How to Start an Art Business 101
You’ve heard the “starving artist” cliche.
You’ve endured people referring to your drawing, lettering, or illustration skills as a “cute hobby.”
But contrary to these outdated views, you CAN build a profitable business with your artistic talents, especially in today’s digitally connected world.
However, starting an art business can feel incredibly daunting on your own.
From craft fairs to Etsy to digital products to online courses and beyond, there are SO many options to consider as income sources.
There are business licenses to apply for, acronyms like LLC thrown around, and you know you need to pay taxes but when and how and where do you register your business?? 😪
That’s why checking all the business setup boxes and crafting the right strategy at the beginning is essential for artists wanting to start their own business.
When you’re clear on the direction for your business, you can use your time effectively to grow your income and customer base… instead of wasting months or years following the wrong strategy and hindering your business growth.
To kick off a successful art business and develop an effective business plan that will serve you for the long term, you need to consider 4 major factors:
What products/services will I offer?
How can I differentiate myself from my competition?
How will I promote my products/services?
Do I have all the proper business licenses & tax documentation?
HEADS UP! This is a very thorough (ahem, long) post.
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Okay, ready for the deep dive? Read on!
What products or services will I offer in my art business?
Arguably the biggest part of a business plan is figuring out how you’re going to make money.
As an artist, you have several income options available to you, depending on your skills, the medium you work in, and the type of work you want to take on.
Products for Art Businesses
Within art business products, you have 2 options: physical products and digital products.
Physical Products
Physical products include things like art prints, home goods, paintings, sculptures, and other things that someone could actually touch. You can sell these in person with your own brick and mortar store, selling wholesale and having other stores sell your products, or at events like craft fairs. You can also sell physical products online through marketplaces like Etsy, through your own e-commerce store on your website, or by using print on demand services like Redbubble. There are both pros and cons to basing your art business off of physical products:
PHYSICAL PRODUCT PROS
Customers are often willing to pay more for something tangible
It’s exciting to see your art come to life in a physical form!
It can be easier to stand out and differentiate yourself with unique physical products as opposed to digital
PHYSICAL PRODUCT CONS
High COGS (cost of goods sold) - this means you make less profit per sale unless you charge a much higher rate
Shipping is more complicated/expensive, especially for fragile items
Unless using a print on demand service, you’ll have to handle printing, which may involve additional fees and shipping charges, cutting into your profit margins
You may have to keep stock inventory in your home or studio
Examples of physical products for different types of artists include:
Letterers/illustrators: Mugs, cards, apparel, or other home goods with your designs printed on them
Photographers: Prints of your photos
Potters: mugs, bowls, vases
Digital Products
Digital products include things like designed templates, digital art prints, stock photography, or resources for other artists like Procreate or Photoshop brushes, online courses, digital worksheets and guides. You can sell digital products online through your own website, or through an online marketplace like Etsy or Creative Market.
DIGITAL PRODUCT PROS
Much lower COGS, meaning you can have a much greater profit margin
Don’t have to deal with shipping and handling
No inventory taking up space in your home/studio
Can generate passive income
DIGITAL PRODUCT CONS
Have to play more of a customer support role to troubleshoot customers accessing and using files
Some customers may not be willing to pay as much for intangible art, or art they have to print out themselves
Examples of digital products for different types of artists include:
Letterers/illustrators: Printable greeting cards, Procreate brushes, lettering worksheets, Procreate/Illustrator templates, social media graphic templates, Powerpoint/presentation templates
Photographers: Stock photos, Lightroom presets
Interior designers: Decorating “cheatsheets” with color palettes and textures
Art Licensing
Another income stream I’d loosely include in digital products is art licensing. This is where you have a catalog of designs or illustrations and “rent” them out to companies to use on products or in campaigns for a specific length of time or in a specific capacity.
Art licensing can be an amazing source of “passive” income (i.e. income that’s generated without you having to actively work on something), but also tends to be more of a long-term play. For instance, you may license artwork for use, but then not see actual income from it for a year.
