Author Archives: worthwhile

Connecting Art and Business

As an artist, do you feel that sense of discord when someone tells you to learn how to market yourself? I know I do. Thinking of myself and my art as a product makes my art spirit raise an eyebrow and slowly shake my head.

Business-minded people see the importance of having a viable product, and more importantly an interested buyer. A business-minded person might very quickly tell an artist to change their product to meet the desires of potential customers. (Thus begins the eyebrow raising.)

Most artists, however, need to make their art without considering who will buy it upon completion. Such is the nature of creating authentic work. Believe me, the world needs the art that is made without profit in mind. Imagine if Vincent Van Gogh had never made Starry Night! Indeed, Van Gogh only sold one of over 900 paintings in his lifetime, Red Vineyard at Arles.

Surely there is a disconnect between selling art and making art, but the good news is that authenticity wins in both business and art-making. Especially now, as modern consumers seek out products and services that have personal stories. Buzz words like handcrafted, artisanal, local and ethical attract modern consumers, but art has always been these things and so much more.

The key to selling yourself is not making art that everyone wants, but finding the people who like your very unique, once in a lifetime voice.  Art buyers are looking for art that speaks to them. You make art to say something to the world. Finding where that conversation takes place is how you will create success for your art.

The Business of HeARTwork

A hobby in art is not the same as an artist who has a creative practice along side another career. For some artists, authentic heART-work requires a multitude of outlets to both be with their work and separate themselves from the challenge of creating authentic work. Therefore, artist’s, more often than not, have a variety of interests and activities outside of making art. These activities feed the artist, both literally and figuratively. What I’ve noticed is that artists can relegate their creative endeavors to “hobby” status either by refusing to do the heart-work required to make compelling art, or by allowing themselves to believe that making art part-time while working at another job precludes them from being a true artist. 

In my opinion, the amount of time an artist dedicates to making art does not define the quality of the work. Part-time, full-time, or as the mood strikes as long as the work is deep and authentic. My job as an arts business consultant is not to help you make quality work, but to help you learn how to support your work with income. Worthwhile Studio will help you set goals that define your vision, discover and learn about the people who support your work with purchases, and understand how to manage the financial aspects of being an artist. 

If this sounds like something you would like to have under girding your creative practice, then send me an email! I will keep you up to date with my progress in developing this service for artists.

Flights of Fancy

In my interviews this week, I’ve stumbled upon a stereotype about artists that I despise: Artists are flighty, flakey, and full of themselves. Yes, perhaps there are some underdeveloped creative spirits out there who fail to follow through, who agree to a commission they never complete, or believe themselves to be the most talented individual in the room. As my graduate studies come to a finish, I am considering how to help artists develop their creative careers, but I have concerns that this creative group can be unwieldy and troublesome to work with. However, I’m pretty sure this kind of person can be found in almost any profession. People more readily accept this stigma about artists because the creative process can seem so mysterious.

Artists are full of creative ideas. That’s why poets keep journals, painters keep sketchbooks, and bar drinks come with cocktail napkins. In Elizabeth Gilbert’s book Big Magic (which I highly recommend to any artist no matter your medium) she talks about how she believes Ideas find artists to bring them into the world. When an Idea comes to an artist asking to be created, the artist has the choice to work for the Idea or let the Idea move on to another artist. There are myriad reasons why an artist may pass on a particular Idea, and work diligently on others. This is one of the best concepts I’ve ever read that can explain the nature of artists and their flights of fancy with creative Ideas.

Going back to arts business mentorship, I believe it is imperative for an artist to answer to the question, “Is making art your business or your hobby?” Please consider this definition of hobby from Dictionary.com:

HOBBY [hob-ee] Noun, Plural Hob-bies. An activity or interest pursued for pleasure or relaxation and not as a main occupation.

