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Factors In Determining A Successful Pottery Business


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#1 DirtRoads

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Posted 29 June 2014 - 02:45 PM

 *  Factors in determining a successful pottery business

I.  Overcoming barriers to market entry and establishing long term market presence

II.  Business Model

III.  Product

IV.  Marketing Mix

Financial Viability =f  { (barriers to market entry) + (business model)
                                             + (product development) + (marketing mix)}

Financial viability defined as deriving enough income to sustain a viable living.  This can be any amount the potter deems as "viable".

         Poster of this thread thinks it might be in the range from $24k to $50k, annual income

I.   Barriers To Market Entry

1.  Start up costs  ( Gep, Mark C., Stephen, John Baymore)
2.  Opportunity cost of lost wages

3.  Cash Flow - Stephen
4.  Technical ability
5..  Personal fortitude/motivation (Chris Campbell, Mark C, John Baymore)

II.  Business Model (John Baymore)

1.  Focus
      A.  Market Focus
      B.  Product Focus

2.  Structure
      A.  Solo artist
      B.  Production team

III.  Product  (placed ahead of other marketing mix variables)

1.  Product differentiation -  Your product is unique and different from competitors - Mark C
2.  Customer appeal -   Your product has the “it” factor, to the point where
     Customers will want and buy it  (Gep)
3.  Production - Can you produce enough of it to make a living

IV.  Marketing Mix

        1.  Distribution
        2.  Price
        3.  Promotion

1.  Distribution (Dirtroads, Mark C)
       A. Wholesale
       B.  Direct to Cusomer -  any venue where end use consumers physically see and buy product
       C.  Internet

A.  Wholesale
       1.  Outlets
             A.  Gift or specialty stores
             B.  Galleries
       2.  Sales Promotion
             A.  Wholesale shows
             B.  Personal (1 to 1) selling
        3.  Representation
             A.  Self presentation
             B.  Sales rep or rep group   (15% commission)

B.   Direct to Customer

  1.  Events
       A.  Juried art shows
       B.  Handmade shows
       C.  Festivals               
       D.  Flea markets
       E.  Farmer’s markets
       F.  Retail shopping shows
       G.  Open House

  2.  Vendor marts - Typically, a monthly rent for an allocated amount of space plus 10-15% commission
  3.  Free standing retail (show room in the same facility where you make pottery)
  4.  Kiosh - sales space located near or within another retail outlet (can be seasonal or permanent)

C.  Internet
      1.  Etsy
      2.  Website

2.  Price
      1.  Cost plus approach
      2.  Wholesale or Retail
      3.  Perceived value
      4.  Right price for distribution outlet

3.  Promotion
      1.  Social Media
           A.  Facebook
           B.   Instagram
      2.  Post card or flyer
      3.  Sales promotions at events
           A.  Business card
           B.  Flyer or catalog
       4.  Website

 

* Compilation from Ceramic Arts Daily forum contributors



#2 DirtRoads

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Posted 29 June 2014 - 02:47 PM

Make any suggestions to the above :) .  Thanks in advance for any contributions.   PLEASE point out an oversights or points of disagreement.   My goal is to outline a comprehensive model for new comers to the pottery business.  In addition, generate discussion threads for each of the major factors.  (Going back now and crediting contributors.. give me a little time on this)



#3 Chris Campbell

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Posted 29 June 2014 - 05:17 PM

That list looks fairly daunting ... I would add that there are people who can help.

Arts Business Institute
www.artsbusinessinstitute.org/

Invest one weekend of your life and save yourself two years of errors.
I recommend them 100% .... have attended two and they were excellent investments in my future.

This might look like a forbidden plug for a business ... but they truly are dedicated to helping artists succeed. They want a thriving hand made in America arts scene. They are always on the brink financially but keep going on.

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#4 Diesel Clay

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Posted 29 June 2014 - 08:41 PM

Since I'm kind of in the position of beginning to set up shop, I think mentorship desperately needs to be on that list somewhere. What you don't know can and will kill you, and there are times when you don't even know what you don't know. You know? :)
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#5 Stephen

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Posted 30 June 2014 - 11:53 AM

Great outline, going to integrate it into my business plan, thanks!

