Art Business Annual Review – time to review your year before planning for the next – but how?
So the Christmas rush is over, hopefully you have had time to slow down and relax? You probably need a bit longer still I am sure. But as the year closes you need to start thinking about next year, this is the perfect time to take stock of what happened this year. This is the ideal time to do your art business annual review. This will be a key tool to help to make next year even better.
It has been a difficult year to look back on really. There has been no normality since March 2020. There have been so many changes in such a small amount of time. Traditional sources of income such as shows, exhibitions, trade have plummeted. Online sales for some have rocketed beyond all previous records.
We can be so blinkered to so much happening around us when we are busy. That is why this quiet time is perfect to take stock and review the previous year before you plan for the next. This year that is especially important. Take time to look at what went well, what didn’t and where you want to focus to make improvement next year.
Why Metrics Are So Important For Your Art Business Annual Review
Looking back over a year your memory can be very selective. Look back over 5 years it is even more selective. You might remember a show which you really enjoyed it but was it the financial success you thought it was just because you enjoyed it? You might have been working so hard at something being so close to it you didn’t step back and recognise the changes that were happening, the success, the failure, the seized opportunities, the missed opportunities. By replacing memories and feelings about how things went with metrics that precisely measured what happened you can make much better decisions based on facts.
Art Business Annual Review Metrics Are Everywhere
One thing I love about helping people with their online art, craft or photography business is that so much information is available if you take the time to seek it out. Software is available to measure and total things for us so that it is not the laborious job it once was. If we start to measure key elements in the business it then becomes easy to tell if things are working as we want them to. When they aren’t working it helps to pinpoint the areas we need to work on. When we are working on those areas needing attention we are able to drill down to identify what we need to do to make things better and the metrics tell us whether our efforts are paying off or we need to try something new.
Metrics Help To Plan Ahead
Metrics not only tell us what is working and what is not and how to improve, they help us predict what is going to happen. The run up to Christmas may have seemed like a nightmare to some this year with unprecedented demand because of the pandemic situation, however, it has produced so much valuable information. By looking at this year’s metrics you know what to plan for next year. You know what products are likely to sell the most and in what numbers. Get ahead of yourself making and ordering those products so that you can service orders much more easily. You can plan stock levels so you don’t run out of stock like this year. It becomes easier to avoid mistakes such as making or ordering too much of things that don’t sell!
Daily, Weekly or Monthly Metrics
Most systems will allow you to choose the time period for which to report metrics. By default many will show ‘last 7 days’, ‘last 30 days’ and ‘last 12 months’ for example. Most also allow custom date periods for you to choose a from and to date.
You could track metrics daily or weekly but for most purposes this becomes too administrative. What I would suggest is that you collect metrics on a monthly basis. This will be sufficient for you to see the direction that things are going as well as spot seasonal patterns and once you have more than 12 months worth of metrics it becomes easy to compare with the same month last year to ensure things are growing as you want them to.
If, however, you are trying something new then a month is a long time to wait to know if something is working. In that situation you might want to be very selective about which metrics to record and focus on them weekly or even daily to test new theories and working practices for example. Seeing quick results will give you confidence to continue whatever you are trying rather than waiting a month and losing faith. Similarly seeing nothing happening may quickly confirm your efforts are not working so you can quickly try something else rather than wasting your time.
Where To Record Your Art Business Annual Review Metrics
You can record your metrics the old fashioned way using pen and paper but you are trying to build an online business here. Take advantage of technology. By using a spreadsheet on your computer you not only get to record your metrics you also get to manipulate them much more easily. If you already have figures for each month – let the computer add up the figures for the year. Want to work out the increase on last year – let the computer work it out. Want to understand the figures much more visually – let the computer graph them for you so you can better understand them.
PC users can use Microsoft Excel if they have Microsoft Office. If not look at a free product such as Open Office and its built in spreadsheet equivalent of Microsoft Office. Mac users can use Apple’s ‘Numbers’. If you haven’t used spreadsheets before find out how to do some of the basics by taking a short course or watching some YouTube videos. It might save you lots of time in the long run and make measuring your business progress much easier.
