Are There Profitable Art Dealerships?

The short answer is, of course, yes.  But there are many more – I would suggest the vast majority – which are not.
 
Over many years as an adviser to businesses of all shapes and sizes, I have experienced the problems that face businesses on a daily basis.  But increasingly in the past few years as Westbury have become more involved with the art world, I have pondered the ingredients of a successful art dealership.
 
Of course art dealers face the same issues that all businesses do.  Questions about:-
 
•         Pricing and margins;
•         Working capital and cash flow;
•         Employment of staff; and
•         Costs control.
 
But the nature of the art dealership is that, in most cases, sales are extremely ‘lumpy’.  It is not unusual for a dealer to have a good month followed by three or four very lean ones.  And, when you bear in mind that, normally, half of the sale price of a work goes to the artist, it becomes apparent that dealers have to have considerable sales just to keep their heads above water, plus sufficient capital to cope with the lean months. 
 
These thoughts kept recurring in my mind over the past two weeks.   Starting with the opening at Eames Fine Art in Bermondsey Street of their ‘Hockney Graphic Works’ exhibition.  This was a fascinating show as it exposed me to works that I would not have realised were by Hockney.  Since I have known them, Eames have consistently come up with interesting and well-curated exhibitions.  They have an excellent website and a well-oiled marketing machine. 
 
From there to a meeting of young professionals in the arts a not-for-profit London based networking group created to foster connections for creative and visual arts professionals, which includes some dealers.

The fortnight ended up with a visit to Affordable Art in Battersea. It’s always good to bump into familiar faces and particularly those galleries which are members of the Association of Women Art Dealers with whom we work closely.  But, much as I enjoy the show, a lot of the dealers show the same art by the same artists year-after-year.  Of course this is a particular market – prices range from £40 to a maximum of £4,000 with a fairly clear target audience but, returning to my theme, a dealer has to sell a lot of art at the lower prices just to cover the costs of exhibiting. 
 
So my 6 tips for running a successful art dealership are as follows:- 

  • It’s a business – be business-like.  It is not sufficient to just be passionate about the art you are selling;
  • Do the maths!  What are your costs?  What do you need to sell?  What do you do if you have some dry periods?  If you cannot do this by yourself, seek help;
  • Find your niche, test it and then exploit it mercilessly;
  • Build a database of clients/customers and be systematic about how you approach them;
  • Ensure you have a good website and use social media; and
  • Ensure you have sufficient funding. If that’s going to be a problem perhaps you shouldn’t be in business at all!

There are thousands of dealers and if Affordable Art tells me anything, it is that many will, I regret, not survive. 
 
Make sure you are one of those that does.

Keith Graham – Managing Partner

Westbury Accountants & Business Advisors, Accountants specialising in ‘The Arts’.  For more news, views and opinion, visit http://www.westbury.co.uk/.