You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your art consulting business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an art consulting business?
One of the best things about an art consulting business is that it takes very little money to start. Functionally, you will often be working from home, on the road, in an artist's home, or an art gallery. That means that you don't need to lease a separate space or pay for special supplies. You can effectively start this business for $2,000, with $500 of that going towards the design of a professional website and $1,500 going towards a mixture of traditional advertising (such as local newspapers, radio stations, and possibly cards and fliers at relevant art venues) and online advertising.
What are the ongoing expenses for an art consulting business?
Aside from paying for any of your travel expenses and providing more marketing for yourself (both of which are variable costs), your only real ongoing expense will be the hosting upkeep of your website (about $100 a year). The low cost of starting and maintaining this business means that it can function well as a part-time job for someone to try before they make it their full-time gig.
Who is the target market?
The target market varies based on the clients. For instance, art gallery demographics can vary wildly based on the tastes of the art director and their own specific niche. For art collectors, a surprisingly growing audience is affluent millennials, as they are likelier to see art purchases as an investment rather than a luxury. As for the artists themselves, they will typically be young artists who are fresh out of art school and looking to make a name for themselves.
How does an art consulting business make money?
Typically, art consultants make money by charging different fees for their different services. For instance, you may charge a flat fee for acquiring works of art for collectors, or you may negotiate a percentage fee in which you receive a certain percentage of its overall price. Similarly, in promoting the works of artists, you may charge a flat fee for particular services (demographic research, marketing consultation, and possibly marketing design), or you may function more like an agent who receives a certain percentage of profit from sales.
How much can you charge customers?
The amount you charge clients depends on the service you render and who the client is. For instance, if you are helping an artist or gallery to sell a work, it is reasonable to charge them between ten and fifteen percent (like a typical agent) as a commission. If you are helping a collector to procure a work of art, it is reasonable to charge them between fifteen and twenty percent as a commission. Typically, you will negotiate a rate by considering the intended price of the work of art and calculating how much time it will take you to buy or sell the item, allowing you to insure you are properly compensated.
How much profit can an art consulting business make?
Obviously, the exact profit of this business depends on how many clients you have and how many works of art you help to sell for artists and procure for collectors. For the related field of “Advertising, Promotions, and Marketing Managers,” the Bureau of Labor Statistics reports that the average income is $127,650. Your initial years will probably reap far less than that, but once you have a steady array of clients from whom you are getting ten to twenty percent commission per artistic work, it's easy to develop a steady cash flow.
How can you make your business more profitable?
Don't ignore the social aspect of your job. Organizing community events for artists and art lovers (such as a happy hour at a trendy bar or an informal exhibition at a coffee house) can help you grow your network and expand your influence. Consider helping young art majors put on their first exhibitions and sell some of their first major woks: this allows you to discover talent early and possibly become their representative for many successful years. Finally, consider expanding your sphere of influence: as many of your customers (both artists and collectors) will be millennials, they are likely to be comfortable working with you remotely. This allows you to help people throughout the nation and across the world, greatly increasing your chances of developing steady (and affluent) clients.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your art consulting business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an art consulting business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to an art consulting business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your art consulting business will be in compliance and able to obtain a CO.
Art consultant businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership.
Informed Consent Agreement
It is recommended that you provide clients with informed consent agreements to decrease legal liability and encourage transparency.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market an art consulting business
In addition to the advertising methods mentioned earlier (including newspapers, radio, website, and online advertisements), you should create social media pages for your business on platforms such as Facebook and even Instagram. The art world is a visual medium, and social media helps you reach your ideal demographics while also giving you the perfect venue to highlight the work you are helping young artists sell.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
In addition to advertising, you might consider becoming a member of local art clubs and to familiarize yourself with any local university art scene and galleries in the city. This gives you a chance to pinpoint talented artists who will need representation to get noticed. To find art collectors, one solid method is to visit the same kinds of art shows, auctions, and galleries they are likely to attend, which gives you a chance to break the ice in an easy and familiar setting.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start An Art Consulting Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Needless to say, this job is best for those with an artistic background. This includes practicing artists and those with a formal education in subjects such as art and art history. This provides the necessary background to understand both how the art world and artists themselves function.
What happens during a typical day at an art consulting business?
Because of the multiple roles an art consultant plays, any given day may be different from the one before it. For instance, you may spend some days conducting demographic research and coordinating with advertising firms to help promote the work of an artist. On other days, you may spend a lot of time browsing online and offline art auctions in order to acquire specific works for art collectors. On other days, you may be contacting artists on behalf of art galleries and negotiating the commission of unique works of art.
What are some skills and experiences that will help you build a successful art consulting business?
As mentioned before, any experience in studying, creating, and selling art is invaluable in this business. Aside from the raw experience, any existing networks you have of fellow artists, art directors, and art collectors can help provide you with resources to get things started quicker. Finally, your own experience collecting art can be a big help, as you will already know an assortment of tips and tricks to find the best works of art at the most competitive prices.
What is the growth potential for an art consulting business?
The growth potential for this business is modest. While the Bureau of Labor and Statistics does not track art consultants specifically, related fields such as “advertising, promoting, and marketing managers” are projected to grow by nine percent between 2014 and 2024. Combined with the fact that you have three different types of clients (artists, collectors, and galleries), your business can safely diversify and grow in whatever area is more profitable at the time.
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting an art consulting business?
One way to help your business take off is to pick a particular niche to focus on. For instance, the world of decorative art is very different from the world of corporate art, which itself is very different from the world of art galleries. While being able to work for different kinds of clients is a strength of this business, you will have an easier time focusing on one niche and then expanding. Another way to hit the ground running is to reach out to your existing network of artists and art collectors to see if they need your services or if they know of someone else who does.
How and when to build a team
Art consultants typically work on their own. This helps reduce your overhead, maximize profit, and underscore the personal relationship you have with clients. If you ever choose to build a team, it should organically come from your own success, meaning that you now have more clients and prospective clients than you can reasonably handle on your own.