Keeping accurate records consistently is the foundation of strong financials regardless of artist discipline or whether you are a nonprofit, for-profit, or contractor.

Marketplace 101 –  Small Business Accounting & Finance Made Easy (Market to Market)

1. Enter your budget and track actual income and expenses using the worksheet below. It may seem intimidating. Take it one number at a time. The totals will automatically calculate as you enter each number. The first column, Fiscal Year Budget is what you think you will earn and spend in each category from January 1 – December 31. Once you enter your budget, you won’t typically edit it until next year.
2. At the end of every 3 months, type in what you actually earn and spent that quarter in each category.

The last column is the total amount you spent over the year. You can compare this to what you thought you would spend in the first column.

At the very bottom, you will see a profit $ or loss ($). Your goal is obviously to make a profit, but this is a difficult feet, especially starting out, and will often vary from season to season in any artistic discipline. If you are starting a nonprofit organization, change the “profit/loss” to “surplus/deficit”. The goal is still to maintain a surplus of income that you can feed back into the organization. Nonprofits may be trickier in that if you don’t spend funds from some foundations or other supporters, you are asked to give the money back.

AEI Budget Template

. Are there certain expenses that increase as you sell more work? Which ones?

2. Are there times of year when your expenses are relatively high and relatively low? Based on this information, what strategies can you employ to plan for times of year when your profits are lower or higher than average?

3. Build a sales spreadsheet. Consider including additional information, such as basic information regarding where the customer resides, how they found out about your work, how long the purchase occurred after their initial contact with you, whether they have made a purchase from you in the past and where they made the current purchase.

• How can this information inform the market research work you began?
• Are there any trends regarding what work sells the best, where and to whom?
• Is there additional information you would like to gather about your sales to inform your market research?

4. Because of the sometimes complicated nature of accounting and finance, we recommend consulting with a Certified Public Accountant on such issues. Are there any challenges or questions you have regarding your accounting and finance? For instance, are there any items that you are unsure how to categorize as an expense, or are you unclear as to when you should record a sale? How could an accountant assist you with these issues?

• Which accounting and bookkeeping functions do you feel comfortable addressing yourself?
• Given your budget, and the scope of your business, which accounting functions are you most concerned about having addressed by a trained accountant?

Tax Write-Offs:

Reflection Questions

1. Business-related taxes are issued at a variety of levels (municipal, county or parish, regional, state and federal) and through a variety of methods (sales tax, income tax, property tax, capital gains tax, social security withholdings, etc.). Find the name of the taxing agency at each level of government, their filing deadlines and their website address.

https://www.sba.gov/starting-business/filing-paying-taxes

Ohio: http://www.tax.ohio.gov/ohio_taxes.aspx

• Which taxes relate to your artist business?
• Are there contacts at any of these agencies that can assist you with your questions regarding filing procedures and your specific tax compliance responsibilities?

2. Review your expenses spreadsheet. At the various levels of government, are there specific taxes for which you may be able to claim a business deduction?

3. What are the documentation requirements for your eligible deductions (e.g. a travel log, receipts, invoices, etc.)?

Because of the complexity of filing taxes at a variety of government levels and the specific knowledge required to correctly identify business income and expenses, we recommend consulting with a Certified Public Accountant on such issues.

1. What questions do you have for your accountant or tax preparer related to tax compliance?

2. What is your timeline for obtaining answers, given the filing deadlines that your business faces?

3. Are you aware of any services that provide low-cost or free consultation with accountants in your community?

If you are doing work for hire, you may feel like a small fish in a big pond. You have more power than you think you do.

Our speaker at the March 2011 San Francisco, CreativeMornings (www.creativemornings.com) was Mike Monteiro, Design Director, and co-founder of Mule Design Studio (www.muledesign.com). This event took place on March 25, 2011 and was sponsored by Happy Dog and Typekit (who also hosted the event at their office in the Mission).

Mike’s book “Design is a Job” is available from A Book Apart (www.abookapart.com/products/design-is-a-job)

A big giant thank you to Chris Whitmore (www.whitmoreprod.com) for offering to shoot and edit the video. Photos were graciously provided by Rawle Anders (twitter.com/rawle42).

