Artists – You Need A Business Plan!

The business planning process consists of four basic questions

The business planning process consists of four basic questions

If you are serious about selling art and having a successful art business then you need a business plan.  Every business needs a plan including businesses in the arts!  A plan will help you organize your business and give it a much better chance to succeed and grow. Many successful artists and galleries have told me that when they started their business they now wish that they had spent more time to create a formal plan. They felt that having a plan would have enabled them to grow faster and make fewer mistakes – take their advice!

Whether you are starting a new art business or have an existing one, make sure that the planning process is a part of your business life. A major benefit of the planning process in addition to the plan itself, is developing a way of thinking about your business and the environment it operates in. You will begin to see things differently and uncover opportunities and threats before others see them.

Most people spend more time planning their vacations than they do in planning for their businesses – don’t let this happen to you. Set some time aside for planning in your normal course of work – planning should be a normal part of your work!

The Planning Process

In keeping with the “planning your vacation or trip” theme, planning for your business is quite similar. The planning process is really quite simple and consists of four basic questions. Finding the answers to these questions is a little more complicated and will require some time and effort on your part. The basic questions in the planning process are:

  1. Where are we now?
  2. Where are we going?
  3. How are we going to get there?
  4. How will we know when we have arrived?

1.  Where are we now?

Sometimes this step is called a Situation Analysis in that you are trying to get a feel of where you are today and to identify the internal and external factors that affect your business. Key parts of the Situation Analysis include:

Company Summary – a brief description of:

  • Your company
  • Products
  • Markets
  • Competition
  • Form of organization
  • Key players
  • Your story

Strengths & Weaknesses

When you analyze your strengths and weaknesses you are taking a look inward at your business. Because strengths and weaknesses are internal to your business you have some level of control to alter or change them. When you find a area of strength, you should capitalize on it. When you find an area of weakness you should remedy the situation or make its impact less on your business.

Some ideas of areas to look for strengths and weaknesses:

  • Your art, products and services you create or provide
  • The skill of the people in your organization (this includes you!)
  • Your marketing efforts and your brand
  • Your studio and facilities
  • How you create or produce your art
  • Your financial and accounting systems
  • How your company is organized and managed

Opportunities and Threats

Opportunities and threats are factors that are external to your business. Unlike strengths and weaknesses you will probably have little power to change them – only adapt. You should strive to take advantage of opportunities and minimize the effect of threats on your art business.

Some ideas of areas to look for opportunities and threats:

  • Changes in consumer behavior, fashion and trends
  • Changes in technology that may affect how you sell and produce your art
  • Government regulations
  • Changes in availability of supplies / materials
  • The state of the economy
  • The size of the market and growth trends

Competitive Environment

Your business doesn’t live in a competitive vacuum! It is likely that you have a large number of competitors. These competitors may be in your neighborhood, city or town, country and now ever increasingly all over the world. Don’t confuse the fact that your work may be unique with not having any competition – there are very few products or companies in the world with no competition!

Some areas to look at in analyzing your competitive environment:

  • The number and quality of competitors
  • Geographic dispersion your competitors
  • What makes your competitors strong/weak?
  • Competitor’s actions and reactions
  • What can you learn from your competitors?

My Competitive Advantages

After you have looked at your competitors you should analyze what YOUR competitive advantages are. What makes you stand out in the marketplace and insures that customers think of you first? A good question to ask yourself is, “What is your “secret sauce”?

2.  Where are we going?

When you plan a vacation one of the things you do first is decide on where you are going and what you will do when you get there – planning for your business is really no different. If you don’t know where you are going then you may end up in a place that you don’t want to be.

In business planning you answer this question by developing our Mission; a Vision of what the future should look like; and Goals & Objectives to focus your attention on key business areas.

Mission

  • The what, why, how and to whom for which your business exists
  • Your mission guides your everyday business actions.

Vision

Conceptually the Vision Statement helps you describe why it is important to achieve the Mission, the overall reason(s) the business exists, and what you are trying to accomplish

Goals & Objectives

A goal is a broad term for the things you want to accomplish in your art business. Objectives are typically defined as goals that have been “quantified” in terms of time to complete, cost, and other resources that can be measured. You will need to develop objectives for the major areas and initiatives in your business.

Goals & Objectives need to be:

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Time and/or Cost Based

3.  How are we going to get there?

Once you have developed your overall goals you will then need to develop strategies and action plans to describe the various steps necessary to achieve your goals. Strategies are somewhat broad in nature and the day to day activities needed to achieve them are translated into “Action Steps”. Your strategies and action plans are similar to a map and itinerary when planning a vacation.

You will need strategies and action steps for:

  • Your creative and product direction
  • Marketing and sales
  • Finance & Accounting
  • Production & Operations
  • Facilities, studio, workshop
  • Management & Organization

4.  How will we know when we have arrived?

When you are on a vacation it is easy to know when you have arrived at your destination by the signs or points on your map. Business is no different but the signs are in a different form. In business we know we have arrived at our destination or completed our goals and objectives by:

  • Tracking our progress on a calendar or schedule
  • Measuring key initiatives to see if they were effective and accomplished our goals
  • Monitoring our financial statements to see if our revenue and expenses are meeting our expectations.

The Bottom Line…

Planning your art business is a must for success.  You don’t need to go to business school to learn the basics of business planning and as you plan you will become better at it.  I suggest you check out my book “The Artist’s Business and Marketing ToolBox” which contains everything you need to create a winning business plan for your art business.  Once you are done with the planning process you are ready to start over. You should develop a business planning “state of mind” and make it an ongoing activity. Remember – a lot of the value of the planning process is not the plan itself but a way of thinking about and running your business.

You will find most of the tools you will need to develop a great business plan for your art business here in http://creativesandbusiness.com/ .

Neil McKenzie is the author of The Artist’s Business and Marketing ToolBox – How to Start, Run and Market a Successful Arts or Creative Business available in softcover from Barnes & Noble and Amazon and as an eBook from iTunes, Amazon and Barnes & Noble.   He has developed and teaches the course “Artrepreneurship” at the Center for Innovation at Metropolitan State University of Denver, and is also a visiting professor at University College at the University of Denver.

Neil has over 30 years’ experience as a management consultant and marketing executive, working with some of the world’s top brands. Neil is a frequent lecturer to artists and arts organizations, a guest columnist for Colorado Biz Magazine, where he covers the creative sector of the economy, and the author of several articles for Americans for the Arts, a national arts organization. Follow Neil on Twitter: @neilmckenzphoto

 

2 thoughts on “Artists – You Need A Business Plan!

  1. Rafael Salazar

    Congratulate you on excellent article. Much needed information to everyone in business.
    Shared via Stumble Upon, Facebook< Tumbler and Twitter.
    Happy Thanksgiving!

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