The business of art: the art business, in many ways, is unlike any other. Yet, in many other ways, it is like any other business. This month, five gallery owners discuss what it takes to operate a successful gallery business
Editor’s note: This is the second of a two-part series, in which five gallery owners from New York, North Carolina, Florida, Missouri and California, share their views on business plans, market research and methods for securing capital. Part 1 of the roundtable appeared in the January issue, and provided an opportunity for the participants to share what they consider to be important factors before entering the art gallery business, including reasons why for entering the art market; important character traits to have; the best legal structure for an art gallery; and the pros and cons of the business. Roundtable participants are Betty Cuningham, Betty Cuningham Gallery, New York (Chelsea); Jonathan Kodner, Kodner Gallery, St. Louis; Richard Roberts, R. Roberts Gallery, Jacksonville, FL; Melanie Smith, Seaside Art Gallery, Nags Head, NC; and Mike Woolsey, Marina Fine Arts, Marina del Rey, CA.
Would you recommend that the new business owner conduct thorough market research of potential customers, the art trade or industry, their competition, the licensing and tax requirements, location, and name? How have these different marketing factors affected your business?
Richard Roberts: No, Yes, Yes, Yes, Yes, and Yes. Your customer base is constantly changing. Having a good product will allow you to attract customers from throughout your area, while the Internet will provide you with additional, although incremental, exposure. A strong business sense will help you with items 2, 3, and 4. Location is essential. We are in a historic district with a small set of diverse shops and restaurants. The district provides us with a strong customer base while attracting people from the rest of Jacksonville. We, like others, have chosen to put the owner’s name in front of the public. If there is a problem, people know where to go. Basically, you put your reputation and customer service on the front doorstep.
Melanie Smith: Market research is helpful. First, you should plan what type of gallery you want to open. You will need to decide what type of art you want to feature and what services you want to provide. This will help to define the personality of your gallery and the market you will be appealing to. With this information, you can then decide on location, advantages of renting or buying and government regulations.
Jonathan Kodner: Market research is a must for all aspects of your business strategy. The more questions you ask, the more you see results and the more you know. All of these elements as a whole can make or break your business. For example, you can have the most desirable artwork in the world, but if you don’t know who your potential client base is, you have no market for the work and cannot sell it. You have to be prepared.
Mike Woolsey: A good location is important. Ours provides good customer traffic and demographics–affluent and young (20- to 40-years-old). We’re located away from other galleries. I would not want to be open in a neighborhood with five other galleries, unless they weren’t meeting a specific need in terms of pricing or types of works.
Betty Cuningham: I did not do that sort of research. I think you join a gallery and learn how your employer markets work and then you choose to follow or not to follow when you open your own gallery. Per the legal licensing and tax requirements, be sure you have a good business manager and a good art lawyer to advise you as the laws change.
How did you choose your location? What advice regarding location would you offer to those looking to open a new art gallery?
Kodner: We chose our location based on proximity and accessibility to our main client base. If your space is inconvenient to your clients, they are less likely to stop in on a regular basis. However, if you have the public relations and advertising budget to make it work, you can support a less desirable location.
Roberts: We bought an existing business that’s not only in a well-known and heavily trafficked shopping area, but it’s also convenient to my residence. While location is very important, one needs to assess the suitability of the building for use as an art gallery. Conversion or modernization costs are very expensive. In this regard, one should attempt to get an option to purchase the building in an effort to provide cost stability for the future. An option for a long-term lease is a good alternative.
Smith: We are still in our original location and at the time it was the only retail location available. One of the things about location that is often overlooked is the availability of parking and if the traffic pattern is advantageous to getting in and out of your location.
Cuningham: I am an exception. I only looked at one space both times when I opened my two galleries. I walked less than 20 feet to open at 93 Prince Street in SoHo in 1972 … and I walked a block to open my current space. However, from my most recent past experiences, I did know both times that I wanted to stay first in SoHo and this time in Chelsea. And, that was determined simply because both times I wanted to be where the artists that I like and show wanted to be.
How would you describe your style of conducting business? Does a business plan play an important role in your day-to-day operations?
Smith: I do not have a day-to-day business plan other than to be open during our business hours. I do have projects that I plan to work on during the day, but that can change depending on who walks in the front door or calls. Our gallery is located in a beach resort, which is very relaxed and friendly and our business style reflects that.
Kodner: A general business plan is relevant, but paying attention to sales on a weekly basis and keeping abreast of the current financial situation (i.e., monies going in and out on a daily basis) are critical. As a business owner you must be aware of what your employees are doing, and that they are performing in a manner best suited to helping your company thrive.