The San Francisco chapter of Creative Mornings is run by Greg Storey (twitter.com/​brilliantcrank).

Follow us on Twitter at twitter.com/​SanFrancisco_CM

1. Different types of insurance cover different aspects of an artist and their creative practice. What types of insurance do you currently have? Are there any that you are considering?

2. Refer back to your expenses spreadsheet. How much are you currently spending on your insurance? How can you best leverage your insurance to minimize cost and minimize risk?

3. With an assortment of insurance types available, it can be overwhelming to know where to start. What advice would you provide to another artist if they were seeking home/studio, health, liability and/or automobile insurance based on your experience?

4. Are there any resources that have helped you in selecting your insurance?

A “brand” is essentially a promise. It is a “pledge” of some sorts, whether that is to provide a high quality product, the lowest possible price, or the quickest possible service (or all of the above). It is the essence of a product or service delivery, including why it is great, and how it is better than all competing products.

Read This Handout Before Moving On 

AEI-Branding Handout

Write down three elements of your brand image that you would like to develop and make more visible to customers and potential customers (e.g. the work you create, your packaging, your website, etc. If you don’t have packaging, consider things like your bio or where you conduct meetings with collaborators, editors or producers).

For each element, list one strategy you will use to strengthen your brand across everything you do. In the case that your artwork is segmented into different brands, build a strategy to strengthen each brand without competing with one another. Add this to your goals in your business plan.

Establish a concrete deadline for implementing that strategy.

List some measures of how you might know the strategy worked (e.g. an increase in page views, meetings scheduled, revenue).

1. What are some examples of strong brands that you have encountered?

2. Which brands do you find yourself most loyal to?

• What about these brands do you find appealing?
• If these businesses suddenly branded themselves in a different way, do you think if would affect your buying habits? How or why not?

3. What one word do you think people would use to describe you?

• To describe your art?
• Your business?

4. How can you build on these existing perspectives to develop a consistent brand message?

5. What kinds of customers do you think would be most likely to respond to this image?

6. Who would be your most likely competitors for reaching these potential customers?

Now that you have a strong sense of your market, you can use that knowledge as you develop a strategy for reaching them where they are. With so many outlets and constant information being thrown out there, building and maintaining relationships is key for individual artists. Here is how one artist made his mark in the comic and illustration market.

To date, what are the strategies you have used to tell people about your artwork outside of your immediate circle of friends and family? (business cards, festivals/conventions/conferences, postcards, websites, advertising, press releases)

Which of those generated the most or best exposure?

What target audiences that you identified in your market research and marketing plan do you want to reach most?

What did your research find about how this audience or type of client gathers information? (Are you more likely to reach them electronically or on paper? What do they tend to read, and where do they read it?) The more narrow you can get here, the less likely it is that you will waste money and time on blanket marketing efforts.

Create a Marketing Campaign

A marketing campaign should be an extension of your marketing plan.

In other words, you have one overarching marketing plan; marketing campaigns are a collection of activities to achieve the goals in that plan. A marketing campaign may be to increase traffic to your website, for example. Another campaign may be to sell a particular event or collection of work. You may have different campaigns to reach different audiences. Once you have determined how your audience prefers to receive information, the campaign is a set of strategies to expose your work to them.

• Are there particular people with whom you need to make contact to run this campaign (reporters, advertising departments, etc.)?
• Do these individuals work on particular deadlines or timeframes of which you should be aware?
• What kind of barriers should you prepare for with a particular marketing channel (e.g. perceptions people have of Facebook ads and how you combat that)?

Choose one way you can increase your visibility with the right people without spending too much or any money. Make that the basis for your first campaign.

Describe yourself and your artwork in 100 words or less. Every word should be chosen based on how your audience receives information, pulling their interest, rather than starting with you. Most often, avoid using technical terms since most people may not have experience in your artistic discipline. See the next section on storytelling to craft your message in a way that can draw someone in and remember you.

