The term “starving artist” has long been part of our lexicon, signifying the significant struggle artists face bringing their creative work to market. A creative career is very rewarding, but for many other artists, the struggle never ends. Most artists don’t choose their career path to make a lot of money, but they also don’t expect to be still living paycheck to paycheck twenty years down the road.
Part of the reason for the disconnect is that while artists learn to master the creative process, very few can master the business of art. American arts educational institutions, in particular, focus predominantly on technique and artistic skill, yet only a handful are concerned with what students do after they graduate. Artists know how to create art, but not how to make a living from it. As creative entrepreneurs, artists and other creators spend an ever-increasing portion of their workday on non-creative aspects of their business. In fact, the stereotypical artist doesn’t understand business and isn’t good at it. That would certainly provide reasoning for the lack of business education among artists. If that were true, then would creative entrepreneurs benefit from being taught skills traditionally reserved for non-creative types, or would that be an act of futility?
What is Entrepreneurship?
Entrepreneurship is most often associated with the pursuit of new business opportunities for the purpose of creating wealth. As a result, traditional entrepreneurship education tends to focus on economics. But creative entrepreneurs don’t see money as the primary motivator. They want to bring their creativity to the world, money being a secondary objective. In fact, many artists are fundamentally suspicious of anything that has to do with commerce and business. Money is often seen as a symptom of “selling out.”
Are entrepreneurs really, so money focused or is that a stereotype, developed as a consequence of today’s business environment? After all, the high costs of starting a business require entrepreneurs to raise significant capital to get their businesses off the ground. Investors are usually not interested in funding smaller ventures, looking instead for those with the largest the potential return. They want to see comprehensive business plans that include projected financials, marketing strategies, competitive analysis, product development models, and strategic planning initiatives. Entrepreneurs then need to create high-value, high-profit businesses and have the multifaceted educational background to develop the business planning document. So it is easy to see why money is so central to the notion of an entrepreneur, but might be a faulty portrayal.
Entrepreneurship is about developing new ideas and finding creative ways to interact with and reach potential customers. Take in that context, without money as a motivator, both art, and traditional entrepreneurs may have the same goals, but are the alike enough to expect creative entrepreneurs to embrace the business mindset? New York Times Author Jay Golz, sees successful entrepreneurs as have similar traits and attributes, most of which are also common to creative and traditional entrepreneurs:
- Ambition. While most people believe they are ambitious, there is a marked difference between those who will obsessively put in a 70-hour work week to bring their venture to life and those who want a steady 40-hour work week. Ambition is defined as “a strong desire to do or to achieve something, typically requiring determination and hard work.” Artists fall right into that mold, often obsessing over their work, spend every waking moment to bring their ideas to fruition.
- Creativity. This goes without saying; creativity is the hallmark of every creative entrepreneur.
- Tenacity. Bringing an artistic creation forth is not easy. It requires determination and fortitude in the face of many failures. Tenacity is critical to both the creative and business process. Bad things happen, obstacles fall in our path, and mistakes are often made, but those who learn from those mistakes and try again are the ones who are successful.
- Risk tolerance. Taking risks is the bedrock of any new business, and it doesn’t necessarily get better along the way. Without risks, there is no reward. The creative entrepreneur knows he or she is most likely going to be a “starving artists;” it doesn’t get much riskier than that.
- Personality. We all know that stereotype of the crazy artist. But creative people are generally some of the most interesting people. They see the world through a different lens, with the unmitigated desire to express the world they see in new and interesting ways. It is often through personal interaction that artists find inspiration. Big ideas come from big personalities. The successful creative entrepreneurs are may not always be the ones we can comfortably talk with, but they are rarely the people who hide in the corner.
- Entrepreneurial skills. If creative entrepreneurs have the traits necessary to be successful, then it’s also possible that stereotype of artists being bad at a business may be incorrect. On what types of business skills should creative entrepreneurs be focused?
Finances. How a business manages its cash is often more important than generating sales. Many entrepreneurs fail, even though they have huge profits because they aren’t able to manage their resources, particularly their cash, effectively. In creative business, revenue can come in sporadically, it is rarely a steady payment. While there are always steady outlays, such as rent, which must be paid. As well, there are often payment problems; people don’t pay on time, work gets damaged, people get injured. Successful entrepreneurs realize the need for money management and plan for present and future financial obligations (usually with a small amount set aside for a rainy day). Even if the creative entrepreneur hires others people such as bookkeepers and accountant to help, the decisions are not theirs to make. Unless you can understand and work with basic financial statements, you could find yourself out of business.