What Metrics You Should Use For Your Art Business Annual Review
So many metrics are available to you. Your website host is likely to provide metrics for numbers of visitors, number of page views, where people are from, what browser they are using. Install Google Analytics and you will find incredible information about which pages people visit, how much time they spend there, where they came from to get to that page, where they went from there and so on. Social media will track data about your followers, your engagement, your growth. There will be information about sales numbers, sales values, product lines and so on.
There is so much information it can be quite overwhelming. It’s all very useful information when used in the right context but it is essential to focus on key metrics not all metrics on a regular basis. Focusing on a handful of key metrics will help you get a good feel for how everything is going then when you identify areas that you need to focus on you might home in on some other more detailed level metrics for a period while you work on that area in your business.
Number Of Products
The first figure I want to start with is number of products. Every product is a way for customers to find you and a way into your website and other online shops. If you only have a small number of products you risk not being found, if you have too many you risk overwhelming yourself and not listing any of them well enough and possibly having poor quality products diluting your high quality products. Grow your number of products slowly and keep quality high, retiring any products you are no longer happy with but aim to keep increasing the number of products for more chances to be found. Aim to get to 25 products as soon as you can then 50 soon afterwards to really start seeing things work for you but get to 100 or more and you will be in a much stronger position.
Figures in this example indicate a slow start in 2018 and 2019 but a healthy 26% increase in product lines in 2020 with more emphasis on online growth during that period.
Website Sales Numbers
The next figure I would probably go with is sales numbers per month. Your business exists to make sales at the end of the day doesn’t it so surely it is key to track how many sales you are making. Track this monthly and you won’t see one steady upward projection you are likely to see fluctuations. There will be seasonal sales such as Christmas, maybe sales around Valentines Day, Mothers Day and other key dates. Watch for key patterns. Mark where you did a sale or promotion and see what affect it had on number of sales. Did you get a result? If not, why not? Look at your year and identify areas where you would like to improve these figures next year.
These figures show a drop on online growth in 2019 due to distraction from other areas in the business but back with determination in 2020 with a 357% increase during a pandemic! Sales across all 3 years were low in February and September which would make great promotion times next year to even that out.
Website Sales Values
Sales numbers are not key by any means you need to look at sales values too. You can sell a handful of £1000 original paintings and be far more successful than someone selling 1000 £3 greeting cards for example. Sales numbers may have increased considerably but not affected the bottom line as you had hoped because the product lines that have been successful have been at the lower price end.
Plot sales values as well as sales numbers and see if it tells the same story or a different one? Do you need to focus on higher transaction values to make things work better for you? Could you sell your greeting cards in multicard packs for example? Could you bundle products to sell more and raise transaction amounts? Look at your year and work out where you want to change these figures next year.
The example here shows a similar 323% increase on 2019 in 2020 in terms of sales value. Sales values, however, are not as high as one would hope for sales numbers and therefore work needs to be done next year to increase transaction amounts and to optimise more of the higher value products so that they perform as well as the already optimised lower value ones.
Sales By Platform
Do you sell on multiple platforms? If you do it is important to record the metrics above for each platform separately. If you sell on your Website and on Etsy for example and your metrics tell a different story on each platform that will help you to focus your attention to make improvements.
All platforms are capable of selling your products they just connect to different customers in different ways. Having the confidence of sales on one platform will help you to realise that you simply have a problem to address on the other platform in order to start to see similar sales patterns.
Look at your figures for the different periods on each platform. What worked across all platforms? What worked on some but not others? See if you can work out why so that you can improve it next year. You might not have the answers yet but you can at least identify the problems that you need to work on next year.
Trade sales have been badly affected this year. You might feel it is an offline metric, however, one thing I did very early on with my partner Lucy Gell’s website was to create an online trade ordering area so that all trade sales go through her website online. There are many benefits to this that I will address in a future blog, however, this makes for easy tracking for her.
Trade sales can be analysed by number and value each month. Are you seeing seasonal patterns? Can you see when people are stocking for Christmas, when they are stocking for the new year? Mothers day? Valentines day etc? Did you miss any opportunities this year that you can address next year? Are you getting the trade sales you want? Are you engaging with trade regularly or have you neglected them? Can your products tolerate the large trade discounts or do you end up making too little or pricing yourself out of the trade market? Are you offering your best products to trade?
