How to start an art business
Starting an art business probably means supporting the lifestyle you want to live.
It points out that cash flow is one of the primary aspects of any business. Also, it suggests you should cut off recurring costs first so you can sustain your business longer.
If you don’t have money, how to even pay rent, buy food and water to sustain a living, and make art? This is a chicken and egg question.
Steps on starting your art business
1. Gather a startup capital
In the startup world, the first thing you need to gather is startup capital. Startup capital refers to the money that is required to start a new business, for example:
- renting a studio space,
- buying art supplies,
- making a website and social marketing.
2. Find investors
Startup entrepreneurs could get their startup capital from the bank or investors (angel investors or venture capitalists). If they get bank loans, they have to pay back with a higher than usual interest rate depending on the riskiness of their business. When an investor puts in the money, he has a percentage of this new business. He can make decisions and drive the business if he has over 51% of the equity. Next time you hear other entrepreneurs say they have investors, don’t feel jealous. It might not be a positive thing.
3. Make an art business plan
As an art entrepreneur, you probably could not secure a loan or an investment due to the nature of your business. The best bet you have is getting money from Family Friends and Fools (3Fs) or saving up for it yourself. Ask people in your inner circle to help out. If they don’t have the resources, you can still do it on your own. How much money do you need to embark on a full-time art career? Earn that money. The advantage is you will be in control of your art career.
If you are serious about your art, make sure you have a simple business plan and gather for your startup fund.
4. Gather a team
Consider adding the teamwork element to your art business. Many artists think as long as they can paint or draw well, they will become an artist and make good money. You talk to an art dealer, thinking that he will sort everything out for you. It won’t work! You are the owner of your art business. Cover many different aspects of running a business. Just blind collaborations with dealers are not enough. Better to have your team.
Who you need
Each artist is different; therefore, each art business is different. Here are some examples of who you need:
- The art director.
- The art market expert.
- The social media manager.
- The web ninja.
- The graphic designer.
- The photographer/filmmaker.
- The business manager.
- The accountant.
- The researcher.
- The general manager.
- The assistant.
Attract the right people
You must have heard many stories in the startup world: someone left Google to work on a startup. Why? Because they found something more important than money or a secure job. As an employer, you, the artist, obviously cannot beat Google for the salary or welfare. You need to be able to attract capable people to work for you by offering them something more.
Artists are not alone.
Remember, You can not achieve everything alone. You don’t work alone, and you don’t take all the glory alone. Art school might teach you to work as a solo artist, but you should play in a band. While building your team, try to learn as many skills as possible.
“Not having the right team” ranked as the 3rd best reason for a startup business to fail. Think about it; artists shouldn’t be an exception to the rule.
5. Maximize your shareholder value
This is all about Equity. Equity refers to the shares to which a co-founder or investor is entitled. It is a percentage of ownership in a company. Perhaps you have heard of stocks more often, like the stock exchange. Stocks, shares, or equity are interchangeable in this scenario. They all represent the ownership of a company.
6. Scale your art business
Perhaps you have not yet thought about it when you first plan your art business. It’s normal because we don’t usually consider scaling in the art business. But if you have a closer look, most established artists were prepared to scale. Yourself alone producing one piece of artwork every month will not get you very far. You need to think about scaling and have a strategy for it if you wish to have a team, earn more than just a salary, or become successful in the art market. You can jump directly to How to scale in the 3rd chapter of this article.
7. Beat your competition
In business, competition is good. It means there is a market for your product. Competition is a part of the market research without being emotional. But it is very different when it comes to art. When an artist friend talked about another artist with a similar style, he got upset about being copied. But at the same time, it did not qualify as a copyright infringement. Artists should approach competition in a business manner. See 4th chapter.
8. Sustain your art business
You need to maintain a healthy cash flow to sustain your art business. I will list a few pieces of cash flow advice applicable in the art world at the end of the article.
Juicing the art market
“You should ask “who else has collected that particular artist? What museums is that artist in? What curators like the art? Who are their dealers and who else is buying?” A while ago there were all these people who went long on Kippenberger, and then they tried to juice the market. They loaded up and then tried to sell. That happens in the art world.”
-Billionaire J. Tomilson Hill to Michael Xufu Huang
Art business equity
Now I challenge you to think about this: your artwork is a share of your art business, and your collectors are your shareholders. They spend their money investing in a piece of your art because they believe in your potential growth as a brand. What you have to do, is to maximize your shareholder value.
I know it can sound fierce and shocking. When I was in my first accounting class, my professor asked us: what is the goal of doing accounting. What is the purpose of running your business? I was like: ‘Make a better world?’ She told us one version of the answer: Maximizing shareholder value.
Of course, this is a free-market way to understand business. It could have a bad connotation: you might overlook the social value you bring to society.
