Own the New Year by Creating an Art Business Budget
The most successful resolutions build on what you are already working on to help you evolve and optimize your effort. In 2021 make the business of your art a priority.
Make the business of your art a priority in 2021 by starting off strong with an effective budget.
As we enter a new year, we pause to remember, reminisce, and refocus on how we operate within the world around us. January is made up of goals, resolutions, and recaps.
You can use budget-building as a reflective activity, allowing you to take stock of the past months and break down what worked and what didn’t work. Even the nittiest-grittiest need-to-do details of your career can offer up insight and be a tool for introspection. Looking at the past year in numbers helps you to understand how your art business functioned. You can then make more informed decisions about your art career finances moving forwards.
Budgeting allows you to take charge of your finances in the future.
As an artist, you are also an entrepreneur and a small business owner. In the new year, embrace both your creativity and your business savvy within your art career. If you prepare yourself now with structures that work for you, you’ll create financial success throughout the year.
If number crunching sounds intimidating, don’t be scared off. You are already doing the work of an art business—now it’s just about setting your intentions, thinking through what works and what doesn’t, and building your budget like a pro. The rest will fall into place.
Here’s how to create a smart budget that will help you realize your goals this year:
Total your income and reflect on your success
To create a budget you need to know how much money you bring in and the different sources of your income. It’s basic, but totaling and breaking down your income helps you make sure that your expenses aren’t greater than your revenue.
Go through and tally up your income generated from your art business for the past year. Even if you have income coming in from other non-art sources, start by tallying just the income from your art sales, workshops, fees and whatever else you brought in that was related to your art business. This will help you get a better idea of where to spend your time and resources in the upcoming year.
Or course, making money from your art is not the only reason to be an artist—there are many other markers of success. That said, if you are trying to make a career from your art or even a hobby, you will want to get an overview of your re
If you are using a system to keep track of your sales and manage your artwork like Artwork Archive, go through and create a record of your art sales from the year. In your Artwork Archive account, you can use the Revenue and Expense feature to generate a revenue report of art sales, non-sale revenue, and both types of revenue. This report will give you a total as well as break down your revenue by line item. You’ll be able to easily see a record of your sales and revenue with just a few clicks.
Make sure to add up your art sales, revenue from commissions, any workshop income, passive income like art licensing, and art sales from print-on-demand sites.
Fixed income is regular income that you can count on like a monthly payment from someone renting your art. Variable income is income that fluctuates, like sales from an art fair.
While variable income is, well, variable, you can still predict its patterns like a bump in revenue from holiday sales or summer art fair sales. While variable income is dependent on many different circumstances, you have some control over it since you arrange for its possibility.
An example of an expense report on Artwork Archive.
Identify costs and evaluate what did and didn’t work
Now that you have an idea of your art income for the year, go through and list out your art expenses.
Your costs can be everything from rent for a studio, membership dues, material costs, to utilities. Like your income, your costs are both fixed and variable.
What were the most expensive elements of your art career this year? Can you look back at big purchases from years past, like equipment, and see their continued pay off?
Look back on your expenses to trim unnecessary costs in the coming year so that your money spent can be as productive for you as possible. Yes, you must spend a certain amount of money to be able to thrive in an art career. However, not all money spent has equal future payoff for you.
Review your variable costs item by item and think about which costs are productive investments in your art career. For example, you might find that ordering supplies in bulk is cost-effective or that you can rent equipment or split or build your own art fair booth. You could also look into sharing expenses, equipment or with another artist looking to tighten their art belt.
There are always small ways to effectively reduce your business costs, even if it is insulating your studio so you spend less money on heat in the winter!
Be data-savvy by pairing numbers with intentions
Now that you know your money in and money out, think through how your costs related to your revenue. Before officially drawing up your yearly art business budget, be strategic.
With your data on hand, it’s time to work with your administrative details and your yearly goals and aspirations to create a budget that will help you evolve in your career.
To do this, consider a few questions:
Where did most of your income come from this year?
Was your year-end total consistent with past years?
What are the effort, time, and material costs that go with your top income-producing activities or works?
You can even get as specific in your breakdown by thinking about what type of artwork sold the most throughout the year. To analyze your data, look back on your sales from the past year. Artwork Archive’s Insights feature allows you to view the breakdown of your sales so that you can see where your works are selling most, the prices of works sold, sales over time, and a breakdown of what’s in your current inventory.
After understanding how your expenses help translate to your revenue, plot out how you want to operate in your art career this coming year and where you can grow. If there are certain types of artworks you want to make more of, workshops you want to create, or new ideas that may boost your career, what will be the cost and potential rewards of these plans?
Now, as you prepare to predict and map out your future spending you can based on what you know about how profitable your efforts and costs were and where you want to grow in the coming year.
Track expenses, sales and income by category on Artwork Archive.
Predict and prepare for spending
Based on your costs, create a rough prediction for your yearly spending. This is your budget. Make sure that your prediction leaves in you the black based on your previous year’s expenses.
If possible, add in some room for flexibility. Flexibility and agile responses to circumstances are necessary for success in any career—and in life in general.
There may be some upfront costs that are intimidating but will be rewarding over time. For example, during the COVID-19 pandemic artists transitioned to online sales, marketing, and exhibitions. During this transition, there may have been start-up costs that were intimidating but paid off. Start-up costs like new technology or systems like Artwork Archive that helped artists grow and manage their career became essential to growing income.
You now have an estimated cost of your art career for a year. You may want to break your budget down month by month, quarterly, and section out your various big-ticket costs and put those on your calendar. Make sure to lay out what your budget is each month so that your fixed costs, like studio rent, will be covered.
Revisit and revise your budget throughout the year
Your yearly and monthly budget will help guide you throughout the year. Make sure that your numbers add up and that there is room for flexibility.
A thoughtful budget can be a living document when need be. If something changes, you can update and revise your budget. Since you know what your strongest and most reliable revenue sources are and biggest expenses you can make informed decisions if you need to change your budget over time.