The newly-launched StartUp Britain website, which is backed by the U.K.
government, “is designed to make it easier for new companies and
innovations to flourish and encourage people who aspire to start new
businesses to work for themselves.”

But it’s the subject of a significant amount of criticism. Some say it
lacks all substance, and is little more than a low-quality link farm.
Others point out that it promotes sites filled with affiliate links.

Some of the biggest criticism, however, has centered on StartUp Britain’s
promotion of 99designs, a US-based service that runs crowdsourced design
contests.

Not surprisingly, design contests are a hot-button topic for those in the design community. On Hacker News, there is a vibrant discussion about a blog post entitled “Why designers need to stop moaning about 99designs.com.

The publisher of that blog post does make valid points, and there clearly is a place in the market for 99designs and sites like it. But is a design contest the right choice for you? In some instances, the answer might be ‘yes‘, but here are six reasons to think twice.

Great-looking work product isn’t necessarily great work product

Great design is about more than aesthetics. A great logo, for instance, coveys feelings and sends a message — things that a great-looking logo may not.

A skilled designer looks at the big picture. If your logo is going to be printed, for instance, sizing, the level of detail and the number of colors used are crucial considerations that a less-skilled designer may not bring up, leaving you stuck with a logo that may have beautiful form but poor function.

In design contests, designers have every incentive to give you what they think you’re looking for so that they can win the contest; they have far less incentive to try to help you truly figure out what you need by applying their expertise, but that’s precisely where skilled designers provide the greatest value.

Process matters

Is it possible to post an RFP for a logo and watch as dozens of samples from dozens of designers flow in? Sure. But good design is just as much about process as it is about design, and the type of designer-client interaction found on design contest services can leave a lot to be desired.

You exclude a lot of designers

While there are plenty of designers participating on 99designs, and many are almost certainly quite capable, lots of designers refuse on principle to participate in design contests.

Logically, many of these are designers those with no shortage of demand from paying customers. From this perspective, it’s worth considering that the kind of designer most of us would ideally want to work with (read: one who has lots of business) will have very little motivation to participate in your design contest.

Legal issues can be treacherous

Knowing and trusting the designer you’re doing business with is of huge importance for companies. Even when you sign an agreement that assigns intellectual property rights in the work product to you and represents that the work product is original, the agreement is only as good as the honesty of the person signing it and your ability to enforce the terms.

Needless to say, working with someone you know very little about or who may be located in a different country carries significant risk. In this respect, doing business with a designer you don’t really know can prove to be penny wise and very pound foolish.

Relationships matter

Although owners of new businesses may not require lots of design work, establishing a relationship with a quality designer early on is a good idea because chances are you will need services in the future as your business grows.

Having a solid relationship in place will minimize the risk of poor execution as your design projects take on more and more importance. Outsourcing design projects through sites like 99designs may be an appealing tool for getting jobs done when you need them done, but they can also dissuade you from the kind of relationship building that is beneficial long-term.

If money is everything, you may have a problem

Naturally, new businesses and small businesses usually have to watch what they spend carefully. That means hiring a big-name agency which charges $10,000 for a branding package is probably not an option. In most cases, it shouldn’t be.

But when a service like 99designs is used primarily to cut costs, it raises red flags. The reality is that undercapitalization is one of the biggest causes of new venture failure. This means a business that doesn’t want to spend more than, say, $300 on a logo because it realistically can’t afford to should consider the possibility that it’s undercapitalized.

After all, starting a new business usually comes with certain costs, ranging from entity formation to collateral creation. If you feel the need to ‘cut corners‘ on these basic costs to save a few hundred dollars, there’s a decent chance you don’t have enough gas in the tank.