If making money as an artist is not your goal, if you would prefer to create only what you will as the Ideas come and go, then perhaps art is your hobby. Please know, hobby is not a bad word, and does not mean you are not a true artist. It just means your activities surrounding your creative practice are different than someone who plans to support themselves entirely as an artist. If making art and selling it is important to you, then your activities must include more than art creation. The good news is that building a business around art can also be a creative process. Sure, there are finances to consider and websites to be made, but there is also branding, maketing, networking, and so many other creative tasks. Perhaps working on your business can help you take a break from a heavy piece or give you insight about your next body of work. You never know where Ideas come from, but you do have to be ready to accept their offer to bring them into the world. Working on the business side of your art will allow you the opportunity to accept more creative Ideas because your work will be moving out into the world and supporting your next idea with the finances needed to support your studio.

If you are a working artist intent on selling your work, then perhaps an arts business mentor can help you take flight on your journey as a creative entrepreneur.

Mirrors and Mentors

 

I’ve interviewed a lot of artists and makers for one of my final courses in this master of entrepreneurship program. There are a few things that really touch my heart as I speak with these vibrant and creative individuals. They each have an inspiring passion for creating something. Painters, fiber artists, jewelers, every artist I’ve spoken with talked at length about their ideas for new creations, their collection of art materials, and the exciting journey of innovation they’ve taken as artists and entrepreneurs. When I inquired about who they ask for help in their creative endeavors, most artists told me they look to other creatives for support. One artist told me that although there is business help available to her, most of the time she has to translate traditional business advice to the specialized needs of a creative business. All of the artists I spoke with are interested in some form of arts business mentoring. The overwhelming answer to my question about their creative business strengths and weaknesses was they felt most confident in creating their products and least confident managing their business in the fast-paced world of internet search engines and social media presence. A lot has changed (and very quickly) for artists since the internet became a more accessible and acceptable place to sell and purchase art. Art schools have not adequately addressed the entrpreneurial needs of artists during this technological disruption of the art world.

What I have enjoyed so much about interviewing such a range of artists, is that I see myself and my artistic journey reflected in their stories. This mirror lets me see that the struggles I faced just out of art school, the disorientation I felt having to navigate the technology that changed as quickly as I learned it, they were not signs of my failure as an artist, but more a lack of understanding the process of building a business around my talents. I went back to school thinking I wanted to understand the business side of selling my work, and have come out the other side hoping to mentor other creatives based on what I’ve learned in this program. Creating art will always be my first passion, but seeing other artists succeed by doing what they love has taken a close second.

Small Business Grants: Free Money for Your Business

Free money for your business may seem too good to be true, but the truth is there is grant money available to a wide variety of small businesses. The Small Business Association has a pretty large definition for small business. In fact, most mom and pop businesses do not even come close to the SBA’s definition of small business in either income or employee numbers. “The two most widely used standards to qualify a business as small are 500 employees for most manufacturing and mining industries and $7.5 million in average annual receipts for many non-manufacturing industries” (Beesley, 2014).

Federal Grants
It is important to denote that this is a size definition used by the U.S. government to determine if a business is able to apply for their small business grants. These government grants are called the Small Business Innovation Research Grant and the Small Business Technical Transfer Grant. Both of these grant opportunities, funded by federal agencies with budgets greater than one million dollars, aim to stimulate innovation, research, and development, as well as collaboration between universities, entrepreneurs, and the agencies. The grants are broken down into three phases. In Phase I, the business must establish the merit, feasibility, and commercial potential of the research and development. These grants are less than $150,000 and should be completed within six months. Phase II supports the continuation of the Phase I research and development. Funding is based on the results but is less than one million dollars and should be completed within two years. During Phase III, the business is able to reap the benefits of extended research and development by pursuing commercialization of the developed product. The granting agency no longer funds this phase, but there is the potential for funding through other sources.

Does Size Matter?
The definition set forth by the SBA can be misleading, as a small business with 500 employees is quite sizable when compared to a startup tech company with only ten employees. A small tech company will have strong and mighty competition for these government grants. While this should not dissuade a tiny company from applying to these government grants, it should put the competition in perspective. These well-funded, extensive government grants are essential to American innovation and entrepreneurship, but a start-up would be wise to look for grant money a little closer to home.

