Can You Make a Living as an Illustrator?

Imagination is the most powerful force in the universe.
--Albert Einstein

What? Me plan? Yes, Tarzan. You plan. You are not just an artist. You are not only an illustrator. You are the Owner of a Creative Business. First, make that paradigm shift and learn to think of yourself that way. Then put some clothes on. At least while you are in your office. It doesn't need to be a suit.

Business owners who are successful have all done a business plan. Those that have not may still get lucky, but, luck may not serve them over the long term. More likely, by not planning, they are actually inhibiting the actualizing of their own long term dreams. There are a lot of resources to help these small entrepreneurs start a business, but some of this does not apply directly to the freelance creative sole proprietor. Our inventory is our time, knowledge, and our talent. Our location is not important. That is the reason for this article. I am going to present here a simple version of a standard business plan, the essentials for a sole proprietor illustration business.

A more formal plan is also good. Necessary if you are working with partners or seeking loans or investors. I'll give some references for how to do a more formal business plan at the end of this article. I try to go over my plan at least once each year and evaluate how my desired outcomes are fitting with the reality to date. It's always open to adjustment. Tax time is a convenient time to do this review. That is the time to make little adjustments. Over the years I've noticed that when I did this, my income went up, sometimes surprising me. When I've neglected it, my income has gone down.

When I first was dragged, kicking and screaming into doing a business plan, I had two questions; "Can I make a living as an illustrator?", and "How do you spell entrepreneur?" I will address both those questions in this article. I suggest that you can approach your business life in the same way you approach a white canvas or blank computer screen: with the creative process. Your business is your life, and you are the sole proprietor. Writing a simple business plan is one medium for taking a creative attitude toward your life.

A Brief Digression on Creativity

Was Bob being creative?

Let's look at it. He was inventive and clever in solving his immediate transportation problem. But he limited himself to what he happened to have on hand, and he used up all his resources doing it. He didn't really get what he wanted. He got the best thing he thought he could do with what he already had to work with. But, like most of us, he skipped the creative process. Bob went right to the nuts and bolts without first stopping to dream.

That's the first step in writing a business plan: dreaming. And not just your ordinary daydreaming. That is probably mostly about sex. We are not excluding sex from your business plan, but this dreaming is more focussed. It is exactly what you naturally do when you are about to start a new painting. I spend time every day sitting on my porch and staring into space. And my neighbors don't even know that I'm an artist and a genius.

For anything you want to accomplish, there are two ways to approach it: as a problem to be solved, or creating the object of your desires. Most of our lives, we are only taught the first approach, but it can lead you to your own personal dead ends. I believe that the second approach is the creative, and the best way to achieve your goals. If you spend your life solving problems without defining what you want, you are limiting yourself to reacting to perceived obstacles in your immediate environment. To reacting to the way other people have defined the problems. This wastes time and, paradoxically, can make problems seem insurmountable. Alternatively, by using the creative approach, you can walk around or through some of these so-called obstacles. By keeping your mind focused on what you want to create, keeping a wide view, by writing it down like you do in a business plan, you get farther faster and end up more or less where you want to be, instead of where other people are going.

A creative approach does not ignore problems. It simply does not give them power. It focuses on the creation. When I am considering a piece of art I want to do, it is initially a blank in my mind. What the heck am I going to do here? As the art director describes her idea in more detail, I suddenly feel an almost audible click as an image crystalizes in my mind. At that point, I know I can do the illustration and I know it will work. The initial foggy picture in your mind's eye as you start a painting will usually not match the final image exactly. It doesn't have to. No one worries about this. But the final work is a direct product of that initial vision. Often the final picture is better than you imagined. It has evolved and changed with you as you worked.

In the same way, you may not eventually duplicate exactly the physical situation that you pictured in your imagination, but you will have created the essence of what you wanted. You will find that if you focus on the essence of how you will feel when you have what you want, instead of the specific concrete expressions of it, many outcomes can make you equally satisfied. This is important to realize.

No one has completely described how creativity works. It is the greatest of mysteries. But it does work. It works in every area of life, whether we are aware if it or not. I suggest that it's a three part process. It's been around longer than the Father, the Son, and the Holy Ghost, but includes them all. There is something compelling about things that come in threes.

1. You take a brutally honest assessment of where you are and the general environment in which you are operating. You will see some items that you don't like. Don't focus on solving or removing them. Just take note and let them be. If you are sleeping in an alley, feel fully the texture of the pavement. Be glad that it is showing you that you don't want that anymore. You created it and you can create something else using the same process. Imagine how good it will feel to get a good night's rest.

2. Imagine what you want to create. See it in your mind, even if it seems like an unrealistic fantasy. Staring blankly into space is something I schedule into my work day. Create empty space in your mind for what you want to create. Get it in detail. If you can describe it, you are on your way to achieving it. The emotional part of this process is as important as the thinking. How good will you feel when you have your desire fulfilled? Go ahead: lust for it. It's not a sin.

