innovative designers tend to be useless when it comes to business decisions, and good programmers tend to be totally incapable of thinking like a marketer. The activities of a Web design shop naturally divide themselves into these three categories, so it really makes sense to divide the responsibilities accordingly. Most Web shops will have a head designer and a technical director, in addition to suits with various fanciful titles.

In addition to these three mystical figures, a Web shop (or any business) needs one or more salespeople, or "rainmakers." The rainmaker is discussed separately from the mystic triumvirate, because although their function is absolutely critical, it doesn't directly relate to creating Web sites. The suit, ponytail and prophead all need to be experts on the Internet, and to know a little about each of the others' areas. A rainmaker needs to know enough to sell your services, but in the end they will be judged by only one thing - how many dollars they bring in. The best rainmakers have their own arcane methods, and work with little supervision.

If you don't have a rainmaker, then you don't have a business. Just setting up a Web site and submitting it to the search engines will not get you enough business to pay your electric bill. You have to have someone out there looking for new accounts on a full-time basis. The most lucrative accounts are medium-to-large companies that have an ongoing Internet strategy. This type of account is almost always "won" in the traditional way, just like advertising accounts or major software projects. A salesman calls likely prospects, and when a fish nibbles at the bait, the salesman works with the client to prepare a Request for Proposal (RFP). Your whole team will then work together to prepare a proposal for the client.

This doesn't mean that you have to restrict your sales efforts to a geographic area. All the steps described above can be done over the phone and through email. It does mean, however, that you need to have at least one person whose only job is to market and sell your services. If you don't, then you'll get into a vicious cycle which is very common for small service businesses. The cycle works like this: you spend a bunch of time pounding the pavement, and finally come up with a client or two. You get to work on the project(s), and soon find that getting the project(s) done by deadline leaves no time for pounding pavement. Thus, when the current project is done, you have no new work in the pipeline, and it takes a week or two of sales work to stir up some more. No business can survive this feast-and-famine cycle for long.

This fact applies to any business, but it's especially apropos in the hyper-competitive Web world. Marketing is very time-consuming, and it must be ongoing to be effective. If you don't have a good rainmaker on your team, you don't have a business.

What kind of person do you need to look for? A salesperson. Selling is like artistic talent - some people have it and some don't. If someone has the gift, then their other qualifications (or lack thereof) pale into insignificance. A basic knowledge of the Internet is helpful, but not really necessary, as most of the clients you'll be working with know nothing about the Internet either. You can teach a good salesperson everything they need to know about Web development in a couple of days, but you won't be able to teach a computer geek to sell in a billion years. Look for someone with an established track record, perhaps in a similar type of sales, such as advertising, enterprise software or some other type of business service.

Some managers mistakenly believe that because sales staff are paid on commission, it's not necessary to select them carefully. "We'll give her a couple of weeks. If she doesn't sell anything, we don't have to pay her, so we haven't lost anything." That's stinkin' thinkin', my friend. During that couple of wasted weeks, valuable time is ticking away. You need clients, and you need them now. Also consider that your sales staff are representing your company. If they come across as ill-prepared, unprofessional or rude, they may do permanent damage to your reputation. I'll say it again - without a strong sales staff, you have no business. Choose your salespeople as carefully as you would choose a CEO.

The Suit

The suits are the ones who keep the whole business together, and the paychecks flowing. Traditionally, businesses are started and owned by suits, but in the Internet field it's common for techies or creative types to found a company, and to hire the suits they need. Suits handle several functions. In a large company, each function would be the province of one person, or even a whole department, but in a small Web development shop one or more of these functions are likely to be handled by the same person.

Corporate Management

Big decisions, such as who to hire, what type of business to pursue, what equipment to buy, and so forth, should be made with input from all departments. However, a suit is responsible for implementing the decisions, and keeping track of all the paperwork.

Administration and Office Management

The paperless office is a long way from reality. You'll be amazed at how much paper even a "cyber-business" like a Web shop generates. All this junk has got to be filed and organized, so that information is there when needed. And someone has to make sure that logistics, like keeping the air conditioners running, are under control. This kind of thing is typically a weak area for Web shops. If you've got Perl geeks running to the post office instead of coding Perl, then you've got problems.

Project Management

Each Web project that you undertake must have a project manager (some Web shops refer to this position as a "producer"). The project manager is responsible for allocating staff and resources to the project, and coordinating different elements to make sure the work goes as smoothly as possible. A good project manager needs to be able to relate to different types of people, as one of his or her primary functions is resolving conflicts among propheads, ponytails and suits. Some say that a project manager's job is simply convincing others to do their jobs.

Account Management

The account manager is the person who has direct contact with the client. This is the lucky soul who gets to explain to the client why the site looks perfect on the monitor at the office, and like a jumbled mess on the client's AOL browser at home. Or to explain that you'll be happy to implement the cool new feature that the client has suddenly decided he needs, but that it will cost him a quarter of a million dollars. Actually, the account manager is usually the same person as the project manager. Very large Web shops often have separate account managers, but this is a dubious practice, as it adds another layer for communication to filter through.