Choose a piece of content you need to create to engage people with your business. It could be a video, your about page, a business pitch presentation, or anything else you are doing to put yourself and your artwork out there.

1. Identify the protagonist and the starting point. (Is it you today? Is it where you were when conceived your idea? Is it your friend or someone who experiences a piece you created?)
2. Explain the routine or average day of the protagonist.
3. Pinpoint the “inciting incident.” In other words, what happened in your world or the protagonist’s world that set that routine in a different direction?
4. State the obstacle and describe all the frustration and tension that rises as you try to overcome that obstacle.
5. State the moment of bliss, the moment when the artwork and process you are offering to your audiences or clients solves all of the problems and tension.
6. Tie up loose ends and state the new normal.

How Visitors Changed Our Museum from ArtsFwd on Vimeo.

ArtsFwd Full Profile: (http://artsfwd.org/how-visitors-changed-our-museum/)

In either your products and services or operations section of your business plan, build in at least one strategy to help you adapt to feedback with clear intent and focus.

How to Price Your Work (Dave Picciuto, Artist)

How much does it cost you to make your work? What are your expenses? How much money do you need to make? How much is your time worth?

How much would someone be willing to pay for your work? Many individual artists, writers and creative ventures in general have a tendency to drastically undersell their work and their time. If you shift your perception away from pricing your work to make ends meet and gear it toward communicating the quality and value you offer, you may find yourself much better positioned in the local, national and global art markets. Cleveland may be a more affordable place to live than other cities, but it doesn’t mean what comes out of it should be any less valued.

Determine Your Value (Bill Carney, Creative Mornings)

1. What have your total sales been in the past three months?
2. What has your total revenue been in the past three months (your total sales, less your fixed costs (rent, utilities, etc.) and variable costs (materials, time, rental costs, etc.)?
3. Are you underselling yourself? If you increased your prices by 10% each year, would you drastically reduce your customer base?
4. If you increased your rates even more, could you break into any new, higher-paying markets? What would they look like?
5. Could you compete in those markets? What would be your niche?
6. Could you develop or maintain some lower priced offerings of your creative practice while increasing the prices of your high-value creative works? Which ones?
7. Would the labor intensity of the low-cost, high-volume work make up for the value of keeping your prices low? Would it help or hurt your bottom line (and what does it do for your own health and well being)?
8. 8. How much work and at what prices would you have to sell in order to make a comfortable living (based on your own definition)?

1. Create a pricing sheet: List every item you identified in your “products and services” list.
2. Assign a price to every art work or artist service you intend to offer.
3. Segment products by product lines.

Do the prices you have listed match what the audiences for that product line?

For example, “bread and butter” items (low-cost to you, easily made items, that many people will purchase) should increase your potential profit the more you sell. “High-end” or exclusive buyers may may rely on price as an indicator of value, so it will be critical not to undersell yourself here.  “Whole sale” work that you will sell in bulk to a retailer will need to allow the retailer to make a profit off their individual sales. Conversely consignment options will need to accommodate the percentage the owner will take when your art sells. Artistic services may require you to set an hourly or daily rate, or you may choose to set one fixed price for that service based on the preferences of the people hiring you.

Are other artists forced to lower their own prices to match yours? Is that good or bad? These questions relate to your direct effect on the local art/music/literary economy. By lowering your prices, others are forced to lower theirs to keep their market share. Ultimately, new customers you would have gained by reducing your price will likely go back to buying the lower-quality, lower-cost work. Likewise, increasing your prices and valuing your work may allow others to do the same. In time, you are contributing to driving the local art market up or down.

Supply and Demand

What people are willing to pay for your work is also affected by demand, or the number of people who want it and how much they want. So, for example, let’s say no one else is offering anything remotely similar to what you are creating, and a ton of people want it. Demand is high. Supply–or the amount of items, seats, copies or time you are selling–is limited. Price should much higher in this case than if, for example, you have a warehouse of inventory or never-ending supply of work and only a handful of people who want to access it. This is not an excuse for giving your work away for free, but may be an opportunity for selling in bulk or at very low cost. When should you offer free goods or services?