Just like the saying, it takes a village to raise a child, it also takes a village to grow a business.

Perhaps the best and most rewarding place to look for small business grants is in your own back yard. Your local economic development center is a great place to begin a grant search close to home, and they may even offer insight into the kind of businesses your area is hoping to attract. There are small business centers all over the country, and many of them have grant money in the budget to help entrepreneurs start up and grow their businesses. Many agencies set up grants that serve a particular kind of entrepreneur such as women, minorities, or veterans. A web search can quickly find grants applicable to a certain population or region. Each state will have small business grants available for supporting their economy, and there may even be funds at the municipal level. Another great resource for grant money is corporations. With the increasing demand for corporate social responsibility and the corporate world’s need for fresh and innovative ideas, many well-branded corporations have funding set aside to support their local economy and create an influx of innovation for their research and development.

Competition for grant money will always be tough because most small businesses can use a little free money. It is important to make sure your business qualifies for the grant you are applying to, so make sure to carefully look over application requirements before taking time to submit an application. Through a little bit of research and a lot of preparation, you can grow your business through grant funding.

References

Beesley, C., How and Why to Determine if Your Business is “Small.” (Oct. 20, 2014), https://www.sba.gov/blogs/how-and-why-determine-if-your-business-small

SBIR STTR: America’s Seed Fund, SBA. Retrieved from https://www.sbir.gov/about/about-sbir

Modern Day Patronage: Thank you, Internet

I would like to introduce you to Patreon. If you are a creative entrepreneur, with a strong social media presence, Patreon has the potential to help you create a measure of sustainable income. Once you create a Patreon page, you tap into your social media network, and ask them to help to support your creative endeavors, one dollar (or perhaps five) at a time. In a perfect world, all your friends, family, and tenuous acquaintances will sign up for Patreon and begin supporting your dreams. Now, before you think I sound flippant, I want you to know I think Patreon is a fantastic service! The company strongly supports their artists and takes great care of the patrons. There is no other service out there like this for artists, at least none that I am aware of, and so long as you have a strong social media presence the potential to secure patrons is unlimited.

Financial Narrative for Worthwhile Studio

I have been developing assumptions and financial sheets, including Income Statements, Balance Sheets, and Cash Flow Projections. And yes, that is just a boring as it sounds, at least for me. But, I have a renewed clarity for how I see Worthwhile Studio in its startup phase, and how it will look as it grows and matures into a big girl business. Please watch my screencast to understand how Worthwhile Studio plans to blossom and grow!

Financial Reports: Tedious and Rewarding

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So, I knew the financial class was going to kick my “a double s,” but I also knew this was a weak area for me in my other business endeavors. Artists, let me tell you, making financial statements is both tedious and rewarding. My first pass at the Income Statements and the assumptions therein was lost due to a power outage. The second round was respectfully tossed out by my professor as well, just plain wrong. My ego had to take a few days to rebound, and after a whole lotta whining and “I don’t wannas,” I finally sat down to the tedium and discovered the rewards of creating (mostly) accurate assumptions about my business activities.

The rewards came in the kind of clarity that gave me a glimpse into the future financial standing of the ideas I have been diligently developing over my graduate studies in entrepreneurship. Being a keenly visual person, averse to numbers and math in general, I had no idea that numbers could create an image of a company. But indeed they do, and I feel as if I have been baptized through fire trying to learn this lesson.

I cannot say I would drop my dreams of being an artist to pursue financial planning, but I can say I have a newfound respect for those who relish spreadsheets, balancing acts, and crystal balls full of excel equations. In the future, I will certainly employ someone with those proclivities to help me make sense of my business’s financial picture.

Seasonal Cash Flow Issues

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Seasonal Cash Issues in Small Business

The majority of small businesses have some measure of seasonality. When it comes to weathering the ups and downs of the seasons, adequate cash flow is imperative. Thorough planning, forecasting, and consistent review of financial reports can help managers mitigate the effects of seasonal sales and better prepare the business for future growth in lean times.