The figures in this example show that although it was a terrible year for many for trade, one particular trade customer here ordered 3 times during the year so trade were still selling. A bit of focus was lost and much better contact with trade is needed next year to restore this. Trade started off well in 2018 with a small number of trade customers but the area needs more focus to achieve consistency and growth.
Do you run workshops? Has this suffered badly this year like most or have you taken your workshops online? How many did you run? What income did the workshops generate? How did that feel? Have you got the balance right between making and teaching or do you need to make changes?
The figures here were intentional. Workshops had actually become too popular and were becoming a distraction from producing new work. There was some intentional pulling back in 2019, however, the pandemic almost wiped out all workshops in 2020.
My main focus is helping to improve your online business not your offline business, however, if you are doing your annual review you still need to account for show sales. Everybody will have taken a hit this year with so many cancelled but going forward this should always be part of your annual review. How many did you do in the year? How many sales did you make and what was the sales value? Were those shows effective? Do you get into the same shows each year or do you get selected for different ones each year? What can you do better to create more consistency and growth?
Total Everything For Your Art Business Annual Review
If you key all these metrics into a spreadsheet like me, totalling them all up is easy. Totalling them all up each month can lead to some interesting monthly patterns. Adding ‘growth’ calculations to show growth over the year are quick indicators of success in that particular area. Do you have months where income is huge and months where it is small? Can you even that out? Is it possible to add more workshops in quieter product sales months? Can you fill earlier months with trade before you get Christmas demand from direct sales? Maybe you can have flash sales in those quieter months or other promotions to stimulate sales? Can you plan ahead better but looking at your metrics both in isolation and when they are brought together?
Don’t Forget Costs
Sales is one thing but don’t forget about the costs. What products are you making a good profit on? What products are you barely breaking even on? Do some products only work direct once you factor in the cost of you time and materials? Are you offering any of those products to trade? Can you swap those products for others that have a better margin for trade? How did the shows work out? What did you make once you factor in the show fees, travel, accommodation, preparation and all your time? Were they the success you thought or could your time be better spent elsewhere?
Mailing List Growth / No Of Mailings / Open Rate
A core component of your online success is going to be your mailing list size and yet so many people either don’t have a mailing list or neglect it which I find heartbreaking! Record its size each month. Ensure that it is growing and if it isn’t address that as a priority. Typically you might get a sale from 1-2% of your mailing list. That’s 1-2 sales from 100 people which you might feel is not worth the effort. But grow your list to 1000 people and its 10-20 sales for EXACTLY THE SAME EFFORT! Grow your list to 10000 people and that is 100 – 200 sales for EXACTLY THE SAME EFFORT! Imagine trying to scale things like that with shows – you would need to do the same show another 10 times or another 100 times. How much harder is that?
To have this work, however, you need both growth and engagement. The numbers alone do nothing and if you send an email to a list that you have not been writing to regularly they won’t be receptive to your message and many may even unsubscribe. You need an engaged mailing list that enjoys your content and is receptive to it in order for it to buy from you.
Make sure you send an email at least every month to stay in front of your audience. Send more often if your audience will accept that (better short and frequent than long and infrequent). Record how many you send each month and your average open rates (the percentage of people that open your email compared to the number that it was sent to). 20-25% is the average open rate in our industry. Aim for much higher than this if you can and if rates are starting to fall this is a sign that something is off and needs addressing. There are so many ways to grow your audience. Check out my 20 Best Ways To Grow Your Audience for ideas if yours is not growing as quickly as you want it to.
The figures above might be cause for some alarm initially in this review. There was steady growth by picking up new subscribers at shows in 2018. Because Mailchimp has a free account to 2000 subscribers, however, it was necessary to shed a number of subscribers who were not engaging in 2019, this was done twice which is why numbers dropped twice. During 2020, however, the mailing list has become much more engaged when more frequent emails have been sent out. This has led to more sales from the mailing list which is great but unengaged subscribers have been unsubscribing at a similar rate to new subscribers joining the list which has limited growth. This is to be expected and an engaged list is often better than a bigger list! In 2021, however, this list needs to be grown much more.
