Our biggest savings of the year
The ArtSphere Gallery School of Art (ArtSphere) began its operations in September of this year after expanding from its former back room into the full 787 square foot facility on the corner of Main and 1st Streets in Birmingham, AL. Since September the business has grown substantially, but in an unordered way. This business plan is being written to set a rational framework for growth to maximize profit potential. Successful realization of this plan will produce increasing profits annually by the end of the third year.
Keys to success and critical factors are, in order of importance:
- Penetration into the day-time market for art lessons.
- Completing some alterations to premises.
- Making changes to certain operational and pricing practices.
- Making sale of art supplies an additional profit source.
The greatest opportunity for the ArtSphere is through the teaching of art to paying customers. The capacity to do this is limited in size to approximately eight persons at one time. The most important objective is to successfully penetrate the 9 A.M. to 3 P.M. day-time market. This is the largest portion of ArtSphere’s teaching capacity (61%). This offers without any doubt the most important element in the future development of profits. The prime objective is to gradually increase penetration of this market sector from its present near zero level to 90% of full capacity by the end of second year.
As the afternoon market sector (22% of total capacity) is already nearly fully booked, a secondary objective is to fill the evening hours (Monday through Thursday) 7:30 P.M. to 9:30 P.M. These eight hours are easier to fill. This goal should be reached by the end of Month 5.
A further objective is to separate art supplies from art lessons, so as to make the sale of art supplies a separate profit center.
A final objective is to maintain the present level of portrait work, produced under contract by clients, as well as maintain the historical level of sales of art work created by the owners of ArtSphere prior to the recent mushrooming of art instruction.
The ArtSphere is dedicated to providing competent, professional instruction in art in friendly, pleasant surroundings while catering to the varying needs of different target market groups. The ArtSphere tries to cultivate a more personal and longer term relationship with the customer than can be achieved by a typical six session generic art course taught at Bessemer State College. The ArtSphere recognizes that the real product it sells is different from the art instruction given. Helena Rubenstein is quoted as saying, “in the factory we manufacture cosmetics, but the product we sell is called ‘hope.'”
This thinking holds true at the ArtSphere. The product sold is viewed differently by different buyers. A serious young student with potential may need special help in compiling his portfolio when applying to art school. A retired 70 year-old woman may be seeking a fun way to fill up an otherwise empty day. A stress-ridden executive may be seeking solace and relaxation. Encouragement, technical advice, stress-relief, escape from loneliness, self-expression, etc. are just some of the products sold by the ArtSphere. The owners of the ArtSphere recognize that art lessons can be had at less than $5.00/hour in some state college evening courses. The ArtSphere cannot attempt to compete with these prices. It is only by tailoring the “real” product sought by customers that we will create and maintain a high level of sales.
1.3 Keys to Success
The most important element to success is how skillfully the owners can tailor the product to suit the varying needs (emotional, psychological, technical, etc.) of its customers.
- The limited spaces (maximum of eight) have no shelf life. They are like airplane seats: A 10 o’clock space unsold today is lost forever. It is essential, to avoid the problem of “no-shows,” that customers be signed up on a monthly basis, payable in advance. This does not preclude the possibility of switching time slots. “Walk-ins” can still be accommodated, based on availability, but these “products” must be sold at a premium to encourage customers to sign up.
- Like most businesses, it is key to recognize and encourage the “heavy user.” A “heavy user” would be someone happy to work at his easel two to three hours at a time, several times a week. If, however, an hour art lesson does not come to a signaled end, for example, lights being turned off, then the customer may simply continue working for hours. It is important to arrange a signaled end to a lesson by collecting students’ canvases to store them for the next session. Those wanting a longer session need only enroll for a longer period. Only in this manner can the owners profit from the “heavy user.”
- Both owners are artistic and at times reluctant to insist on certain policies designed to encourage profitability. A willingness to be flexible in this department is key to the success of this plan.
- The special nature of the product does not allow for it to be purchased on a “take-out” basis. It must be consumed on the premises. Therefore it is absolutely essential to create and maintain an environment in keeping with the special needs of customers. Ugly clutter, adequate lighting, clean-up and smoking policies, comfortable seating, etc. all must be addressed. The location of the ArtSphere within sight of the harbor and the town landing has all the potential for superior atmosphere compared to a typical rectangular classroom at a state college.