During the past few years, I have been struggling with the correct words to describe to non-artists how our business of making art is different from the model of most small businesses. Most people do not understand that our ‘product’ is one-of-kind, sometimes successful, a process, it changes/evolves constantly and that it is a deeply emotional and intellectual expression and interpretation of a concept. It also takes years to learn the technical skills to offer these expressions and interpretations – our products – to the world.
Finally, the word speculation surfaced and I realized that we operate speculative businesses. I wondered, “How could I learn from this insight?” I started to do some research.
What does speculation mean in the the business world. Here are a few definitions:
- Investment decisions based on the hope and expectation there will be a profit, but no firm evidence that this will be the case. As a general rule, the more speculative the venture, the greater the reward should be, commensurate with the risk taken.
- A company with a large number of assets tied up in projects with uncertain returns.
- The taking of above-average risks to achieve above-average returns, generally during a relatively short period of time. Speculation involves buying something on the basis of its potential selling price rather than on the basis of its actual value. ©Wallstreet
- The term speculation implies that a business or investment risk can be analyzed and measured, and its distinction from the term investment is one of degree of risk. It differs from gambling, which is based on random outcomes.
As you can read in these definitions, there isn’t complete agreement in the definition of speculation. While I was researching the concept, I noticed that sometimes speculators are considered gamblers whereas some believe a speculative business can be analyzed and measured.
Let’s look at the first definition of speculation as it relates to an art business.
We artists invest our time, energy and money “based on the hope and expectation there will be profit, but no firm evidence that this will be the case.” (I know that not all artists have this aspiration. In this post I am referring to those of us that do.) Essentially, we expend our blood sweat and tears in the hope that others will want to purchase our ‘products.’
We offer the world the opportunity to view the world from different perspectives. Often we bring humor, beauty, color, distaste and intellectual challenges for viewers to consider and experience. Personally, I strive to create visual experiences that can impact how people see themselves and the world.
My main question is writing about speculation and how it relates to fine art businesses, is: Could we not benefit from the business knowledge of other speculative businesses in being more effective in operating our businesses? Are there MBA’s out there who could share their expertise?
Examples of Speculative Businesses:
- Oil companies are an example of a speculative company, since they are continuously committing a large number of assets to exploration projects. These companies often experience many failures before a project succeeds. However, should they find oil, potential returns are huge.
- Building contractors who build spec homes. The home is built as an investment with the intention of being purchased upon its completion.
In definition #4 above, a speculative business can be analyzed and measured. I would like to learn how that could be done for my art business.
Let’s extend an invitation to owners of speculative businesses to offer their valuable experiences to artists. How could we artists connect with these people?
Do you not think these business experts could be of assistance? I would love to hear your thoughts and input.
Please share and comment. Thank you!