 

Chris thanks for the link, heading over there now to check them out.

 

Something that jumped out at me was your line:

     'Financial viability defined as deriving enough income to sustain a viable living.  Ranges from $24k to $50k, annual income.'
 

Not sure I get this. That's not really true. I think there are plenty of established potters making less than 24k and plenty making more than 50k. I personally cannot consider 50k a viable living wage and a debt free student fresh out of college with a paid for Ford Focus probably can squeak by on 24k or maybe even less. 

 

I would add a section in place of that sentence V. Finance

 

I grabbed this from Scores website ( http://www.score.org...emplate-gallery ) what they have this section looking like.

 

Start-Up Expenses

Opening Day Balance Sheet

Balance Sheet (Projected)

Bank Loan Request for Small Business

Loan Amortization Schedule (Excel)

Break-Even Analysis (Excel)

Cash Flow Statement (12 Months) (Excel)

Cash Flow Statement (3 Years) (Excel) 

Financial History & Ratios (Excel)

Personal Financial Statement (Excel)

Profit and Loss Projection (12 Months) (Excel)

Profit and Loss Projection (3 Years) (Excel) 



#6 JBaymore

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Posted 30 June 2014 - 12:15 PM

In the "mentorship" category....... beceme a member of the Potters Council, and you can work on getting access to the Mentorship Program we offer (either as a mentee OR as a mentor).

 

Chris, plugs for business are not "forbidden" here ....... except if you work for the company or have any financial interest in them.

 

The only CAD exception to this idea is the "Clay Events"  section.... where such postings for educational / conference type events are OK.

 

best,

 

...................john


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Professor of Ceramics; New Hampshire Insitute of Art

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#7 Colby Charpentier

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Posted 01 July 2014 - 11:35 AM

How does a "debt free student just out of college with a paid for ford focus," exist? I'm pretty sure that situation assumes mom and pop are lending quite a bit of assistance. Also the objection to $50k as a "viable living wage" is perfectly valid. Your additional lifestyle expenditures fall outside the bounds of a "viable living wage." I would propose that any profit from the pottery business needs to be compared to the input, and judged from that standpoint. Additional income from other sources is possible if the pottery business doesn't consume 70+ hours a week. One should probably evaluate the viability of the business in a manner that considers input because of this...

#8 GEP

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Posted 01 July 2014 - 12:59 PM

I've been living a comfortable middle class life in a major US city for many years, on roughly $50K/year. This includes a nice vacation now and then, major home improvement projects along the way, and regular contributions to my retirement savings. It's possible if you know how to manage your money and live frugally.

 

Now that I've been working full-time as a potter for a few years, I can see that my income is going to fluctuate a lot, sometimes less and sometimes more. I am prepared for all of the ups and downs, again because I am highly disciplined about money.

 

For those of you starting out, $24K to $50K per year is a reasonable income to expect. If you think you can't live on that, move on to something else. If you cannot stand the thought to doing anything else, learn how to live within this picture.

 

My secrets? I bought an affordable house, and I didn't have kids.


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#9 Mark C.

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Posted 01 July 2014 - 02:20 PM

I've been at this for over 40 years now . For the past 10-15 years I would sell over 100K (gross) in ceramics-that was my target amount. I have another potter friend who does pots with his wife and we both would sell over that target amount each year. Now that I'm slowing down I no longer chase that amount. Have a mix of sales -retail-wholesale-consignment-custom-whatever you can get to work

The key things for all potters is to keep expenses low as you can-do not live beyound your means-try and own all your stuff as soon as you can (avoid payments) pay the house off as soon as you can. I also do not have kids and have owned my place for over 20 years now.

It can be done and but it takes a lot of work- more than most want to do.

I have seen many a young person think its way to much work (just out of collage). I used to hire them to help me until I gave that up due to realizing most do not want work that is this much work.

Mark


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#10 JBaymore

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Posted 01 July 2014 - 04:02 PM

It can be done and but it takes a lot of work- more than most want to do.

I have seen many a young person think its way to much work (just out of collage). I used to hire them to help me until I gave that up due to realizing most do not want work that is this much work.

