Gallery Economics

The Art Newspaper has a good article by Cristina Ruiz on running a gallery in the current economic climate. The advice is really no different than any other struggling business, including cut costs, renegotiate better loan terms, focus on cash flow and not profitability, and discount the inventory, be honest with collectors, stay positive and be prepared to deal with challenges. All in all, some good advice and a good article.

Ruiz states The panic must be overcome quickly, said Sharp, and the debt must be tackled head on. Although clients are asking for advice on “how to deal” with it, Sharp conceded that “lawyers can’t be much use because, in most cases, the debt is not disputed. It’s simply money owed which can’t be paid”. The best thing is “to try to deal with problems before they arise. Go to your creditors and talk to them—set up deals where you can pay them in installments”, said Sharp.

What matters more than profit at the moment is cash flow, stressed the veteran London dealer Alan Cristea, who said he had weathered four recessions. Keep the money coming in by selling work even if you have to do this at a large discount. “Without cash flow, you can’t do anything,” he said.

Ruiz continues Woolf concurred, explaining that for most businesses: “It is about six to ten times more expensive to develop new clients than it is to retain existing ones.”

“Maintain your clients through regular contact,” but it is important not to appear desperate, said Woolf. “Too much” contact is “annoying”. Handling existing relationships “requires innovation”, he said. Galleries need to ask themselves: “What is it our clients want? If they’re not going to be spending money, how do we keep them in touch with what’s going on at the gallery?”

It is important to “be realistic” when talking to collectors, said Cristea.

“When you talk to them—don’t pretend. If somebody complains: ‘That work I bought from you three years ago, there was one sold at auction the other day for half the price’…You say: ‘Everybody’s affected by the recession, it’s a world-wide recession, why shouldn’t we be?’ If people ring me up and ask: ‘Will you buy this work back?’ I say: ‘Hang on, what do you do for a living? Would you buy that house back for the same price you sold it for? No, let’s get real here.’ And people understand that.”

To read the full article, click HERE.