Start an art gallery by following these 9 steps:
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 gallery. 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 initial 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. Skip on ahead to the Business Overview for more detailed answers to all your questions.
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 gallery is sued. Consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
STEP 4: Open a business bank account
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.
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.
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.
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.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Art galleries provide local artists an opportunity to gain exposure and profit from their work. While the primary goal from a business standpoint is to make profit based on art sales and special events, providing a vibrant art scene can help create a more vibrant community. Customers for an art gallery's work typically include collectors, investors, decorators, and private companies.
Who is this business right for?
The best art gallery manager is an artist himself: someone who is aware of different modes and styles of art as well as its history and future trends. The manager should have a sense of individual style that the different works on display help accentuate, which helps the business stand out from its competition. Running a gallery means having a somewhat flexible schedule, but sales can be contingent on a willingness to deliver and display artwork to prospective buyers' homes, and often on short notice.
What happens during a typical day at an art gallery?
Some of the day-to-day activities of running an art gallery include greeting and speaking with customers, handling and displaying artwork, and dealing with a variety of administrative tasks that can range from managing a database of contacts to creating unique advertisements and updating your website and social media pages. It's also important to deal with framers, manage your inventory, and always be planning for your next major event. Most importantly, you must take care of your artists, which can include finding additional opportunities for existing artists while also researching and reaching out to new artists.
What is the target market?
Of the four primary types of art buyers, the most preferred client is typically the art collector. These clients often have the most time to explore an art gallery and the most dispensable income with which to make purchases. They are also likeliest to enjoy discussing the finer points of different art and different artists. By contrast, art investors purchase many works of art, but they are more interested in buying art for low prices and selling it for a much higher return.
How does an art gallery make money?
The primary way that an art gallery makes money is by taking a percentage of artwork sales throughout the year. This percentage is negotiated with the artist but is typically no less than fifty percent. Additional revenue may be gained by throwing different events throughout the year or even renting the gallery space out as a special venue for other businesses.
What is the growth potential for an art gallery?
One quality of running an art gallery is that the job doesn't really change as the business scales up. That is, a really popular art gallery may eventually lead to expanding via larger buildings and better venues, and may spawn multiple galleries in different areas. Ultimately, though, the nature of the job still involves negotiating with artists, marketing to clients, and seeking higher profits, with the added complexity of hiring additional employees and managers to work under you.
What are some skills and experiences that will help you build a successful art gallery?
The most valuable experience for running your own art gallery comes from having served as a gallery assistant, art curator, or other related position in someone else's art gallery. This provides invaluable experience for the different parts of the job, which is doubly important because managers of smaller galleries are doing much of the work on their own. It is possible to pick up both the practical and soft skills of gallery management by beginning and running the business, but it is vital to have a background in art. Prospective gallery managers should consider joining the Art Dealers Association of America in order to pursue answers to business questions and to explore networking opportunities.
What are the costs involved in opening an art gallery?
One important cost for your art gallery is renting your space. This cost will vary by both region and specific areas of town: an art gallery in Soho may pay as much as as $100,000 a month in rent. Meanwhile, a small 3 room studio and storefront in Key West costs only $1,600 a month. Many art dealers and gallery managers begin as artists themselves and may be able to network with artists who rent studio spaces to find the best intersection of price and space. Additionally, you will need to spend $99 to $129 on a modest inventory business management system and up to $20 a month for a reliable email delivery platform.
Business license fees will vary by state but must be paid. Additionally, you must pay up to $255 a year to register and keep a domain name and website for visitors, and you may pay up to $75 per hour for a website designer if you cannot design it yourself. More variable costs include marketing (clever social media marketing is free, though you'll want to pursue traditional advertisements locally), frames and furniture (the cost of which are respectively contingent on the amount of product and the amount of space available), salary for staff (which may be negligible for a small gallery), and the utility costs and other monthly operating expenditures. Equipment needed is a cash register(s), bins to hold items for sale, appropriate lighting, and decorations to make the store attractive. The other thing needed is exterior signage. These add up to an additional $10,000 to the startup costs. Finally, a deposit is often required to sign a long-term lease. The deposit amount depends on the monthly rent and the size of the retail location.