Seasonality in small business has two sides. There are issues with a seasonal increase in sales, such as how to manage a large inflow of cash, or how to fund the creation of goods and services before a busy season. On the flip side, there are issues with a seasonal decrease in sales, such as how to make payroll or sustain the business while sales are slow. In areas where travel and tourism make up a large part of the local economy, many small businesses will have an influx of cash during the peak season, and then sales will fall off as the tourist season wanes. The weather also has a strong impact on sales, especially in businesses that rely on a particular kind of weather for robust sales. The increase in demand for goods and services around the holidays can also pose challenges in labor and production.

Small businesses, especially new start ups, may have considerable challenges in managing cash flow. Cash flow refers to the company’s inflow and outflow of cash, and whether or not the company is seeing a profit from its activities. Ray Thompson’s article Understanding Cash Flow: A System Dynamics Analysis (1986), states that the “ ‘rules of the game’ are distinctly different for the small business.” Being under capitalized, “they depend on various sorts of short-term financing such as accounts payable, accruals, and lines of credit (Thompson, 1986).” Established, large corporations, while not immune to cash flow issues, tend to have adequate internal capabilities to manage cash flow during lean times.

The bottom line for any kind of business that experiences inconsistent sales is that cash flow management is imperative to the success of the company.

Planning for a slow season can be easier said than done, but there are a variety of financial statements a business creates that can help managers forecast cash flow issues. Forecasting helps a business decide what options are available to the company to remedy cash flow issues due to seasonality. One of the best things a manager can do is develop monthly sales, spending, and cash flow forecasts. Monthly reviews of these reports can help the manager understand the seasonal peaks and valleys, consider borrowing options, and help forecast and plan future profits.

So where does a small business look for cash flow in lean times or as a busy season approaches? There are a number of tried and true techniques for accessing cash.

  1. Internal Accounts
  2. Savings and Investments
  3. Lines of Credit/ Borrowing
  4. Alternative Revenue
  5. Lay off and Close

The first and easiest place to look is in accounts payable and receivable. Most businesses operate by hoping their clients will pay as soon as possible, while simultaneously trying to pay their own bills as late as possible without incurring overdue costs. If the business demands payment from accounts receivable, they can quickly increase cash flow just by calling in profits that have already been made. A business manager can also develop vendor relationships with flexibility to pay later, allowing the business to keep cash on hand a little longer. The second place to look for increasing cash flow is the business’s savings and investments. A manager who understands the peaks and valleys of the business can make an effort to save for seasonal cash needs, and liquidation of investments can often free up cash, although there may be penalties involved with this solution. A third option is to borrow money. A business may already have lines of credit available. If not, developing strong relationships with banks and other lenders throughout the year can help ensure cash when needed. A fourth option is to look for alternative operations/products for the slower seasons, creating an offseason demand that brings in a new source of revenue. And finally, a seasonal business may simply decide to hire during their busy season, then lay off employees as the season ends, perhaps even closing the business until the next busy season.

All of these options require knowledge and understanding of the business’s cash flow needs. Through monthly review of cash flow statements, managers can plan and prepare for the cash needs from season to season.

It is important to understand that these kinds of reports are living documents. A cash flow statement is simply a snapshot of the company’s cash at a given point in time. However, with multiple years of statements showing the inflow and outflow of cash, a manager can begin to forecast the lean and fat times of the business.

Reviewing the reports on a monthly basis can help a manager foresee a cash flow issue and address it before it becomes a problem. In essence, keeping an eye on financial reports allows managers to plan, forecast, review, and adjust for cash flow throughout the year. The point is to keep a positive cash flow in the slow season and not mismanage cash during times of increased profit.

References

Soto, A. (2017, March). How to Balance Cash Flow in a Seasonal Business. [Blog Post]. Retrieved from https://articles.bplans.com/how-to-balance-cash-flow-in-a-seasonal-business/

Thompson, R. (April 1986). Understanding Cash Flow: A System Dynamic Analysis. Journal of Small Business Management. (Vo. 24, Issue 2), pp. 23-30.