Opening a Paint Your Own Pottery Studio or Contemporary Studio
Part Six - National Statistical Overview for 2017
By Connie Speer - The Paint Your Own Pottery Consultant
These facts and figures have been gathered over the past twenty years in working with the over 600 paint your own pottery studios we have helped to open since 1996. They may vary slightly from manufacturers or other sources data. They represent only the information provided to us from our own customers and manufacturers.
How many studios are there in the US? The world?
Surprisingly no one knows exactly, but there is a general consensus that there are between 1200 to 1500 studios in the United States and approximately 800 spread around the rest of the world including England, Switzerland, Germany, Phillipines, Japan, and China. At this moment, there is even speculation that over 100 more new studios will be opening soon in third world countries.
How much do you need to open a new studio?
The lowest budget of any studio we have ever worked with spent $35,000 to open her doors. She went into an existing building (not a shell or vanilla box, as they are sometimes called), that left behind tables, chairs and a few other odds and ends. She did not have any construction done. She cleaned up the store, painted it and spent the budget on ceramic supplies, bisque, marketing and advertising, shelving, utility deposits, extra tables and chairs, cash register system, etc. Her number one biggest mistake was not putting Operating Capital into her start up budget. From day one open, she was in a bind for cash.
A couple of sample budgets - Three of the biggest budget studios we have worked with came in with $150,000, $250,000 and $350,000 start up budgets. The first one gutted a two-story building and started from scratch. She got a liquor and food license. We talked her down to $115,000 because she had too much money in her ceramic budget, and we helped her save costs on her construction, as well.
The one that spent $250,000.00 opened a 3,200 square foot location and added a scrap booking section to her studio. The pottery painting side of the studio brought in the most profit even though the supplies for it only cost 1/10 of the over-all startup budget. She bought the 2 largest kilns in the business and bought all the paint lines, instead of just one which is most often recommended and double ordered many other items.
The third studio opened in an open shopping mall with extremely high end store fronts and restrictive code requirements. Build out alone for this particular studio came close to $285,000.00
Most studios spend anywhere from $85,000 - $150,000 to open. The difference has to do with how much they spend on the finish-out of the building. Going into a shell is always much more expensive than starting up your new studio in an already established building that does not need the ceilings dropped, walls built, plumbing, etc. Many prospective new owners call us with the idea that they can open a contemporary studio for as little as $10,000 - $20,000. In over 600 studios, we have never seen anyone open a true paint your own pottery brick and mortar storefront studio for less than $35,000... and stay open. When you factor the reality of the below items, you begin to understand:
First and last months rent or security deposit -can be as little as $2,500.00 or as much as $8,000.00 or even more.
Finish out allowance of floors, walls, ceilings, electrical, plumbing - this can be as low as $5,000.00 and as high as $185,000.00 or more.
Store fixtures including tables, chairs, shelving, counters, etc. - as low as $10,000.00 or as high as $30,000.00
Signage - as low as $2,500.00, as high as $10,000.00
Office systems and supplies including phones, computers, fax, copier, paper, staplers, etc - as low as $300.00, as high as $5,000.00 or more
Marketing materials and advertising - this is where most people don’t plan well - as low as $3,500.00, as high as $7,000.00 - it’s the advertising that costs so much and depending on where you are in the country. (and this is not for the whole year - just start up)
Grand Opening - as little as $500.00, as much as $4,000.00
Ceramic Package - as little as $8,500.00, as high as $16,000.00 - how many kilns? kiln furniture, stilts, cones, brushes, color, glaze, decorating accessories, books - will you have potter’s wheels, slab rollers?
Other Product Offering - will you have glass fusing, mosaics, silver art clay, canvas painting?
Can spend as little as $500.00 or as much as $12,000.00
Bisque - as low as $3,500.00 or as high as $8,000.00 - how big is your studio, what time of year are you opening?
Industrial and commercial supplies including trash cans, bags, tool kits, drills - no one seems to think about this category - as low as $300.00, as high as $2,000.00
Utility Deposits - as low as $200.00, as high as $1,500.00
Insurances - the lease will dictate many, but you may want more. As low as $600.00 for the year, or as high as $2,400.00 for the year. Workman’s Comp?
Security System - bell on the door? or do you need a REAL system? Could be as high as $2,400.00 for the first year.
Legal and Accounting Fees - as little as $100.00, as high as $5,000.00
Operating Expenses or Working Capital - you aren’t being realistic if you don’t budget in AT LEAST $15,000.00. Smarter would be $20-$25,000.00 and if you are going with an SBA loan, they might hike it up to $35,000.00.
And there is more. And if you think, ‘oh, I’ll just take all the lowest numbers above and that will give me an idea of what it will cost’....well, then you are not being realistic at all. Any banker or CPA would tell you to take the highest numbers above and let that be a starting point for shopping around for best prices.
Yes, it most certainly can be done for less if you are not opening in a strip center, mall or other regular retail space. If you are looking at locations such as your home, a building owned by family or other such unusual circumstances, then a budget as low as $7,500.00 is possible. Not normal, but possible.
How much does the ceramic part of opening a studio costs?
