Is a Design Firm startup feasable in this economy?

I'll answer the question title rather than the one asked in the body!

Perceived wisdom is that a recession is a good time to start a small business:

• Companies begin to work with smaller firms and freelancers on an ad-hoc basis.
• More scope to keep your own costs down.
• Less opportunity cost for you.
• Good people are looking for work and partnerships.

This has actually been a bit of an Internet meme recently if you want to do some more reading: http://www.google.co.uk/search?q=recession+good+time+to+start+a+business

It obviously depends on your specific niche, but usually, quality of product/service and your ability to market would be much larger and more pressing issues than the wider economy.

1. Who do you know?

You have enough design skill to be in the game. So do many, many others. In order to actually make a living at what you want to do, my experience has been that most people in creative industries need to have one or two major clients - people who have a lot of work for you to do, and once they get used to using you, they'd rather stick with you than look for someone else. If you feel like you have these, then start working hard to make them choose you as their go-to designer. If you have more than two of these and they keep you really, really busy, you may be able to carve out your niche in a more permanent manner.

If you do not have these kinds of contacts yet, question two is:

2. Who can you meet?

Trade shows, cold calls, portfolio presentations, meetups, recommendations, introductions, whatever it is, wherever you can meet people, try to get a couple of solid, hungry clients. It may be mundane, but every successful independent creative worker I have seen has taken this path.

The biggest need I've seen lately for a designer is one that is good at working with developers who are launching new startup websites. (Maybe I've been hanging out at this site too much!) So here's an idea.

If you could figure out a good way to reach startup minded developers and collaborate with them on their new ventures, that could be a great way to go.

Offer startups design and user experience work in trade for some equity or revenue share. Do that enough times and you'll gain a large portfolio and the ones that take off and really grow will make you some money and will tell everyone about you.

You could balance that with more traditional design work to pay the bills, but it looks like you're already doing that.

The optimal size for a design firm is small; most are under eight people. There is always room for one more. The economy won't matter that much either way, and it does put you at something of an advantage as you won't have that many fixed costs for a while, unlike your competitors.