Roberts: Our business is based on customer service and providing a quality product at a fair price. My personal style is to maintain our financial position so we meet our obligations while providing for our employees. We have an annual operating plan that is evaluated monthly. We try to find fresh, new works of art while avoiding fads. And we’re aggressive in our marketing, developing an annual plan and modifying it as market conditions and opportunities dictate.
Woolsey: This is a relationship business and we’re all about that. We have a couple of thousand clients in our database who we call on a regular basis and we work at knowing their art interests, hobbies and occupations, whether they have children, where they live, etc. I know a lot of galleries are on top of the latest technologies and have sophisticated Web sites, but I’m not interested in capturing customers nationwide. My strategy is to capture every customer in the neighborhood, within a two-mile radius of our gallery. As for a business plan, we don’t really have one. Essentially, I know what we’ll do in volume each month. When you’ve done this for more than 20 years, you just know.
Cuningham: My style is to be very open and available to my artists and to my clients. We have weekly staff meetings and I have the best staff. And, we all have had gallery experience. And, of course, we do have a plan and a budget per show, and we attempt to stay within it.
Do the following need to be listed in a business plant Sales volume, profit, customer satisfaction, owner compensation, number of employees, owner time commitment, and assets. Are there others?
Smith: A business plan is a good tool, especially when there are partners involved and [when it comes] to acquiring financing. I would like to mention that in many ways the plan needs to be viewed as a fluid guide, rather than rules written in stone. A few other things that need to be considered are insurance; advertisement; building maintenance and cleaning supplies; credit card accounts and interest fees; gallery policy on returns, payment plans, etc.; accounting fees, lawyers fees; taxes; security measures; art purchased versus art on consignment and fees; signage; printing of invoices, price labels, brochures, etc.; employee handbooks; postage and shipping accounts; and equipment such as computers, adding machines, cases, etc.
Roberts: A business plan is a compilation of meeting sales goals while controlling expenses. The success of your employees in meeting their goals goes a long way in determining everyone’s compensation and the ability to add new assets or replace aging equipment. Customer satisfaction will be reflected in your overall sales numbers. A most significant item to be addressed is employee benefits, particularly health care. What you provide and who pays for the benefits can have a major effect on attracting and retaining a quality staff.
Kodner: An idea of sales volume is an area that can be a consideration of estimate, but you must factor the realistic potential only. Keep in mind, one or two high dollar sales can be more profitable than 10 smaller sales. Profit is unpredictable and is based on the works you are selling–both the quality of works and the number of works sold. Customer satisfaction is a must, although any small business owner should seek legal advice when determining service guarantees and warranties for goods and services. As an owner, you must be ready to commit everything you have to your company. If the company thrives, you do well; if not, then you won’t. I would recommend that the owner be a constant presence in the gallery for at least the first year. Even afterwards, the owner must be accessible to his or her clients on a regular basis to instill a sense of confidence in the company. I recommend as few employees as possible in the beginning to keep costs down. You can always hire more as business increases.
Woolsey: You need to know that this is a business that will require many hours of your time each week.
Cuningham: Business plans contain all the above. Plus you should have a strong awareness of the costs of operation; that is catalogs, photography, storage, shipping, art fair expenses, traveling, openings and entertainment. I am sure I have forgotten several other items.
When it comes to securing capital, which avenues have you found to be the most efficient and effective for the art gallery? Please discuss pitfalls to be avoided.
Kodner: Building bank credit is essential and beneficial in many respects. The personal relationships established with the bank can build your business. Outside individuals serving as silent investors can also be prosperous.
Smith: Having a good relationship with our banker has been the best way for us to secure capital. Purchasing items with credit cards has also helped us with our cash flow on a short-term basis. The best advice I can give is that you should never borrow more than you need or can pay back.
Woolsey: I worked out terms with the former owner and am paying it off over time. It’s important to keep expenses down and not to go overboard with fluff in order to achieve the right look.
Cuningham: A good track record will often be the only way you can get people to invest in your idea for a gallery. If you have no record, it is extremely difficult–if not impossible.
Is there an aspect of the art business (or any business) that you think should be the No. 1 priority of the new gallery owner? Financial, sales, marketing, for instance?
Smith: The No. 1 priority of new gallery owners should be to protect their reputation and to handle all of their business with the highest level of integrity. This way your customers will trust you and your sales will increase, your artists will trust you and continue to supply you, and your banker will trust you and continue to loan you money. You will be an asset to your community and a wonderful example to the artistic profession.
Kodner: The financial aspect is primary–from this you can begin a marketing strategy. If this works out well, it will result in sales and the cycle will continue.
Roberts: Have a great sales team. Our gallery director, Jennifer Reideburg, is enthusiastic, a diligent worker and a topnotch employee. Also hire qualified competent professionals to assist with legal, accounting, public relations and the like. They make a world of difference.
