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1.0 Executive Summary
Art Gallery, LLC (“the Company”) is based in New Hope, Pennsylvania. The business will specialize in showcasing art among both established and up-and-coming artists that are regionally based. The Company was founded by Stephanie Barnett. The business, in addition to maintaining a moderate scale brick-and-mortar facility will also distribute art among numerous online platforms. The business will typically receive and sell art on a consigned basis. At this time, the Company is seeking a $125,000 private investment in order to commence operations.
1.1 The Operations
Art Gallery will maintain a 1,000 square foot gallery in the highly trafficked tourist town of New Hope. The business will be open seven days a week. Generally, the Company will feature two artists at any given time. The business will frequently host events that celebrate both artwork and the artists that created the pieces.
In order to further drive sales of art showcased at the location, the Company will maintain numerous ecommerce channels including a proprietary website as well as accounts among third-party platforms. The business will use social media to specifically promote pieces that are for sale as well.
The operations and types of art offered by Art Gallery, LLC will be further discussed in the third section of the business plan.
1.2 Financing
An investor is sought at this time. Ms. Barnett intends to acquire $125,000 of equity capital in order to establish the Company’s operations. A significant portion of this capital will be used to finance the operating expenses of the business. As stated above, the Company will generally not directly acquire art inventories as they will be sold on a consigned basis. In addition to working capital, the funds will be used for:
• Location development in New Hope
• Furniture, fixtures, and equipment
• Marketing (including the development of online sales channels)
If necessary, the Company could acquire expansion financing via revolving credit facilities. The business would only use this type of capital in the event that the Art Gallery directly acquires pieces from artists for sale.
1.3 Mission Statement
Art Gallery’s mission is to provide the general public with an curated artistic experience while promoting up and coming artists in New Hope and the greater Pennsylvania metropolitan area.
1.4 Management Team
Stephanie Barnett is an experienced retail entrepreneur that has a love of art among all genres and periods. She is committed to developing Art Gallery, LLC into a well-recognized institution within this market.
1.5 Sales Forecasts
1.6 Expansion Plan
A major component of the Company’s growth will come from the online distribution of original art pieces. This will ensure that sales can be made on both a national and international basis. The business will also continually expand its relationships among established artists that will showcase their work at the facilities. As the Company expands its brand name, it will become easier to attract well-known artists.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Art Gallery, Inc, LLC.
2.2 Required Funds
A private investment of $125,000 is needed to establish the gallery and online operations of the business.
2.3 Investor Equity
Tentatively, Ms. Barnett intends to sell a 45% ownership interest in Art Gallery in exchange for the $125,000 of capital needed to launch operations.
2.4 Management Equity
Once the requite capital has been acquired, Ms. Barnett will retain a 55% ownership stake. Both the Founder and Investor will serve as members of the limited liability company.
2.5 Exit Strategy
Established art galleries are in demand businesses among entrepreneurs that want to enter the field of art dealing without having to take the risk of starting a new enterprise from scratch. After the third year of operations, Ms. Barnett expects that the business will be valued at two to three times EBITDA. There are no long-term plans to divest the art gallery.
3.0 Art Gallery Operations
The business will offer an eclectic range of art with a focus on up-and-coming artists that are beginning to achieve notoriety. Given the high visibility location, Management anticipates that numerous artists will want their art featured at the location. Typically, the pieces featured by each artist will have a pricing point of $500 to $10,000 with a median price of $2,000. On each sale, the business will earn fees of 40% of the face value of the transaction.
As will be discussed in the fifth section of the business plan, the Company will host numerous events on a monthly basis in order to drive traffic to the gallery location in New Hope. These events will include regional businesses such as wineries. Ultimately, the Company is seeking to become a regional artistic institution.
To further facilitate a faster rate of inventory turnover, the Company will maintain an expansive presence online. The business’ proprietary website will feature state-of-the-art technology that showcases the pieces from multiple angles. More expensive pieces will be showcased via video. In addition to the website, the Company will maintain accounts among numerous platforms that allow galleries to offer auctions. Management anticipates that 50% of sales will be made through online ordering channels.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
The revenues of art galleries are subject to economic fluctuations. This is due to the fact that art is purchased with discretionary income, and middle to upper middle income buyers will most likely reduce these purchases during challenging climates.
Nationally, the economy is performing reasonably well. The rate of inflation has reduced dramatically. This will ultimately lead to a soft landing without jobs being lost. It should be noted that the Art Gallery, LLC will target upper income earning people that are less swayed by negative economic changes. This will allow inventories to continue to be sold at all times.