Examples of art licensing include:
Licensing an illustration for Target to print on gift cards
Licensing lettering for Michael’s to print on home decor like signs and pillows
Licensing a surface pattern design for a company to print on kids’ clothes
Licensing a digital illustration for Hallmark to print on greeting cards
Services for Art Businesses
Your art business can also bring in income through more of a freelancer or agency model, where you take commissioned work from clients. In this scenario, every project you take on is unique and tailored to your client’s needs.
Examples of services for different types of artists include:
Letterers/graphic designers: developing custom artwork for a company’s marketing campaign, or logo/branding work
Photographers: shooting a wedding or doing engagement photos
Interior designers: designing a room of someone’s house
SERVICE OFFERINGS PROS
Can usually charge a much higher price compared to products, since these are custom offerings for each client
More flexibility in expanding your offering as you grow your business
Low COGS, meaning greater profit margin
SERVICE OFFERINGS CONS
Not as easily scalable, since each service package is unique and requires your time
Working with clients can be a challenge and requires additional skills in customer service and communication
Cannot generate passive income
As you can see, there’s a lot to consider when it comes to the offerings for your business. It’s essential to find the perfect combination of:
The work you enjoy doing
The work you’re good at doing
A solution that people actually want/need
Finding that overlap requires a bit of soul searching on your end, as well as market research to determine what goods or services are actually in demand.
(Not sure where to start with market research? I have another post with some ideas to get you started—or, you can look into my 1:1 coaching, where I guide creative business owners through finding the perfect niche for their side hustles)
How can I differentiate myself from my competition?
A core part of any successful business plan is figuring out how you can give customers a reason to buy your goods/services over those of your competitors.
This is called “differentiation,” and communicating yours well plays a key role in all of the promotion and content you create for your business.
The first step to being able to communicate it, however, is clearly defining it.
There are several ways you can differentiate your business. Here are a few examples:
Price
One of the most obvious factors in a customer’s decision to buy from one business over another is price.
That doesn’t mean you have to price your goods or services lower than anyone else in order to get business, though.
Price can also be an indicator of quality to many customers—some will opt for a higher priced offering because it feels more trustworthy.
Ultimately, pricing your work can depend on several factors, including your experience and skill level, the value of your solution to your client, the time it takes you to complete a project, the cost of the materials (COGS), the speed or urgency with which the client needs the final deliverable, and so on.
Using price as a differentiator requires research into how your competitors are pricing, as well as an analysis of what makes the most business sense for you to ensure that your business will still be profitable.
Process/Materials
Another way to differentiate is through your creative process or the materials you use.
For instance, you may offer creative design services that heavily involve the client, taking them through multiple stages of research, reviews, and revisions, providing a more thorough approach than your competitors—which might be exactly what some clients are looking for.
Or, you may do the opposite and take everything off your client’s plate, so they don’t have to worry about the project at all while you work on it. They give you a brief, and you hand them a final deliverable without taking up any of their time. That may be a key selling point for certain clients who don’t want to micromanage.
This differentiator could also more explicitly apply to how you create your products: maybe you use traditional tools, materials, or processes that are hard to come by these days.
Often, customers will pay a premium for things that are done more “authentically” or in traditional styles, as opposed to modern digital or mass-produced methods.
Niche Expertise
My preferred main way to differentiate is by positioning your business as one that helps a very specific set of customers, such as those in a particular industry.
For instance, in my coaching business, I specifically help creative business owners and artists because of my own background building and running a hand lettering business.
While a lot of my teachings in theory can apply to other types of business owners as well, I have much more expertise and personal experience in the creative field, which I feel allows me to be more specific and effective in my coaching.
When you position yourself as an expert in a more specific niche, customers in that niche see you as the go-to. They recognize that you “get” what they’re going through, and you can better understand their specific needs than a generalist who serves many different groups.
How will I promote my products and services?
You can have the best designed business and offerings in the world, but if no one knows you exist, you won’t bring in any income.
Promoting your business is, of course, a critical piece of your business strategy as an artist.