Woolsey: It’s all important. You have to be about making sales. You need to be making the phone calls; you need a newsletter; and you need a Web site. Furthermore, you need to have the quality art works that your customers want and not get too focused on your own interests.
Cunningham: Of first priority is good product, i.e. artists, and of second priority, having enough money.
Meet the Participants
Jonathan Kodner, an internationally recognized consultant and dealer in the field of fine and rare art, is president and director of Kodner Gallery, St. Louis, which has one of the largest and most eclectic inventories in the Midwest. Known for his expertise on French and American Impressionists; masters of the Old West; regionalists; 17th- to 20th-century American and European landscape, still life and genre; and modern and contemporary masters, Kodner began his career in 1986 as the assistant curator of art collections and exhibition technician at the Missouri Historical Society after graduating from the Kansas City Art Institute. After several years with the Historical Society, he was led to the gallery that was originally opened by his father, Martin, in 1971. He became a member of the United States Appraisers Association; The New England Appraisers Association; and the Appraisers Association of America, while he worked alongside his father. Today, he and his brother David continue the family tradition, offering their expertise in the appraising, buying and selling of paintings, sculpture and fine art.
Meet the Participants
Betty Cuningham is owner and director of the Betty Cuningham Gallery in the Chelsea neighborhood of New York. She is living proof that for many, owning and operating a gallery is something that becomes a part of you that is difficult to leave behind. Cuningham once had a gallery in SoHo from 1972–1982. She went on to be a director at Hirshl & Adler and Robert Miller. Last September, she once again became an owner/director of the Betty Cuningham Gallery in Chelsea on 25th Street. Cuningham has a BA from Finch College in New York and a MFA from Hunter College in New York.
Meet the Participants
If you ask Melanie Smith when her management of the family gallery began, she hesitates. “It’s been more of a growing-into pro-cess,” says Smith whose parents, Barbara and Chester, opened Seaside Art Gallery in Nags Head, NC, more than 40 years ago. She grew up working at this barrier island gallery during the summer and on weekends, doing everything from dusting, changing light bulbs and framing, to eventually working with customers and mists. Today, Smith–who is accredited with the International Society of Appraisers and has written and taught a course for the ISA on animation art–oversees the gallery. Seaside shows the original work of more than 80 artists, and features more than 2,000 original works of art by masters and contemporary artists. Since its opening in 1961, the gallery has expanded from a one-room venue featuring mostly marine art to a diverse 13-room establishment. It offers a wide variety of paintings and fine art prints, original production animation art and cels, pre-Columbian pottery, antique porcelain, art glass, bronze and marble sculpture and estate jewelry. Seaside schedules art demonstrations, school tours and changing exhibitions, including the International Miniature Art Show in May. Appraisals are offered with authenticity, fully guaranteed.
Meet the Participants
Richard F. Roberts has owned the R. Roberts Gallery for 10 years, after purchasing an existing gallery in 1994. Representing local, regional, national and international artists, the gallery is considered to be one of the region’s most prominent purveyor’s of fine art. Located in the historic Avondale area of Jacksonville, FL, the gallery offers an extensive selection, custom framing, restoration, personal on-site art and framing consultation and portraiture services. In a New York Times article, the gallery was referred to as the “center of the Avondale art universe.” Prior to entering the gallery business, Roberts had a 26-year career in the petroleum industry, holding a variety of positions with Exxon, Grand Bahamas Petroleum, New England Petroleum and Charter Oil Company. In 1993, he co-founded Ortega Automotive, and sold his interest in that business in the late ’90s. A native of Key West, FL, and an engineering graduate of the University of Florida, Roberts has lived in Jacksonville for the last 20 years, where he supports many community organizations and has served on the boards of several nonprofits.
Meet the Participants
Mike Woolsey is owner of Marina Fine Arts in Marina Del Rey, CA. A native of Southern California, he attended the University of California, Riverside, where he graduated with a bachelors degree in European history. Upon graduating, he started working in the gallery business while his wife finished school. Today, 24 years later, Woolsey and his wife of 22 years have two children and he’s still enjoying the art business, though he admits that he’d like for it to be less demanding at times. Woolsey’s gallery has been at its present location for 20 years. Designed by world-renowned architect, john Lautner, the gallery’s 1,200-square-foot, award-winning space is a one-of-a-kind, with custom-built display areas, skylights and an eye-catching facade featuring large, colorful (orange and yellow) and curved metal pieces.
* Betty Cuningham Gallery, 212-242-2772, www.bettycuninghamgallery.com
* Kodner Gallery, 314-993-4477, www.kodnergallery.com
* Marina FineArts, 310-305-7678, www.marinaflnearts.com
* R. Roberts Gallery, 904-388-1188, www.rrobertsgallery.com
* Seaside Gallery, 252-441-5418, www.seasideart.com
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