4.2 Industry Analysis
The gallery industry spans a wide range of enterprises. This market includes small-scale retailers that operate in suburban locations to internationally recognized art houses that deal in art with price tags that are in the millions of dollars. Currently, there are approximately 25,000 companies actively engaged the sale art. Estimated revenues for the industry exceed $12 billion per annum.
One of the major trends within this industry has been the use of ecommerce to further drive sales of original art as well as prints. Art Gallery, LLC intends to develop a presence among numerous online channels so that the lead times between accepting pieces to be shown and sale can be dramatically reduced.
4.3 Customer Profile
As stated earlier, the Company will typically target wealthier people that will make purchases of art with a median price of $2,000. The following profile will be implemented during the course of marketing operations:
• Annual household income exceeding $100,000
• Is located within 25 miles of the Company’s New Hope, Pennsylvania gallery location
• Will spend $2,000 to $3,000 (on average) for each piece featured at the facility
This market area is well known for its wealth and Bohemian lifestyle. It is a highly popular tourist destination that is located 25 miles from Philadelphia and about 15 miles from Princeton University. Management has chosen this location given the affordable commercial rents and substantial surrounding population. In this section, you can further discuss the reasons why you are choosing any specific market to house the operations of your art gallery. Most importantly, you will need to ensure that the underlying population will be able to afford the pricing points of the art that you will offer.
4.4 Competition
Although each piece of art is a unique creation, art galleries have become somewhat commoditized. As more individuals turn to online sales channels to purchase order, art gallery owners must find ways to differentiate themselves from competitors. Art Gallery, LLC intends to brand its operation as a cultural center within New Hope and the greater Philadelphia metropolitan area. The business will host community events that feature established, up and coming, and new artists that are seeking to gain exposure for their work. These events will further brand the location as a community minded business while creating highly predictable revenue streams for the gallery. You can further expand this section by discussing the niche that you intend to operate specific for your business. You can also list other ways in which your gallery will be different from other operators in the market.
5.0 Marketing Plan
Management intends to implement numerous marketing strategies that will drive traffic to the New Hope based brick-and-mortar location while concurrently creating a substantial presence on the internet. Over the next three years, the implementation of this marketing campaign will ensure that the Company produces immense profits from the continued sale of original art.
5.1 Marketing Objectives
• Source a highly visible retail location in New Hope.
• Implement SEO and social media marketing in order to create awareness for the location as well as to promote sales of individual pieces.
• Maintain ongoing relationships with artists and artistic collectives that will use the gallery to make sales of their work.
5.2 Marketing Strategies
At this time, Ms. Barnett is working with a commercial real estate brokerage to source a suitable location for the Art Gallery in New Hope. This facility will be required to be a storefront so that substantial exterior signage can be implemented. The business will showcase art from the windows of the gallery. As discussed earlier, this location will be approximately 1,000 square feet although a smaller space may be acquired if the location is considered prime real estate.
The business, throughout the life of the business, will work with numerous organizations that promote the work of independent artists. In turn, it is expected that these groups will work with Art Gallery, LLC to showcase work within the location. Over time, these ongoing relationships with be an invaluable source of business for the gallery as established and up-and-coming artists become aware of the Company’s brand name.
In order to further drive ongoing sales, Art Gallery, LLC will maintain a content-rich platform that showcases the gallery, current artists that are featured at the location, and selected pieces from the Company’s curated collection. This platform will feature ecommerce functionality so that anyone in the world can make a purchase of original art or a print. For selected pieces, the Company will have professional videos developed which will be shown on the website.
To further maintain strong connections with patrons, the Company will also use popular social media platforms to market the gallery as well as individual pieces. Among all platforms, the business will use highly focused targeted advertisements among people that have shown a continued interest in original art. For established artists featuring their work at the location, the business will individually advertise these pieces for sale.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• A private investment of $125,000 will be secured to develop and expand the operations of Art Gallery, LLC.
• The business will not directly carry inventories, and all pieces will be sold on a consigned basis.
7.2 Sensitivity Analysis
The Company’s revenues may decline during a major economic recession. Management is mitigating these risks by operating in the wealthy and highly tourist trafficked market area of New Hope which is strategically located between Philadelphia and Princeton. The Company will further abate these risks through numerous online channels that will be used to make sales of art from outside of the business’ location.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
