Sunday, September 01, 2019

Brexit #1: Do or Die?

I'm going to start writing periodic posts which either provide:
  • pointers on things to think about re. Brexit
  • feedback on what seems to be happening / changing (or not) post 31 October - should that be the eventual "do or die" date!
This is prompted by the fact I wrote
  • detailed commentaries on the art economy back in 2008 - and periodically thereafter - as went into recession post the banking crisis and the subsequent impact on the wider economy and people's lives.
  • a post commenting on a question about Brexit last week in the Facebook Art Fair Buddies Group
This was the gist of the question. There's a bit more to it - but in essence this is the conundrum many people are facing
Does anyone have any ideas of how a No Deal Brexit is likely to affect us as artists and crafters who make a living selling to the public?
Here's what I had to say - revised for the opportunity to format on Blogger - and the opportunity to add in more reflections.

Posts will either be on this blog and/or on my Art Business Info. News Blog - which you can subscribe to. Probably bigger ones on this one - and smaller updates on the other blog.


The emphasis is emphatically

  • NOT going to be on the politics 
  • it'll be about 
    • how to meet the challenge of Brexit for your art business and 
    • how to share what works and 
    • how to solve problems.
Comments will remain switched off on this blog - however Facebook posts linking to posts about Brexit do provide an opportunity for practical comments ONLY (political comments will be deleted).

What it's like in the art market during a recession

photograph of a hurricane - lots of turbulence in the atmosphere and scope to blow people and structures off their feet

I wrote quite a bit about the art economy during the recession following 2008.

BASIC FACTS are that
  1. Uncertainty causes people to tighten their metaphorical money belts - and they put buying discretionary goods like art on pause. It lasted a long time.  We've seen some evidence of that already.
  2. Those who are well off are mostly unaffected and continue to buy - at Christies and Sothebys - as before. Hence if you are pitching at the wealthy you probably have less to worry about.
  3. If a lot of people lose their jobs then there's a very big dip in disposable income and buying art and galleries start closing, often with little notice (and a lot did, mainly because they weren't run very well as businesses and hadn't made adjustments for a recession). 
    • My guess would be that the less well run art fairs will go under fast - so I'd exercise caution over bookings and deposits - and 
    • Check the status of 
      • organisations running art fairs and/or 
      • any other organisation you place big money orders with and 
      • the track record of the people involved 
    • (the official information available in relation to Companies is a wonderful thing! You can look at the people involved with specific companies and see how many directorships they have for previously dissolved companies)
  4. Many artists started to focus more on making more affordable art for those who were prepared to risk spending on discretionary non-essential items
  5. Artists with no business plans nor understanding of how their cash flows work typically end up having have to take other jobs (if they don't have one already) - IF they can get one - because they're in the same boat as everybody else looking to get income from employment
  6. The climb back to 'business as usual' can be long and slow if it's a deep recession.
  7. Artists who got burned learn to make sure that 
    • they have enough to keep going when sales are lean - and 
    • when to make essential changes to how they do business
If you're a tiny business without an adequate cash reserve then whatever the state of the economy it always pays to have some steady bread and butter income which pays the bills coming in. Brexit has got nothing to do with it.

There are any number of things which can happen which can cause problems - and some people have no inkling just how big some problems can be and you still get by.....somehow....
Speaks the woman who well remembers paying 18% mortgage interest rate at the start of her mortgage! (my comment on the thread about why a lot of the challenges are not dissimilar to other challenges we confront and survive)

What will it be like after Brexit?

Here are some more thoughts and reflections about what makes a difference when the going gets tough.

Planning for Brexit

The UK government has been sending instructions to a wide range of businesses, including those that trade with the EU, advising them to take actions to prepare for a situation where the UK leaves the EU with "no deal".
It's very probably the case that most artists have seen absolutely NOTHING in relation to guidance or instructions - hence I'll be trying to locate and summarise advice and guidance that is available online and will post again.

Businesses have been advised to :
  • understand their risks in relation to trade re. both supplies and sales
  • make plans to  stockpile and/or find alternative suppliers to cope with the inevitable turbulence associated with changes to "the way things normally work"
  • think about how the likely impact on their cash flow and how they can mitigate this
The classic business approach to dealing with these sorts of risks and business challenges is a Risk Management Plan. See my page on Risk Management for Artists

If you've not done any of this, you might want to read my next post!

Trading overseas after a no deal Brexit

Here's the good news. I'm old enough to know we did actually import and export prior to the EU - rather a lot. Plus
  • not all the trade we do is via the EU and 
  • it's not as if we cannot import or export to EU Countries. Hence, the world does not end for businesses which trade with the EU if the UK leave the EU - it's only the terms of trade which change.
So far as Brexit is concerned, it's anybody's guess how overseas sales will actually work in practice. We don't yet know whether we will have
There's likely to be an inevitable slowdown in Customs - whatever happens - as people adjust to new arrangements.

I'd RECOMMEND you are super particular that you've got all your paperwork sorted re. imports and exports - and evident in the transparent envelope on the outside of your package.

See International Art Shipping: How to ship / export art to other countries re tariffs, documentation and export codes etc. (I'll be updating this as things become clearer as to what the changes are.)

More reflections - on attitude

If the turbulence following Brexit lasts for any length of time, then it may well feel like a recession again. 
  • The shake-up will inevitably find those less well prepared and equipped to deal with turbulence in the market - just as the recession found them last time. Most did not survive.
  • We were supposed to be hit hard straight after the referendum according to Project Fear marketing during the run-up to the Referendum - and that simply did not happen.
There's a lot of incentives to make this change work.  There's a lot of people wanting to make it work.

HOWEVER a lot depends on your own knowledge and your attitude to this change - irrespective of whether or not you want this change.
  • If you are paralysed by ignorance, fear and negativity I do not predict a good outcome for your art business - at any time and in any circumstances.  If you put your head in the sand, you cannot succeed.
  • If however you:
    • understand the need to be business-like, 
    • recognise that change is normal (and stasis is not) 
    • educate yourself about what you need to know and do,
    • identify your risks for your own particular art business / income streams 
    • find ways you can mitigate their impact and 
    • typically approach the challenge with a much more positive 'can do' attitude you are much more likely to ride out the turbulence.
So whatever your personal perspective and/or preferences as to the outcome of the referendum, it's wise if you have an art business to gear up for Brexit. 
  • You have had over three years to get ready. 
  • You have two months left....