How to start a small art business

Many artists spend years moonlighting before they make the leap into full-scale self employment. Some suffer from imposter syndrome — ‘What if I’m not as good as I think I am?’ — or feel intimidated at the prospect of being an official business owner. Others simply don’t know how to start a small art business and are too busy to grapple with research.

If you’ve ever dreamed of owning your own small art business, you’re in the right place. In this guide, we’ll take you through the basics of business setup: business planning, company registration, marketing and more.

• Create a business plan
• Register your company
• Open a business account
• Market your art business

Without further ado, let’s get into the nitty gritty of starting an art business in the UK. By the time you’re done reading this guide, you should feel much more prepared to strike out on your own.

All businesses, including solo creative ventures, benefit from well-written business plans. Creating a business plan can help you gain a deeper understanding of your venture, and it can also help you get funding from a lender, or from an investor. Let’s dive into the seven main sections of a business plan.

Your executive summary is the very first document in your business plan. In simple terms, it’s a single-page overview of your entire plan. You’ll begin with a brief description of what your company does, and then you’ll define your goals and objectives. After that, you’ll tell the reader about the art you create and sell.

Next, you’ll describe the customers you plan to target, and then you’ll talk about your physical business premises — in your case, a studio or gallery. Finally, you’ll summarize your monetisation strategy: in other words, how you plan to make your business profitable.

In this section, you’ll write about your company in detail. This section is much more comprehensive than the brief description you gave in your executive summary. You’ll include the following information:

• Your brand name: The name of your art business or art gallery.
• Your business structure: Most likely a sole proprietorship, a limited company or a partnership.
• Your domain name: Your website address.
• Your mission statement: What drives you, and why you founded the business. 
• Your vision statement: Where you intend to take your company, and what your overarching dreams are.
• Background information: A short autobiographical statement about you.

To be a successful artist, or to run a successful gallery, you need to learn all about your target market. If you haven’t already done market research, this part of your business plan represents an opportunity to find and explore your target demographic — to find out what makes an art buyer tick.

Look at art industry trends, patterns in various sections of the market and opportunities for growth. Pinpoint industry leaders — other galleries or artists near you — and perform a competitive analysis to see what motivates them. You can use the results of your research to create an action plan for success.

You’ll tell readers all about the art you create or the art-related products you sell in the products and services section. Go into detail here about previous commissions, average prices and a typical buyer’s journey. If you create oil paintings, describe the type of board or canvas you paint on; if you’re a potter, talk about the clay and about the firing and glazing processes you use.

Use bullet points to highlight product attributes and make your art more accessible to the reader. If you have client testimonials, this is the ideal section to show them off.

In this section, you’ll talk about all the ways you intend to drive traffic to your art website or to your gallery. Begin with an overview of your marketing budget and then move on to a breakdown of the various channels you’ll use to reach your target demographic. Marketing channels include:

If you’re stuck, you can use the 4Ps approach to build an effective marketing plan. First popularized by Neil Borden back in the 1950s, the 4Ps include the following elements:

• Product: What makes your art unique? How does it benefit the customer?
• Price: How much does it cost you to create art? Based on market analysis, how much will consumers pay for it?
• Place: Where will art buyers look for your product? How will you make your gallery more visible in the marketplace?
• Promotion: Which marketing channels will you use to promote your art?

You’ll describe all the physical and financial resources you need to do business in the operational strategy segment of your business plan. Essential physical resources might include a picture hanging system, directional lights, a studio-quality easel, a potter’s wheel, a kiln, paints, glaze, canvases and a laptop. Financial resources could include a business loan to pay for setup expenses. 

If you plan to send products to people, you’ll include a shipping strategy in this section. You’ll also provide inventory details and talk about your suppliers.

This part of your business plan goes beyond operational strategy. If you do need a start up loan, this is where you’ll prove you can handle the money. Most business owners include three essential documents in the financial strategy section:

• An income statement: This is a breakdown of all your income — also known as revenue — and your expenses over a set time period. You can project this figure if you haven’t yet launched your business.
• A balance sheet: This is a snapshot of the value of your business. You’ll list your assets in the left-hand column and your liabilities in the right-hand column. Your business equity is what’s left when you subtract the total inthe right-hand column from the total in the left-hand column.
• A cash flow statement: This is a detailed analysis of incoming payments and outgoing expenses. If you have more money coming in than going out, you have positive cash flow.