Are you growing your number of followers on social media? Record this each month for each platform Instagram, Facebook, Twitter etc. Measure your number of followers each month and check for patterns. Record events such as giveaways and other promotions. How well did they work? Can you improve on them? Which platforms are working for you? Which platforms should you be focusing on and which are not working for you and simply distracting you? Try to focus you main efforts on 2 main platforms rather than cover them all but none of them well enough.
Has your audience been growing this year? If not why not? What can you do to improve that? The figures above show a steady growth on Instagram of 93% in 2018, 79% in 2019 and 102% in 2020. Whilst this can be improved Facebook growth was much slower and warrants more urgent attention next year.
Are people coming to your website? It is essential that you know this during your art business annual review. What are the numbers like in terms of visitors and page views? Like the mailing list this is scaleable. There is potential if you get 100 visitors to your website in a month you could get a sale and therefore if you get 1000 you could make 10 sales, 10000 and you could make 100 sales.
Of course there is a lot more to it. Driving people to your website is one thing but getting them to buy once they get there is another. The number coming, however, is a key starting point. Keep increasing that number through SEO, social media, mailings and other sources of traffic then you are over the first obstacle and can then focus on their behaviour once they get to your website.
Start by tracking views and visitors which you will find in your ISP stats or Google Analytics. Watch the stats so that you drive the numbers up to start with and if this doesn’t convert to sales as expected you can then look at other stats to work out why that is with the confidence that it isn’t because you are not getting enough people there in the first instance. Are your visitors increasing? If not you need to work out why. Look at SEO, look at your website structure. Try finding your website and pages by searching in Google as your customers might. Are they coming up or not? I will dig much deeper into website analytics in later posts! There is a wealth of information to help you!
3rd Party Platforms
If you run an Etsy shop, Satchi Art shop or another 3rd party platform the same principle applies. Look for visitors stats and page view stats and record them. Are you driving enough people there? Are the numbers increasing and converting to sales or do you need to work at it?
Each platform will receive visitors through organic (ie not paid for) searches. They will all have different mechanisms for you to get found in searches. Learn how you can use each platform to get found. Drive visitors to the platform through email. Use features like Etsy shop updates to get in front of people that already follow your shop or have liked it.
I don’t advocate paid advertising until you are getting good results organically (without paying for ads) first. If you are advertising, even if it is by simply leaving Etsy ads switched on and a 3rd party platform like that is doing the advertising for you, keep an eye on the metrics. How much is being spent? What is that converting to in sales? Is that an acceptable return for those extra sales? Is it costing you too much and do you need to stop doing it or do it better next year?
We had a lot of success with Etsy ads in the run up to Christmas this year. We will be doing a lot more with Facebook and Instagram ads now that certain product lines can be identified as working strongly organically. Ads simply help you scale something up. They do not make something that will not sell organically sell just because you throw money at it. If it sells well already, however, and you throw money are it in a carefully calculated fashion you can make it work much better for you. More to come on that next year but if you are doing it already, track it carefully!
This Year Verses Last Year
As I said earlier many stats can be seasonal. Looking at this year verses last year can really help you see the key patterns emerging. Statistics tools in Etsy and Google Analytics, for example will allow you to make quick comparisons. Where you can make comparisons and see how that helps you. Tracking 5 years at a time, however, as in the examples above will put you in a strong position to make good decisions.
So What Now After Your Art Business Annual Review?
For now just absorb this information. It may take some time to collate the figures for your art business annual review initially. Once you have them study them. Reflect on them before you start planning for 2021. There is a lot to think about. Don’t rush it. Take 1-2 days to look at it all then jot down ideas for what you want to change next year. You won’t be able to change it all at once. Some things will affect others. Somethings will need more information before you will know what you can do. Just make a list for now. You can prioritise and create an action plan later.
I hope you found these ideas for reviewing your year useful. If you want to work closer with me in 2021 I will be launching a new online art marketing course. The course will cover many of the key building blocks you will need to start growing a sustainable online business. Be sure to join my email list and keep an eye open for much more information very soon! I will even provide a tool to use for your own art business annual review on my course!