 

THAT right there is the KEY to making this profession work.

 

It is hard work, it takes solid commitment, it takes a (Chris Campbell) "fall down 6 times get up 7" approach, and the mental wherewithall to accept that, compared to most other people, you will work harder for every single dollar you keep.

 

You have to be driven to do this full time.

 

best,

 

...........................john


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Immediate Past President; Potters Council
Professor of Ceramics; New Hampshire Insitute of Art

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#11 Stephen

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Posted 01 July 2014 - 05:34 PM

I was not saying 24-50k was an unreasonable pottery income just too arbitrary, buts its nice to know the high end is obtainable ;-)

 

I think the number should be based on how they work through the outline and the assumptions they make. Under section II it talks about solo or production team and this choice will radically change financial assumptions in both revenue, net and expenses.

 

What is the daily/weekly/monthly production capabilities of the potter/potters? Shows? how many? Wholesale accounts? Storefront? Studio assistants?

 

All of these things will dramatically affect gross and income and only making assumptions and working through the numbers will establish a plan. It also allows you to do what Mae Rhee is suggesting by being able to evaluate your revenue/expense assumptions compared to what you need to make and possibly make lifestyle changes (get rid of a car payment or line up a part time job) before you start to make it all at least work on paper.

 

The numbers will be off but if they are updated as you go they do start to firm up as you start to replace the projected numbers with the real numbers. Do this for a few years and it is amazing just how close projections will start to match reality.

 

Now another way to go is to just work your ass off and hope for the best.



#12 Mark C.

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Posted 01 July 2014 - 08:16 PM

(Now another way to go is to just work your ass off and hope for the best.)

I think this may just be the best way at least when starting up- you will have the inventory to have options.

Even when selling as much as I have not all tax years for me have been profit years over time.

Depends on the expense column-capital improvements and such can eat up profits fast.Just buy 50 12x24 advancers and see what kind of hole that puts in the expense column.

I have a Roth IRA and own everything with zero payments and take vacations own a few boats and do other things and travel as well.Life is short and my interest list is long. Having an incrediable work ethic is key at least for me.

For most of my life I never knew what the income coloum would be-I can only guess at best-so savings is the only way to even that out.

As Mea said (income is going to fluctuate a lot, sometimes less and sometimes more)this is always true for most potters.

You will learn over the years that sometimes things work different than you would think. For example when I did 15 shows in a year I actually made less than the next year doing 12-as my expenses where way up overall even though the shows where all good and solid. That magic number is almost impossible to know in real time.I still now with only 7 shows seem to pay more quarterly taxes than I used to.My gallery sales are up as well as the ecomomy is on the upward trend

It takes so long to dial this all in.

The main thought is love this work or forget it as it will seem like work and you will not be happy.

For me as Mea said its a lifestyle-I picked it so long ago it a distant memory.

Hey its my 41st 4th of July selling pottery. Whats it like to have that day off???

Last one I had off I was 20 years old-man how time flys.Work your ass off and it pays off-at least for me it has.

Mark


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#13 DirtRoads

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Posted 01 July 2014 - 10:52 PM

"Financial viability defined as deriving enough income to sustain a viable living.  Ranges from $24k to $50k, annual income"

 

(Revising this)

 

This is an arbitrary amount. Should have left this open ended.  These aren't really goals but what I perceive to be idealized minimums.   Enough income to sustain a viable living could be whatever the potter considers a viable living.   Or as a part time venture.  If you were gathering data, this should be an open ended variable.  Although research has shown people prefer income category disclosures. 

 

What I consider "viable" for most people goes like this  .... work 40 hours/week at $10 ..... works out to about $20k a year.     Not that many full time potters work a mere 40 hours a week.   So I"m thinking most people would need around a minimum of $24k a year if you are doing this full time.    I was thinking this might be a base line minimum.  To be honest, I never considered anyone would consider less than $24k viable for full time so thanks for opening my mind to this option. 

 

Then again, others might think they needed $50k a year to sustain what they think is a "viable living".    This is a personal decision.   I just threw out the $24-$50K a year range because i thought that might encompass age and geographic difference. Definitely NOT saying this range is any kind of industry standard.   Certainly would not put $50k as the cap on income, but a baseline standard for some would consider a "viable living". 

