Today's Post is by Lori Woodward, Regular contributing writer for FineArtViews. She is also a contributing editor for American Artist's Watercolor and Workshop magazines and she writes "The Artist's Life" blog on American Artists' Forum. Lori is a member of The Putney Painters, an invitational group that paints under the direction of Richard Schmid and Nancy Guzik.  Find out how you can be a guest author. 

In my opinion, artists don't need to spend a lot of time on detailed business plans. I've gone the "detailed" route, but in the end, unexpected opportunities cropped up, so a lot of what I had planned on, never happened. Rather than set my business plans in stone, I have learned to simply set some principles to follow.

Projecting Costs

Ten years ago, I rented a large space in an old factory building in Manchester, New Hampshire. The smallest space the landlords had available was 2000 square feet. My rent was $900/month. My studio space was across the hall from Dennis Sheehan's and up a flight from Ingbretson's Atelier. While good things came from the 18 months I spent there, looking back, I now realize that there was no way I could have covered the rent and other expenses associated with that commercial location, with my art sales. I did indeed use the space to teach workshops, but since the building was in a commercial district, even my phone bill had to be set up as a commercial account. I invested $20K for my time there. My monthly supplies cost me roughly $300, my art marketing adviser - $200, and phone bill $100. In addition to that, I advertised in art magazines for my workshops. Each one inch ad was $500 per issue. I did end up filling workshops, but with all the costs involved, barely broke even.

I was incurring debt at an alarming rate, and eventually, I asked to break my lease in order to get out of a financial black hole. While having this wonderful space was a thrill and even a boost to networking and sales opportunities, my lack of financial planning (and banking on big dreams which cost a lot of money) in the beginning led to losses in the end.

Low Overhead Expenses

Fortunately for artists, today our overhead expenses are lower than ever. With a website, blog, email newsletter and studio in my home, my expenses are easily manageable. When I teach, I rent a space or else teach at a workshop location where everything is set up, and all I have to do is show up. I don't need a $100 commercial phone account and 800 number, and I know enough about art marketing to counsel myself.  I hardly ever buy art supplies that I will not use within the course of a year.

Count The Cost

The first part of any good business plan starts with an accurate projection of the annual cost of running that business. For an artist, this generally means assessing how much you will spend on supplies, framing, education, self-promotion, advertising, showing and reaching your "Collecting Clan". I advise that you carefully consider each expense you will have. Try to spend realistically:  avoid spending emotionally in "big dream" mode. If you don't plan out what you will need logically to conduct business ahead of time, you run the risk of overspending. The IRS does expect you to make a profit sooner or later - preferably sooner.

Looking Professional

We artists are fortunate in that we need to spend very little on overhead. When compared to other types of businesses, our upfront costs are minimal.

When I decided to "go pro" as an artist, I registered my business with the state I live in. This means I had a tax ID number, which in turn meant that I didn't have to pay sales tax on art supplies I bought locally in my state. I also could buy some items at wholesale prices. Then I opened a business account at my credit union.

Because my current studio is one room - separate from the rest of the house, I can deduct a certain amount of utilities on my income tax. I am not a tax expert, so I'm not well versed in this topic. I hire an accountant whose specialty is in small business. Still keep in mind, that you'll need to make enough income from your art business to exceed all your costs, so don't spend frivolously.

Well, I could write 20 pages on this topic, but for now, I'll divide it into small, easily digested bites. To sum up this post, I'll reiterate: Plan to spend wisely - don't run up huge debt - and remember that as an artist, you don't have to invest a lot to get started.