Marketing

This may sound like the exclusive province of the Rainmaker, but it really isn't. Sales is "micro" and marketing is "macro." Sales is the act of calling potential customers directly, and trying to talk them into using your services. Marketing can be thought of as building the infrastructure that the sales staff need to do their jobs. Designing and creating promotional material (printed and online), deciding where and when to advertise, representing the company at trade shows, keeping an eye on the competition, etc. Marketing is an integral part of a company's strategy, so it's critical that top management be involved in marketing.

Training and coordinating the sales force falls under the marketing VP's hat, too. The sales people may know how to sell, but they don't know what they're selling unless management keeps them up to date on what the company's strengths are, how the company compares to competitors, etc.

The Equipment and Infrastructure

Don't forget that computers are what the whole business is all about. Have several of the best ones you can afford. Time is money, so if a slightly faster processor or more RAM can help you get work done faster, then it's well worth spending the extra money for top-of-the-line boxes. Most Web shops will have an assortment of boxes, all connected by a local area network.

A mix of all the top operating systems is highly recommended. If nothing else, you need to be able to test your client sites on different OSs. A site can look (and work) completely different on a PC than on a Mac, even with the "same" browser. Furthermore, suits tend to prefer Windows, ponytails often prefer Macs, and propheads are into Unix. You need to have all these OSs up and running, and you need technical staff who know how to keep them all up and running. Don't underestimate this last requirement. If you've got a half-dozen computers, chances are that at least one will be down at any given time. Whether you buy a service contract or hire a hardware whiz, make sure you have the maintenance angle covered. If your highly-paid graphics guru is spending half his workday troubleshooting a network card, you've got problems.

How many computers do you need? You'll need at least one per employee, and personally I prefer to have two, so that I can run tedious projects on one while doing other stuff on the second box. Here's a good setup for a small Web shop with five employees (a suit, ponytail, prophead, rainmaker and grunt):

• 1 Development Web server running Unix
• 1 LAN server running Windows NT
• 2 Windows 98 boxes for the suit
• 1 Windows and 1 Mac box for the ponytail, both optimized for graphics, with huge monitors, enormous hard drives, scanners and other graphic gadgetry.
• 2 boxes for the prophead, which will probably have an ever-changing mix of NT, Unix, Linux, BeOS and who-knows-what.
• 1 box for the grunt, which might have Windows 95 (could be useful for testing purposes).
• 1 desktop for the rainmaker, and the very latest and greatest of laptops.
• 1 spare laptop in case the rainmaker's goes down, or someone else needs one.
• 1 spare desktop in case one goes down, or in case you need a box to do some lengthy number-crunching project like a log file analysis.

Sound like a lot of computers? You need 'em - in the Web business, it's seldom a bad idea to spend money on things that can speed up your workflow. You'll also need a complete assortment of the latest peripherals. You need to be able to scan both prints and negatives, to burn CDs, and to be able to use all the popular types of media (Zip. Jazz, etc.). You don't need professional-level printing capabilities, but you should have at least a good-quality color printer.

A development server, set up just like your Web server, but connected to the local LAN, is very handy. This lets you test sites right on your LAN, without going through the slow process of uploading to a Web server.

A good digital camera can be a very useful tool, especially if you do a lot of local business. With a digital camera, you can go to a local business, snap pictures, load them directly into a computer and slap them up on a Web site. Anything with less than "megapixel" resolution is a toy - get the best you can afford.

You'll need accounts at two ISPs - a hosting account and a dial-up Internet access account. These will usually not be at the same provider, because the dial-up account must be local, whereas the hosting account need not be. You can shop around for the hosting service that gives you the best deal. You need a "virtual server" account, which gives you full access to your Web servers. Your prophead should take the lead in choosing a hosting service.

You should have an account that lets you act as a reseller. That is, you can sell clients not only Web design services, but hosting services as well. Package deals like this are very attractive to clients who aren't Web-savvy enough to shop for a hosting service, and they can be quite lucrative.

It should be self-evident that you'll need the fastest Internet connection you can afford. Unfortunately, there are very few options in between cheap-but-inadequate dial-up and plenty-fast-but-incredibly-expensive leased lines. The consensus on ISDN seems to be that it's a lot of trouble to go to for a slight improvement over dial-up speeds. Cable modem service is now available in a few areas of the country. My personal experience (with Time Warner's RoadRunner service) is that the speed, and the price, are great, but uptime performance is abysmal. Your mileage may vary.

Your best choice for Internet access depends on what's available in your area, so I can't offer you any advice there. One thing I can tell you though - have at least two accounts with two different providers. No access provider is up all of the time, and they have a tendency to go down the day before deadlines.

When it comes to equipment, keep two things in mind. First, time is money, so it's well worth paying more for hardware if it will let you work faster. Second, computer equipment is very unreliable, but equipment failure is never an acceptable excuse for failing to get something done on time. Have backup systems, and have someone on staff that can get hardware problems fixed pronto.