 

Chris that Arts Business Institute site is the best.  You know I've already found some things from those articles to add to that "daunting" list.    And Stephen, nice section V on fiance is a good idea.   And as you suggested variable outcomes for decisions, which I actually started out making a decision tree but just too many options to outline.  I compiled this "outline"  because I am most interested in business models and structures and all venues of retailing.  What you have here is a process that would fit some sort of structural equations modeling.  (would love to gather up a data base and crunch it through LISREL)

 

I think a lot of people come to this forum looking for information on making a living through pottery.  I know I browsed the entire forums  4 years ago assessing this information.   I did about 2 months of research before buying anything.  The one thing that hit me back then was that you had to make a lot a lot a lot of pottery to make it.  Went through various stages and am hitting 3 year mark in this location.    I am exceptionally pleased with the progress so far.   Positive cash flow much sooner than expected.  Two full time employees, one makes $16/hour and other makes $10/hour.   Providing these 2 jobs is a personal success for me. (one college student/family member and the other person has worked for me for 22 years and 47 years for my family)

 

 I get asked at least on a weekly basis "how do you make a business like this work"?   I've had about 20 people sit down with me for advise on this.  From this group, 6 of them purchased kilns and equipment.  Not ONE of them is still doing it.  Shamefully, I told them it was one of the least capital intensive and easiest cash flow businesses I have ever owned (which is actually true).  I didn't highlight the 60 plus hour work weeks and abundance of time spent doing what many people would term "manual labor" and the learning curve.  Funny thing is most people automatically assume they "can do this".   The last serious inquiry, I told them to have all equipment paid for and $10K of inventory before they quit their nursing job to do this.  Of  course they didn't listen, quit their job, and have since gone back to work and came back here qqing about failure.  My real secrets to success are that I was over capitalized, consider it routine to work 60-70 hours plus every week, have a lot of retail and marketing experience and as Gep said "frugal".

 

Now when anyone asks, I tell them to review topics in Ceramics Arts Community forums. 



#14 Chris Campbell

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Posted 02 July 2014 - 10:51 AM

One factor that should be noted is that many of us did not start out with $40,000 in student loan debt.

Plus ... I cannot count how many times I have heard the old " I must make my work" .... and presumably catch the entire art world flat footed at the sight of such talent. I wonder how many of these artists are still working at their craft three years out of school.

Perhaps it is time to return to apprenticeships ... many businesses have paired with universities to create work/study programs and maybe it is time to advocate some version of this in the MFA departments. Not just potters, but all the arts ... Some real life work might strengthen the programs??

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#15 JBaymore

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Posted 02 July 2014 - 11:26 AM

One factor that should be noted is that many of us did not start out with $40,000 in student loan debt.

 

The arts are not alone in this "broken system" problem.

 

I heard a recent NPR program where LAWYERS were talking about how so many of THEM cannot get jobs that pay enough to offset the huge cost of their necessary college educations either now.  Yeah,... lawyers. 

 

And I've heard friends in the medical profession also complain about this same kind of issue.

 

We need to stay a bit off of politcs in the forums (for good reasons) ... but I will say there is more to this issue than simply art schools and ceramics and such. 

 

Amen to the "practical aspects" to education Chris mentions. Much needed in many places. 

 

We also unfortunately see all to many students coming out of high schools that have been told that they are SO good and SO special and SO talented........ then arriving at the college level and "crashing" because they find out that they are just 'one of the masses' when it is no longer the 'big fish in small pond' thing.... and suddenly realize that only the best and brightest are going to make the art field work as a profession.  And by "best" I do not mean those solely with the best artwork .... but those that have the rare blend of the WHOLE package needed to be "kickin' butt and takin' names (many of those aspects being discussed here).