This includes the platforms you use to share about your business (i.e. your website, an email list, Instagram, LinkedIn, Pinterest, etc.), as well as the networking and outreach you do with others in your industry, or larger organizations and accounts that can get your message to a broader audience.
In my experience with artists and creative business owners, I’ve found that self-promotion can often be a struggle—it feels too “salesy” or uncomfortable. If that’s you, check out my thoughts on how to frame promotion as “audience education” for a better experience for you and your followers!
As you’re formulating your art business plan and strategy, be sure to consider the following:
Choose 1-2 social media platforms to post on regularly
Your decision should take into account which platform is best for your product/service (i.e. Instagram works well for most artists because of its visual nature), as well as where you know your ideal clients “hang out” on a regular basis.Create a website that both showcases your work AND makes it easy and clear how a potential client can hire you.
In addition to social media, you need to have an online presence that YOU own entirely, and isn’t subject to the whims of a social media app’s algorithms and updates.
A professional website also boosts your credibility and builds trust with your clients.
Just make sure that you’re not simply slapping up a portfolio of your artwork with no explanation or context—your ideal client should land on your website and IMMEDIATELY know that they’re in a place specifically meant for them, and what problem(s) you can help them solve.Have a plan to leverage larger accounts to reach a broader audience.
Especially when you’re starting out, using others’ larger audiences and followings to get the word out about your business can be incredibly helpful.
This might look like you being a guest on someone’s podcast, writing a guest blog post, doing a “takeover” of someone’s social media account, doing a guest workshop or training on someone else’s social media account, doing a collaborative project with another artist, and so on.
Do I have all the proper business licenses & tax documentation?
If you are serious about turning your art skills into a business, you need to get all the legalities figured out at the beginning to ensure you don’t run into any huge issues down the road.
While I am not a lawyer or accountant (please do additional research beyond this post!), here are the basics you’ll need to look into:
Registering Your Business
The easiest type of business you can have is a “Sole Proprietorship.” Essentially, this means you just do business under your own personal name (as far as taxes are concerned), using your social security number as your employer ID for tax purposes.
The risk here is that if a customer or client sues you, they could potentially wipe out your personal savings and assets as well.
The other basic option is to form an LLC (limited liability corporation). When you create an LLC, you give your business an actual name, you get an EIN (employer identification number), and if someone tries to sue you, they can only go after your business income/assets.
Again, I oversimplifying this just to give you a starting point—I cannot stress enough that you should talk to actual legal professionals for more information 😊
Most states have some sort of online business portal where you can register your business as an LLC and set up your tax information. When I set up my LLC (in the state of KY), it was all relatively painless and quick.
Sales & Use Tax
If you’re selling products (and some services), you will need to submit regular sales tax payments to your state as well. As the requirements differ by state, I unfortunately can’t offer blanket advice here, but be sure to look up your state’s requirements and set reminders for yourself to submit your returns (they may be monthly, quarterly, or biannual, depending on your state/business).
Vendor Licenses
If you plan to sell your products at events like craft fairs, you’ll need to get a vendor’s license for the state in which you’re selling them. Again, this varies by state and will likely be done through the state’s online business portal. It’s a good idea to check with the event organizers and see if they can steer you in the right direction as to what licenses you’ll need to sell at their event.
Income Taxes
I highly recommend 2 things to do immediately when you start your business:
Set up a completely SEPARATE checking account for your business
Start using accounting software to track everything that goes into/comes out of this account
When it comes time to do taxes, having a separate account in which you categorized all your transactions for your business makes it MUCH easier.
I use a free accounting software called Wave, which allows me to bucket transactions into different types (which will allow you to write off things like supplies, training, and other business expenses at tax time) and pull simple reports at the end of the year.
Taking the First Step
Trying to figure out the first step to start your art business can be overwhelming, but the most important thing is to just START.
You can only figure out what works and what doesn’t by trying things out, gathering feedback and insights, and making smart adjustments.
It’s also helpful to have someone in your corner who can tell you what to prioritize, what to keep doing, and what to let go of—that’s where business coaching comes in.
If you want help getting your art business off the ground and turning it into a profitable side hustle, take a look at my 1:1 coaching program.