In my first article on budgeting for artists, I looked at some of the everyday struggles faced by artists when dealing with their finances. In today’s article, I want to focus on financial planning for the future of your business (and your life) so you can keep your business flourishing for years to come.
Saving for retirement
No matter how little money you’re bringing in, you should already be putting away a percentage of everything you earn for retirement. Why? Well, you might not realize it now, but when you’re nearing retirement age, you might want to slow down a bit and take things easy, without worrying about where your next grocery payment is coming from.
When investing, the important thing to remember is that your money is there for the long-term, so try not to get caught up in short-term market fluctuations or fads. Do your research (or hire a professional) to make sure you’re putting your money away in a reliable manner.
Investing in your business
In terms of upfront capital and continuing costs, most art businesses are quite low-cost. . . at least initially. All you need to produce an artwork is canvas and paint, clay, sculpey, wood blocks, inks or other supplies, which can be purchased for less than $100 at your local supply store.
But as time goes on, you’re going to want to set aside money to invest in your business. Maybe you want to create a website or purchase more expensive equipment, like a kiln or a darkroom setup, or you want to travel to an art conference in another country, or you want to be able to rent an expensive gallery space for an event, or put on a performance art show that you need to self-fund. All these endeavors could be the catalyst to propel your art career into the stratosphere, but they all cost money.
You should always be putting away a percentage of your income to fund the growth of your business. 5%-10% should do to begin with, but you may want to increase that percentage as your business grows.
Insuring your health, life and business
You’ll also need to look after insurance for yourself and your family. Typically, a family might have insurance on their home, contents and car, on their health, life, and perhaps mortgage protection insurance in case they are unable to work.
A working artist might also require other types of insurance, such as business insurance or liability insurance, especially if you’re creating complex installations or any type of art the public interact with.
Since artists are self-employed, getting insurance can be more complex than normal. The best idea is to talk to an insurance broker about your needs and your budget. They’ll help you figure out the best solution for your particular situation.
Saving for emergencies
In addition to saving for retirement, you’ll also want to set aside some savings for unexpected emergencies and other life events. You may want to take a vacation, buy a new car, pay for your daughter’s wedding, or help your children pay for college. And, of course, savings act as a safety cushion for your irregular income—ensuring the bills are paid, no matter what.
The more you’re able to save while you’re earning a good income, the less trouble you’ll be in when you experience lean months which, as an artist working for yourself, you will definitely experience. If you can save 20% of your income, great! If you can save more, that’s even better.
Tracking and analyzing your income
The more years you are in business as an artist, the more you will begin to notice patterns emerging.
You may discover, for example, that you sell most of your paintings during the summer, when tourists visit your town and see your work in the gift shops. You may notice that you always sell pieces of a particular size at one event and of another size at another. You may see patterns of income and expenses emerging.
It’s important that you have ways to track your finances so you can spot these patterns, and that you take the time to analyze them and figure out what they mean. Within these patterns lie the key to your financial success—but it’s up to you to unlock them.
For instance, if you do 80% of your business over the summer break, then perhaps you need to focus more attention on getting your artwork into gift shops. By figuring out your patterns, you can plan your year to focus on the most lucrative and enjoyable projects.
Planning for the future is a vital part of any good business practice, but it’s even more important for artists, because we often experience dramatic ebbs and flows of income over the years. Having a solid plan, good insurance, and responsible savings habits can make the difference between a starving artist and a thriving art business.