Studio ceramic packages have ranged from $6,500.00 up to $17,200.00, which includes their kiln(s), vent(s), kiln furniture kit(s), stilt package(s), cone package, brush package, color and glaze package, accessory package, and freight. Studios will spend an additional $3,500.00 - $8,000.00 on bisque from recommended bisque suppliers depending on the square footage, time of year they open, budget, etc. These packages are all custom designed based on city, location, square footage, kind of studio, and time of year they open. No two packages have ever been the same. The customer picks the package after an education and training process.
How much can you expect to gross the first year? Second year? Third year and so on?
Taking all studios we have helped to open into account, average gross for first year has been $125,000 to $165,000. Lowest was $54,000, and highest was $243,000. Second year sales generally tend to show a 10-15% growth, and third year a 5-10% growth. We have been seeing a 10-15% growth in the 4th, 5th, 6th years and beyond.
How much can you expect to net the first year? Second year?
Net profits widely differ depending on if a studio owner takes their own salary out of the gross. We highly recommend an owner to factor their salary into the expenses. Paying yourself first keeps the passions going. When an owner’s draw or salary is taken out of the gross, we generally see anywhere from $4,000 to $31,000 net the first year on average. Most studios reinvest those dollars back into their business in the form of adding a new art & craft offering, a new kiln or investing in more inventory. Some choose to pay down their loans - whether to themselves and/or the banks - or even pay themselves a bonus.
Where do you get figures and information to do your business plan?
You can get demographics from realtors, landlords, Chambers of Commerce. You can secure mailing lists from phone books or on-line yellow pages or from special mailing lists subscriber services. You will need your consultant, accountant or CPA to help you convert all of your startup budget sheets into capital requests and your cash-flow projections for years one through five into the formalized and acceptable accounting sheets the bank(s) will require. Even if you have the correct forms, we recommend you use an accountant to help you convert the forms. You want to look professional in front of a banker. Don’t simply take numbers someone else gives to you. Do the honest work in figuring your own expenses and income and start up budget. Your consultant can give you suggestions for different kinds of pricing structures, what kinds of markups, how to price party packages, what kinds of costs might be involved in all of your store fixtures, lighting, POS sytems, marketing and advertising, and the other multitude of items and issues involved in opening any business, not just a contemporary studio. When we help a studio open, we already have all the start-up budgets, cash-flow projections and all other required financial documents. We customize everything to each studio’s unique needs.
Where do you find out what equipment and supplies you will need to get started?
Your distributor or your consultant is best suited to tell you what you need, and more importantly, what you don’t need. Be careful you aren’t taking the advice of someone only interested in pushing one product line to you. Their agenda should be apparent. Instead, look for someone willing to explain the advantages and disadvantages, specifications and price points of various brands. A distributor or consultant should be willing to consider your own unique situation rather than insisting you take a certain number of products. A studio opening in January with 1000 square feet in a town with 50,000 population has a completely different set of needs than someone opening in October with 2000 square feet and a population of 300,000. Also, don’t put all your eggs in one basket with one bisque supplier. You need several for many reasons including availability, price, customer service competition, location and quality control. Work with your consultant for what basic designs you need and quantity based on the size of your studio, your budget and the time of year you are opening. After you have the basics covered, you can supplement with other unique designs.
Where will you get money to start your new business?
(Also, see our Business Plan article to get you started.) When we help you get your loan, we coach you in dealing with the banks. We make no guarantee you will get your loan, however we will discuss with you in advance your own unique and particular financial situation and make suggestions on loan procurement before you hire us. Many of the studios that we have already worked with in the past to get loans, are available for you to talk to about our process.
Where do you get training?
We have been training new studios for over 20 years and other kinds of ceramic businesses for 40 years. Some new studios opt for the long distance method via phone, fax and e-mail and our references are available to talk to you about how the process worked for them in opening their own studios. We coach you in real time with prepping your furniture kits and loading, firing your kiln, checking your cone results, dipping, pricing, test glaze firing, and setting firing schedules for all future loads. We are available through phone, fax, e-mail and even your consultant’s home phone number. All education, pick lists and training are scheduled around your life, family, and present job. But we also have on-site at your studio training with members of our consulting team or you may choose the on-site education/pick list program at our store. We can discuss all the options when we talk!
How will you market the new business?
We have a 200 page section specifically for Marketing, Public Relations and Hard Dollar Advertising available to the studios that work with us in our Full Consulting Program filled with what to do and broken down day by day and step by step. Samples of all kinds of marketing materials and marketing strategies that have been working for our customers for over 20 years are ready for you. We work individually with you to create your own campaigns for your own market and part of the country.
How long does your consulting last?
As long as you own your studio. We are not transferable to a new owner.
We will be updating with more information for you soon. A few of the questions we will be addressing are below. If you are ready to get started on your business plan and/or getting your loan, or are already funded and ready to move forward with your education and pick list and training, please e-mail Connie to set up a time to discuss how you can work together to open your new business.
Articles to come and information we can discuss over the phone during interview:
What about going over my lease with me?
How do I find the perfect location? How will I know one site is better than another?
What if I need help buying another business or selling mine?
What if I need to redo my financial goals or add a new product line or learn a new craft technique?
What if I want to work out of my home first?
What if I want to have a pottery to go program and not have a typical location since I won’t have normal walk-in customers?
What if I hire you and something happens and I can’t open my studio for a year?
E-mail Connie now...or finish reading everything on this site and then e-mail!