Prioritizing your finances allows you to bring a sense of order to your day-to-day life and grow your art career.
Creating and sticking to a budget allows you to take charge of your finances in the future and plan for success.
To create a budget you need to know how much money you bring in and the different sources of your income, as well as all your expenses. It’s basic, but totaling and breaking down your income helps you make sure that your expenses aren’t greater than your revenue.
If accounting sounds intimidating (or boring), don’t worry, we created some simple art business budgeting worksheets to get you started.
The worksheets are designed to help you tally up the income generated from your art business and understand your general expenses. Even if you have income coming in from other non-art sources, start by tallying just the income from your art sales, workshops, fees and whatever else you brought in that was related to your art business. This will help you get a better idea of where your time and resources are paying off the most.
To get started, go through and list out all your expenses.
Getting a true sense of your expenses will allow you to make better decisions for your business. Can you afford that new studio? Are art fair booth costs financially beneficial? A budget will help you answer these questions.
Add up all of your recurring expenses on the monthly expenses worksheet. This should include everything you spend money on (not just for your art business). Include rent, utilities, cell phone bill, transportation, internet, loans etc. Ideally, this should total around or less than 50% of your income according to the 50/30/20 financial planning rule. The 50/30/20 suggests that you spend 50% of our income on obligations like bills, 30% on "wants," and 20% should go to savings.
If you are over 50% in this department, review your costs item by item and think about which costs are productive investments in your art career. For example, you might find that ordering supplies in bulk is cost-effective or that you can rent equipment. You could also look into sharing expenses, equipment or with another artist looking to cut down on costs. Jot these notes down on the worksheets and explore which costs are good investments and which ones can be cut.
Then, tally up your income line by line.
Asking yourself a few important questions can help strategically grow your art business and get to your savings goals faster.
Where did most of your income come from this year? Was your year-end total consistent with past years? What are the effort, time, and material costs that go with your top income-producing activities or works?
Get as specific in your breakdown by thinking about what type of artwork sold the most throughout the year. To analyze your data, look back on your income from the past year. Artwork Archive’s Insights feature allows you to view the breakdown of your sales so that you can see where your works are selling most, the prices of works sold, sales over time, and a breakdown of what’s in your current inventory.
If there are certain types of artworks you want to make more of, workshops you want to create, or new ideas that may boost your career, what will be the cost and potential rewards of these plans?
Now, as you prepare to predict and map out your future spending you can based on what you know about how profitable your efforts and costs were and where you want to grow in the coming year.
Revisit your budget throughout the year
Based on your costs, create a rough prediction for your yearly spending and track your habits to achieve your financial goals.
The worksheets will help you break your budget down by month, quarter and year. Make sure to lay out what your budget is each month so that your fixed costs, like studio rent, will be covered.
Your yearly and monthly budget will help guide you throughout the year.
A thoughtful budget can be a living document when need be. If something changes, you can update and revise your budget. Since you know what your strongest and most reliable revenue sources are and biggest expenses you can make informed decisions if you need to change your budget over time.
Use financial tools to help stay on track.
In addition to the worksheets, a system like Artwork Archive can help you keep track of your sales and expenses. In your Artwork Archive account, you can use the Revenue and Expense feature to generate a revenue report of art sales, non-sale revenue, and both types of revenue. This report will give you a total as well as break down your revenue by line item. You’ll be able to easily see a record of your sales and revenue with just a few clicks.
The fastest way to increase achieve your financial goals is to by getting organized and doing a bit of (groan) math.