Before beginning to trade, you’ll need to register with HMRC — and possibly Companies House as well. As a self-employed person or a salaried business owner, you’ll be responsible for paying the right amount of tax and National Insurance to the government every year. Most small businesses in the UK fall into one of the following categories: sole traders, limited companies or partnerships.

Many small businesses in the UK — 59 percent in 2020 — register as sole traders. It’s the easiest way to register for Self Assessment and there isn’t too much admin to do from an accounting perspective. 

Sole trader pros include:

• Easy setup: Registering for Self Assessment is quick and easy.
• ‘Doing Business As’ name: You can give your business a DBA name without incorporating. 

Sole trader cons include:

• Payments on account: You’ll need to make tax payments on account. In practical terms, that means paying the tax HMRC thinks you will owe six months in advance.
• Debt liability: As a sole trader, you’re liable for all the debts associated with your business.

If you plan to open a studio or a gallery and you want to keep your business finances and personal finances separate, you can register as a limited company. About 34 percent of businesses in the UK were limited companies in 2020. You’ll need to choose an official name and register your company via Companies House.

Limited company pros include:

• Higher take-home pay: You’ll pay corporation tax rather than income tax when you incorporate, and you won’t have to make National Insurance payments, so you could save money on taxes.
• The VAT Flat Rate Scheme: Providing you fall outside IR35, you can apply for the VAT Flat Rate Scheme, which can save you thousands of pounds a year.

Limited company cons include:

• No personal allowance: You won’t get a personal allowance when you file taxes any more, so tax savings may be slight.
• More complex accounting: You’ll need to file your accounts with Companies House every year. You’ll also have to file accounts and pay company tax and Corporation Tax to HMRC each year.

If you want to involve another person in a gallery business on an equal basis, a business partnership might be your best option. You’ll share responsibilities, including losses and expenses, with your partner. In 2020, about 7 percent of all companies in the UK were registered as partnerships.

Partnership pros include:

• Easier accounting: You won’t have to worry about filing a corporation tax return; instead, you’ll track income and expenses and submit a simpler partnership tax return to HMRC.
• Informal setup: Partnerships are easily created and easily dissolved, so you and your partner can separate at any time.

Partnership cons include:

• Personal liability: You and your partner are legally responsible for any debts and losses associated with the partnership.
• Fewer borrowing options: Banks often see partnerships as riskier than limited companies, so you might find it a little harder to raise capital.

You don’t need to register as a limited company or a partnership to have a business account: sole traders open business accounts all the time, too. A business account — like the one you get with Countingup, for instance — can help you separate your personal and your business transactions, which can make it easier to keep tabs on work-related expenses, incoming payments and VAT.

We touched on marketing a little earlier; now, let’s expand the subject a little more. In short, marketing is a vital part of any business plan. If you don’t have a marketing strategy in place, now’s the time to write one. Think about branding, physical marketing materials and which advertising channels you plan to use to promote your business.

Branding is essential — even for an artist. A solid branding strategy can make your business stand out in the marketplace. Many business owners begin the branding process with a simple, memorable logo; they continue with a brand colour palette and a list of preferred fonts. When they’re applied to every part of the business, branding elements bring cohesion.

Physical marketing materials create a tangible connection between you and your customers. Some galleries leave a pot of free personalised pens on their sales counters, while others post flyers through doors. High-quality business cards are crucial, whether you’re a standalone creative or an art gallery owner. Magnets also work well, in part because consumers actually use them, so they continue to deliver your message over an extended time period. 

Most art businesses take a multi-channel approach to marketing. Instead of sticking to just one type of advertising, for instance, they go with several at the same time. Some marketing tactics cost money, while others are free — or nearly free. 

• Paid channels: Pay-per-click (PPC) advertising, affiliate marketing, social media advertising and influencer marketing.
• Organic channels: Website search engine optimisation (SEO), social media posts, blogging networks and self-created content marketing.

Creative businesses are exciting and challenging. As an artist, or as a gallery owner, you’ll deal with many types of customer on a daily basis. You’ll help people select artworks, you’ll handle commission requests and you might also get involved in corporate creative projects. 

You’ll also need to monitor your company finances, make tax payments and track VAT — and that’s where Countingup comes in. Simply put, Countingup is a business current account and accounting software in one intuitive app. You can use it to create invoices, examine profit and loss, keep organised records and more. Find out more here.