Competition and Prices

The beauty of what you do is that your work is always one of kind. “High-quality,” “creativity” and “local” are all great selling points. Everyone, however, has competition. Without diving too deep here (the Marketing session is next), there are some pricing tricks you can use to convey how you are different without lowering your rates. For example:

• Ending prices in odd numbers has been known to convey a sale or clearance. This has a tendency to also reduce perception of quality.
• Leaving off a $ symbol conveys higher-end products, and opens you up to a more global market.
• Offering “bundle” prices could increase a purchase for someone who came for just one item, but sees value in the collective offer.
• Higher prices are generally associate with higher quality and exclusivity. Building trust with those clients requires that you deliver on those promises.

One of the most important things an artist can do is protect her or his work and ideas. Having the right resources can involve a great deal of research, but it will definitely be worthwhile in the long run. Watch the video and read through some of the articles below to learn more about copyright and fair use.

1. What are the primary differences between a copyright and a trademark?

2. What types of your work are eligible for copyright protection? What types are eligible for trademark protection?

3. Given the art you are creating, are there certain types of work that would warrant formal copyright or trademark protection?

4. What would be the advantages of mitigating the risk of your intellectual property being stolen or misrepresented, given the cost of registering for copyrights?

5. If you are hired to create new works, your rights related to your intellectual property may be different than the work you do on your own. What are the major differences?

6. How can you ensure that you understand what rights you will have to the work in the future when conducting “work for hire”?

7. Are there resources in your community that can assist you in obtaining low-cost or free legal services (e.g. the Cleveland Metropolitan Bar Association hosts a volunteer program, Volunteer Lawyers for the Arts)?

For each artist, filmmaker, performer or writer, distribution outlets will significantly very. You might be thinking publishers and agents, fairs and galleries, music halls and clubs, screening locations or any combination of other venues.

1. What are some distribution outlets–both within and outside of your discipline–that you have seen artists use to distribute their work?

2. How do you currently make your work available to people?

3. List advantages and/or disadvantages to the particular method(s) you use. For instance, are certain methods more time-intensive, but get in the hands of audiences more directly? Have you been more successful in generating profit through one than others? Are some better at developing long-standing relationships or quick transactions?

4. Where is your target audience when they are looking for things similar to what you are doing?

5. Where are your audiences more generally? Can you put your work in unlikely places where your target buyers already go?

7. Have you seen artists use any nontraditional or outside-the-box methods for distributing their work? Can you follow (or improve upon) their lead?

6. Which distribution outlets do you believe present the most opportunity for you in the future?

7. Who do you know that could assist you in getting your art in those places?

8. How do you plan to gather additional information about new distribution outlets?

9. Will new outlets stretch your resources? Would the payoff be worth it?

10. Are there cases when you should pay (or pay more) for getting your work in the right location?

Please note: This Video Contains Profanity

Note: If the term “sale” is completely off-putting, try using a different term, like “support” or “exchange” or “unicorn” if it helps.

1. In the last year, what sales tactics did you employ at each point of distribution (Maybe that you didn’t even realize you were doing at the time)?

2. Did your strategy differ depending on where you were and to whom you were talking?

3. How would you rate your success for each thing you tried? Was it related to your comfort level or their interest level?

4. How would you modify your current strategy to help you “close a deal” faster, sell more work or get a higher price?

5. Identify a small step that you can take to improve your next sale. Add this to your list of goals in the business plan.

6. What local, regional or national resources can help you get your work in the hands of the people who want to pay for it?

Equally as important to understanding the people who will buy your work (or tickets to your show, copies of your book, etc.) is understand who else is solving that same problem. To get a better understanding of how you are different than your competitors, there are a number of research strategies and questions you can ask. Read the Market Research handout in the previous session for more information about primary research. You can also find research about the local arts economy and the players that make up each industry in our Research Library.

1. Who offers the same type of work you do?
2. Who outside of your peer artists, writers and performers are solving the same “problems” as you and your work? I.e. where else could they be spending that money for a similar experience.
3. In what ways is your work different from theirs?
4. How else is your work benefiting the people who experience it in addition to the initial “problem” in question 2?