Issuing a share to a collector
You are an artist, and you spend time making this product that is limited and high in potential growth. It’s like if you are issuing a ‘share’ to a collector. You have the right to issue it to whoever you wish, at what price you think it’s right. By owning this piece of art, your collectors now have a stake in your business. You need to represent their interest, as well as the interest of your shareholders, big or small.
How can you scale your art business?
1. You need a team
The first thing you need is a workforce. You might need a business manager and a social media manager. And be able to provide your team with a minimum salary or cover food, accommodation, transport. Once you start selling, you will need more people on your team. Make sure you have the money to sustain your team. You can’t say you will give a percentage and ask people working for you for free. It might be pretty standard in the world of the art dealerships, but they are not your team! They are your sales channels.
2. Make more art: Market share
The next step is to make and sell more art to more people. Indeed, you can just start making more original works of art, but it doesn’t have to be actual artworks. It can be art print, copyright licensing and other art merchandising. Just get your art out there while getting paid – that’s the principle. You are getting more “market share” so you can establish yourself and dominate your niche.
3. Take care of your Cash Flow
Once you start to make money, you need to take care of your cash flow. If you are unsure how to manage cash flow, read some articles on how to manage cash flow as a startup. There are a few tips and rules to follow to sustain and grow. Remember to reinvest in your growth, such as hiring, R&D, marketing, etc. Anything that can help you grow your team and market share.
4. Grow according to your values
Of course, growth isn’t everything. Don’t bite off what you could chew. Grow with a plan, and say NO to expansion if this is what you need. Choose the growth strategy that is aligned with your values. For example, you can choose to stay small in your region but enter a new market to bring your art to other cultures. Why not? You could grow however you wish. Make sure you have a plan at hand.
Art as an entertainment industry
“The art scene now is almost a mirror of the entertainment industry. I think that’s why the Juxtapoz magazine art world is so popular now. This low-brow art style has overtly cut any ties to the traditional avant-garde. The posture is: “We’re just plain old working-class folks making sexy art for the people.” And young people really glom onto this stance.”
-Mike KELLEY -Photo Craig McDean
–Interview mag – Glenn O’Brien – 2008
Art business competition
Pick an Art Niche
You don’t have to go head to head against established artists. Pick a niche with low competition. If you don’t have a lot of capital or a large team, just start with a small niche. Instead of street art, you can compete in photorealistic street art. Instead of an abstract painting, make a blue abstract painting. Start somewhere small and slowly grow and expand.
The artist narrative
Tell a story that separates you from your competitors. Once I saw a statement online: the artist doesn’t matter; it is the artwork that matters. It might sound misleading. It does not mean the story of your art brand doesn’t matter. On the contrary, you should be able to tell your story through your artwork. Like when a filmmaker is making a movie, you say to the story in the film. You shouldn’t need a behind the scene video to explain the story.
Build an Art Community
It’s time to be social with your collectors and fans so you can build your community. They will carry out your message, buy your art and support you. Ensure you include them and spend time on customer service and social marketing. The best part? You won’t even feel that you are doing marketing. It’s just like having a chat with friends.
Find your difference
You might say, I have an idea, but the niche is already taken. Of course, almost everything has been done before in human history. It’s OK to be the second who does this art, which makes this kind of work. You just need to use your story, find your community, and differentiate yourself from your competition.
Also, instead of competing against other artists, consider collaborating with them.
How to sustain your art business
1. Adapt your art business
If your artworks don’t sell for a long time, stop making more. These artworks don’t sell for a reason, so making some more of the same thing probably won’t help. You can’t just keep spending on production while building your inventory without reacting to the current situation. Instead of making art, perhaps work on social media promotion or talk to your sales channels. Maybe you should get feedback from your customers to build better products.
2. Get paid early
Would you prefer to receive 100$ now or 110$ tomorrow? The correct answer in business is: now is always better. Who knows what will happen in the future? Many artists do commission works. Make sure your customers pay you as much as possible upfront. Pre-sell your art when possible. You can use this money to pay your bills and get your business going.
3. Pay later
Paying later doesn’t mean paying late. Many bills have a due date, for example, taxes, material costs, and rent. Don’t pay your bills until the last day so you can use this money until the very last day. Of course, make sure you don’t go over the due date. You can set an automatic transfer on the previous due date for recurring costs like rent for your studio or office.
4. Minimize uncollectible accounts
Uncollectible accounts are the money other people should pay you, but they would not for various reasons. It’s bad debt. You have lost hope and assume it will not be reimbursed. Imagine you have a customer who should pay you the remaining commissioned work, but he went bankrupt. Before receiving work, do a small risk analysis. The art world is small; ask around your contacts before accepting a big order or a significant commitment. Sometimes some things are too good to be true.