Where can I find a business mentor?
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.
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Growing Your Business
How to promote & market an art gallery
Traditional marketing for an art gallery includes television and newspaper advertisements as well as fliers and other promotional materials in cafes and other cultural centers that support the local art scene. Local businesses may also enjoy being associated with the art scene via your business. As mentioned before, social media is a major way to reach a large audience at no additional cost.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
One of the best ways to retain existing customers is to stay in contact with them. Create a mailing list of previous clients and keep them apprised of new artwork and events that keeps them coming back for more. To attract new customers, it's best to perform a combination of the above marketing techniques and collaborations with your artists on ways to advertise their work. This takes some of the pressure off of you and helps leverage their natural connections to the community you wish to reach.
How and when to build a team
Determining when to expand your art gallery business is a fairly organic process: once it gets to a point that you can no longer do everything on your own, it makes sense to begin hiring employees. This may happen very soon: you may wish to have someone who can process payments while you show other customers around, or someone to “mind the store” while you deliver some artwork to a loyal customer. Once you begin to host special parties and events, additional employees are an absolute must. Typical roles for employees are gallery assistants (who are typically paid $35,000 a year) and office managers (typically paid $36,000 a year), though it is possible for businesses just starting out to hire part-time help on an hourly basis.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an art gallery business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
In particular, most states require art dealer businesses to obtain a seller’s permit. A seller’s permit allows states to record and collect taxes from goods (and sometimes service) sales.
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.
In addition, certain local licensing or regulatory requirements may apply. For example, If you want to offer complimentary alcohol at special events or showings, you will need an Art Gallery Liquor Permit, the specificities of which vary locally. For more 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.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
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.
When dealing with artists, it is always advisable to draft a standard contract regulating terms of conditions under which you may sell their artwork. This type of agreement is often referred to as a consignment agreement.
- A sample gallery-artist agreement can be found here.
How much can you charge customers?
The amount that you can charge clients and customers is dictated by factors such as region, competition, and the artists themselves. Artists with a long history of their work selling well will safely command a higher price and essentially represent a safe “investment” for your gallery. The prices from local competition also dictates your own prices, as it's not wise to charge more than, say, $4,000 for a work of art if no other local galleries charge more than this amount. It is also wise to offer a range of different art at different prices to increase the perception of your gallery's accessibility to the entire community.
What are the ongoing expenses for an art gallery?
The ongoing expenses for an art gallery include paying monthly rent and the salaries of any employees that you may have. You must also continue to pay for any special events you throw, such as local art fairs. There are ongoing costs associated with the safe transport of the artwork as well as insurance for your entire business. Finally, you must pay for continual marketing in your area and beyond.
How much profit can an art gallery make?
The profit an art gallery can make is variable. Bloomberg reports that the average profit margin for this kind of business is 6.5 percent. Obviously, the amount of profit is tied to the amount of art sold and the price of that art. It's important to work out a fair price with the artist: they want to feel properly compensated for their materials used and hours spent, while you want to receive at least fifty percent of the sale.
How can you make your business more profitable?
One immediate way to make your business more profitable is to negotiate a higher cut of art sales. While a 50/50 split is more of the industry norm, some argue that a 70/30 split in favor of the gallery is more equitable: after all, the gallery is typically paying for the marketing, production, transport, and insurance of the art. Finding areas with more affordable rent is also a consideration, as is using the gallery space for more of your own special exhibitions, fairs, and parties as well as leasing it to others for their own events. Finally, it's wise to consider a smaller staff: a few higher-paid employees actually perform better in gallery-related roles than paying smaller salaries to a much larger staff.