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Featured Article/Paper Number 9
by Dr. J. Darragh
M. Elliott, M.Sc., Ph.D.
"HOW AM I GOING TO GET THERE?" (Part 1)
Now
that we have set our goals relative to our business, the next stage is to
determine a further goal. This goal is our new clients. Who are the people
who are going to buy our product and how should we channel our energies
to get the greatest return for the least amount of work?
This might well be said as an industry analysis,
as we now have to determine who it is that are most likely to purchase
our works of art. First we should note that the person who invests into
art is approximately 40.5 years of age and older. This is not to say that
younger people do not purchase art, but that younger people are busy channeling
their money elsewhere, such as raising a family. They may not be able
to afford your works of art right now, and they may not have acquired
that same appreciation for art as yet as you have. So 40.5 years is the
average when a family has raised their children and are now able to afford
original works of fine art. Hence, they acquire the interest and in so
doing acquire the appreciation.
Now that we know who it is that are the most likely
to purchase our products, the next step before moving off in this direction,
is to take a closer look around us to determine our own industry, how
does it work and how do we fit in. In doing research and updating this
research from time to time, this will let us know who the competition
is and to keep abreast of our competition. If we do not do this, within
this fast changing world, our competition can pass us by through sheer
technological advancement using new and innovative marketing techniques.
Understanding Your Industry:
This can require some research, but it is a very
necessary evil. Without this knowledge, all of your hard work in learning
how to create, and selecting a comfortable medium to use can go for nothing,
if you are not aware of your market, how it works and your competition.
You should break your industry down into five different
basis points and describe each on paper. These are:
1) Your industry, your competitive environment
and market.
2) The current economic environment.
3) The legal political and social environment
relative to your works of art. Here you should list all the sources for
government grants, patrons, areas for display of your works, etc.
4) The technological environment. What is your
competition doing, and how do they go about doing it?
5) Lastly, is the demographic environment.
Now this is where you decide where your niche is located. You want to
write down what strategic opportunity exists for you, why it exists, how
you are going to go about developing this and why it should be successful.
The starting point is for you to begin with the evaluation
and merits of your proposed new business. For this is how you move into
your industry and how you're going to fit into this industry.
At this point it is extremely easy to skip over doing
this section, and yet if you do, you have just lost one of the most basic
fundamental tools of yourself and your niche. It is extremely important
that you do the necessary research into your industry, as, at the very
least, it will become a valuable learning experience. This will allow
you to be able to make rational decisions later on and avoid a lot of
the pitfalls that a new business entrepreneur, or even many established
business can fall into, due to lack of inexperience.
Understanding your industry should not be a long detailed
report. It should outline the normal methods as to how your industry and
those like you work within the industry. What are the factors that can
and do affect your industry as an artist? In describing your industry,
identify all of each of the different areas of your industry. The various
forms of service and what manufacturing products make up this industry.
The economic influence area of each including immediate area, city, county,
state, and country. Next, you want to make a list of all of the industries
characteristics and those that are related to the primary suppliers of
your industry. This should include, the services and products that they
supply, and how do they move their product from their manufacturing plant
through to the customer and the eventual consumer. You should not forget
to make a list of all of the factors that can materially affect your suppliers.
Who are your industries biggest customers? Who are the biggest benefactors?
Is this customer base stable or does it have a way of changing and why?
You should make some notes about their customers (including yourself),
and why you buy from these suppliers. How is it that these suppliers have
been able to reach you? Is there customer basis stable or is it changing?
What are your costs? What extent are they able to supply you with their
product? What kind of service do they offer? Do they offer any input into
your product? Is their product available when needed? Are they unreliable
and/or are their costs almost prohibitive. To what extent do you have
to rely on these suppliers? Are there any mitigating factors as to why
you would not continue to remain a customer of these suppliers? You should
make note of the good points and the bad points to see that you do not
become complacent and fall into the same scenario. Here you can find a
major pitfall to avoid beforehand.
Now look at yourself, what is your relationship with
your customers, why should they continue to do business with you rather
than someone else? What do you do or should you be doing to retain your
customers?
Competition:
Since commercial feasibility is critical to the success
of all business, it is important to know to what extent your product and
subsequent services are exposed to direct and indirect competition.
Historical Performance:
It is best to research some data as to how your industry
has done over the last ten years. Particularly, in the sales of works
of art. A graph illustration best serves this purpose. To outline this
sector, historical trends of art sales are readily available from numerous
sources. Some of these can be obtained from art books and magazines. It
is generally known that in the 1980’s the sales of art grew rapidly until
it reached a peak in1889/90. Then, with the recession, it dropped dramatically.
It has slowly started to return, and certain works have reached or slightly
surpassed the 1889/90 values, but many have yet to reach these values.
Where do your works fit in? What are the chances for it to increase in
value? How are you going to ensure that they do increase in value other
than your costs of production?
Are there any seasonal patterns that can affect you
sales, If so, then what are you doing to set off these seasonal patterns?
Future Outlook:
What is the future outlook for the art industry in
general, what strategic opportunities exist for the development of your
niche? Does your niche really exist?
Is your new product marketable? Is it innovative?
Have you really found your market niche? Will it grow rapidly within the
art industry? Does it meet an unfilled need or a market demand? Could
a new existing untapped market be developed for your works of art or any
product for that matter? Could you develop a lower cost method for doing
business? Could you provide a better service than your competition or
is otherwise available through this industry?
All of these factors must be identified and the reasons
that you can take advantage of them, has to be carefully defined.
Also, you have to make a list of all of the pitfalls,
as you know them to exist. Would these result in some failures, and to
what extent possible, could these failures affect your whole business?
It is extremely important for you to now identify what can go wrong, to
state what precautions and what plans that you have in force that you
will take to protect yourself against them. What then are your plans that
will lead to success?
Now that you have all of this information down, and
you have done the research, now is the time to write a feasibility study
to evaluate the merits of your new venture. You should come out of this
feeling very comfortable, but if there are areas that you are uncomfortable
about, then you have to return to those points that you have answered
under the section titled, Future Outlook and re-address them again. You
will have to modify them to the point that you feel comfortable about
them. If you do not, then it is similar to trying to operate a business
with one hand tied behind your back.
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