A creative entrepreneur should be able to prepare and read the following financial documents:
- Balance sheet. This statement provides an overall financial snapshot of the business. All the liabilities or debt + owners equity = assets, such as cash or other items of value. The two sides must balance.
- Profit and loss statement. A profit and loss statement, also known as an income statement, showing projected sales and projected expenses over a certain period, such as monthly.
- Cash flow statement. This statement highlights how much money is coming in and going out of the business, projected into the future. It is the most important report for the day to day operations, especially early on in a business when money is tight. It includes outstanding sales contracts, expenses like rent or insurance, equipment purchases, and other payments. It should project how much money you will have leftover for each period. In essence, it can tell you at what point you may not have enough cash to make your payments, which will allow enough time to make the necessary strategic decisions to fix the problem.
Planning. (But not over-planning) Entrepreneurship is about building a business from scratch while managing limited resources (including time, money and personal relationships). In the short and medium term, planning is important as all the decisions, from advertising to new equipment purchases, affects your cash flow. Having a good plan that will ensure the greatest potential for reaching the goal, whether that goal is sales or something else. Planning for potential problems can also be helpful. However, over-planning can prevent you from ever taking the first step. How things will turn out is unknown, but the key is to know the business so well, that any deviations or crises can be dealt with successfully.
Networking. Entrepreneurs don’t solve problems in a vacuum; they have networks of people that they can call on when necessary, whether it is advice on handling a problem to marketing your art. Successful entrepreneurs understand that they must know a lot about their business but are not necessarily the most knowledgeable about certain things. Just as artists on the creative side, surround themselves with other artists, learning from them and receiving feedback on new artistic ideas, art entrepreneurs add the same dimension to the business side. Rely on people smarter than you. You can’t know and do everything. Surround yourself with people who know more than you do.
Creative vs. Traditional Entrepreneurship
While creative entrepreneurs have the many of the same traits needed to be a successful entrepreneur and need to learn some of the same skills, there are distinct differences. If creative entrepreneurs follow traditional entrepreneurial approaches, they may have problems unless they take into account those things particular to the art industry. The Harvard economist and academic Richard E. Caves have defined some of those keys:
Demand is uncertain. Demand for any product is in some ways always uncertain, although, in traditional entrepreneurship, the product or service has been developed to overcome a hole in the market. They usually don’t make the product first; the product is a result of some unmet need in the marketplace. So there is a certain demand inherent in the product at the time it is created. Artists, though, don’t create based on an unmet need. They are working to fulfill a personal artistic vision. Artists don’t think, “this type or style of art that people need or want,” and then go about finding a way to create it. It will be up to the artist to find the audience and create market traction while also remaining true to their artistic sensibilities and personal goals.
Creative entrepreneurs care about their work. An artist’s passion for his or her art may be one of the most compelling drivers for art businesses. Unfortunately, that same passions also can make them less objective. Artists don’t do focus groups, they don’t analyze the market penetration, and they don’t put beta test versions into the marketplace. Traditional entrepreneurs do all of that; constantly analyzing consumer opinions and making changes to their products based on market research. The product is wholly from the artist mind and not the product of a team of creative people.
An artist’s time is limited. Traditional entrepreneurs often begin with a limited product line, which is honed and refined over time. The products are produced by a production house and fulfilled by a fulfillment house, which is hopefully producing that small product line in large quantities. Artists, on the other hand, are the creators, engineers, programmers and production houses, all in one. Artists must continually produce new works, that in some cases are only sold in limited editions. So the artist’s time is one of the business’s most limited assets. The profit margins are also usually less, which means fewer resources including hiring people to delegate tasks like marketing and finances.
Creative entrepreneurs need to be more good artists to survive. They need business training, but training specifically tailored to the art industries unique aspects. There has been a lot of interest in the area, with even some universities adding business curriculums to art programs. It’s a bit early to evaluate how it’s working but anecdotally, the results are positive. It may still take a while for the idea to roll out to the mainstream art schools and art communities. As long as schools have a steady demand for applicants, programs will be reluctant to change. However, it is probably inevitable; it’s just a matter of which creative entrepreneurs will take advantage of the opportunity.
As a photographer and Patent Attorney with a background in marketing, Steve has a unique perspective on art, law, and business. He is currently serving as the Chief Product Officer at Artrepreneur. You can find his photography at artrepreneur.com or through Fremin Gallery in NYC.