 

best,

 

.......................john


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#16 Chris Campbell

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Posted 03 July 2014 - 08:57 PM

>We also unfortunately see all to many students coming out of high schools that have been told that they are SO good and SO special and SO talented........ then arriving at the college level and "crashing" because they find out that they are just 'one of the masses' when it is no longer the 'big fish in small pond' thing.... and suddenly realize that only the best and brightest are going to make the art field work as a profession.  And by "best" I do not mean those solely with the best artwork .... but those that have the rare blend of the WHOLE package needed to be "kickin' butt and takin' names (many of those aspects being discussed here).<

 

 

I wrote an article years ago about the habits of successful people and the people I interviewed never thought they were the best, smartest or most talented. They could all point to someone else who did the basics ... whatever it was ... better than they did. The talented ones certainly got a head start on them, but they caught up to them eventually.

 

What they prided in themselves was resilience and stubbornness  ... knock them down and they popped right back up and tried again. Nobody had to tell them it all came down to what they were willing to do to succeed.


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#17 Davidpotter

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Posted 04 July 2014 - 11:37 PM

 

One factor that should be noted is that many of us did not start out with $40,000 in student loan debt.

 

The arts are not alone in this "broken system" problem.

 

I heard a recent NPR program where LAWYERS were talking about how so many of THEM cannot get jobs that pay enough to offset the huge cost of their necessary college educations either now.  Yeah,... lawyers. 

 

And I've heard friends in the medical profession also complain about this same kind of issue.

 

We need to stay a bit off of politcs in the forums (for good reasons) ... but I will say there is more to this issue than simply art schools and ceramics and such. 

 

Amen to the "practical aspects" to education Chris mentions. Much needed in many places. 

 

We also unfortunately see all to many students coming out of high schools that have been told that they are SO good and SO special and SO talented........ then arriving at the college level and "crashing" because they find out that they are just 'one of the masses' when it is no longer the 'big fish in small pond' thing.... and suddenly realize that only the best and brightest are going to make the art field work as a profession.  

best,

 

.......................john

 

I cannot agree with this enough. I came from a small town and was constantly told how great I was and then when I did potty tournaments for the first time I was shell shocked by how much I needed to improve just to feel average.


Practice, practice, practice. Then when you think you've practiced enough, the real practice begins.

#18 clay lover

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Posted 05 July 2014 - 07:54 AM

And one way to continue to feel like the local "Master Potter"  is to never leave the narrow confines of your local uninformed populace.

I think that happens in every filed.  Sort of like 'The more I learn, the less I know" . Some avoid that feelingby never leaving that spot that we all come to when we think we have it 'figured out'.



#19 Wyndham

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Posted 05 July 2014 - 09:58 AM

I think many who come out of our education system have never been schooled in "real world work ethics & economics" . Many students can't balance a check book but want a 100k/yr profession.

Ceramics is a little different than most professions, in that there are fewer limits on structure and more on creativity  and personal expression being taught.

There are  fewer hard facts and information about  ceramics being taught about what makes a technically acceptable ceramic object compared to a welding course at a tech school.

A welder taught at a tech school can get a $50-$80k/yr job as a industrial  welder and a pottery grad has yet to learn how to set up a booth at a craft fair, get a sales tax number and plan inventory.

One field has stronger guidelines and structure than the other. No one needs a coffee mug but a welders skills may have life and death consequences.

If there is no educational structure, create it for yourself and demand from yourself the quality education that other fields demand.

Math,finance,geology,history,marketing and more, are the foundations of a pottery career.

It takes years of hard work and learning and still no guarantees of monetary success, but the self discipline will be it's own reward.

Don't expect to go to the front of the line, without time and hard work, even with all that, you maybe far from the front of the line.

 

Why are so many beginning potters asking elementary questions on this forum, if there are well rounded courses teaching in-depth ceramics.

 

Something is missing, such as planning a long road trip and not filling the gas tank.

I recently had a young lady, just graduated from HS come in to ask for a job. She had no idea what was needed for a retail job. She had no training in handling money or what going on in a retail store, she just wanted a job.

When I told her I had nothing she smiled a left as if asking for a job was all she had to do, maybe before going to apply for welfare.

I may have rambled a bit, hopefully not too much

Wyndham



#20 Davidpotter

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Posted 05 July 2014 - 11:21 PM

maybe before going to apply for welfare.

maybe we should stay away from this sort of subject.


Practice, practice, practice. Then when you think you've practiced enough, the real practice begins.




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