3. Start taking the first step, however small toward your vision. Go to the drawing board. Make the first little brush stroke on your white canvas. Start crunching the numbers. Hire the engineers. Look through your garage for stuff, if it will help you make what you imagined. One step follows another.
In my example above, Bob skipped item number two. He went right from taking stock of his situate to doing something about it. But, by skipping the creative imaginings, he may be solving his problem and also creating a monster.

Again, the standard process of designing a business plan is just a vehicle for your creative imagination to be applied to your business and your life. On a piece of paper, write the headings below and use them as your outline. They are simplified from a standard business plan.

A Simple Business Plan

1. Your Mission Statement

Write a statement that reflects the essence of why you are in business. It should reflect your highest values, vision, and purpose. It's your heart and soul. It's what you'll put into your work. It's what you do. Why? If you don't know, you should be working for someone else. You can write a long list under headings like "Values", Vision", and "Purpose"; or a few wandering paragraphs, but keep working on it until you can state it in one sentence. Write in the active voice, using the present tense, and using positive terms with no qualifiers. It's like a haiku. As in design, less is more.

You will benefit from writing down what you do. Writing is like magic. Your mission statement will help you make all the decisions involved in your business, like deciding which projects to accept, which markets to spend your advertising money on, and which areas to let ride. Those decisions make the difference between thriving and surviving. We want to thrive as creative businessmen.

For example, you may say to yourself, "I just love to draw". True enough. Ask yourself why. "Because drawing helps me appreciate beauty in the world. Come to think of it, drawing also helps others appreciate that beauty". Yes. Think about earning money, the conventional exchange we use to convert work into what we want to buy.

You can start out with something simple like, " I run a successful business doing what I love to do." It has your basic feeling, but you need to describe what you love to do so your clients can understand it.

For example: "I create unique, fine art-quality images that are accurate and detailed, yet going beyond realism to communicate intangible ideas and appeal to emotions." Note that this example includes scientific illustration, but is not limited to that market. Someone will be able to use that service. In fact, perhaps they would kill to be able to achieve that combination of qualities. Fortunately, they don't have to resort to violence. It is simpler to pay you to do an illustration.

You can use your mission statement as a lead-in or hook on the home page of your web site. (You do have one, don't you?) Clients may spend only a few seconds before they decide that what you do is what they want, before they click through to another site. Tell them who you are, quickly. If you know who your clients are and what they are thinking, you can help them find you. You are exactly what they want, so express that.

You might want to simplify your mission statement even more for a web site so it sounds more down-to-earth than my example. Put it in your META tags along with your keywords so search engines will find you. Here is one that I found in an illustrator's meta tags."Digital Illustration for corporate, editorial and advertising clients. Bryan's work is a blend of flat graphic shapes and 3D elements." It exactly describes the artist's work and names his clients.

A few years ago a poet friend wrote this haiku for me:

Imagination and illustration
design and detail
traditional and digital

I used it, although it is a little vague, and now outdated. The distinction between digital and traditional is no longer relevant. And it will not get me on the top of a Google search. But a simple, well-crafted paragraph about exactly what you do will get you to first base with a web robot.

2. Goals and Objectives

Again, writing something down is the first and most magical step, in making it happen. You will also want to think about a time table for when you want each stage to be completed.

3. The Situation in Your Industry

Do some research into the background, history and trends in your industry in general, and also your particular specialty.

• What are the assumptions behind illustration? Why do clients use it, rather than words or photographs?
• What is the history of the field?
• What sectors of the economy affect it the most? Is it stable, declining, or growing?
• What are the expected impacts of new technology, and what is just over the horizon?
  You need to know where to get information and how to make key contacts.
• What are the trade associations and relevant publications in your field?
• Government publications can give you free or low-cost information. Eg. "US Industrial Outlook", "Business Statistics", and "Statistical Abstract of the United States", available from the Dept. of Commerce.
• Many more publications are available in the reference section of your local library. Make friends with the reference librarian. Especially if he's cute.
• Find out if there is a local Small Development Center. They give courses in business planning.

You won't know what is really going on by just thinking about it. There is hard data out there. You need to talk to experts and read publications. For instance, there are dramatic changes happening in the illustration industry as a whole. Not a surprise. Isn't that just what life is like? You might want to know what's in the air and make marketing decisions accordingly. Here's an example I came across.

In a report by the Illustrators Partnership of America on the state of illustration, the board of directors makes the following statement.

Many of the forces affecting illustration today are the result of business or labor decisions made by middlemen. These middlemen have built the decline of illustration into their long-term strategies. When they speak for their own interests, they have no overriding reason to speak for ours.

This is serious news. What are those forces? Who are these evil people? Will I get to meet them? In an interview, illustrator C.F. Payne explains.

In illustration, we have stock house agencies and large publishing houses,
each having illustrators sign very punitive contracts of one kind or
another, where artists are signing over their image rights with troubling
consequences...The two of the major corporations involved with stock are
Corbis, owned by Bill Gates, and Getty Images, owned by Mark Getty. These
folks have deep pockets and are gobbling up as much imagery as possible.
Artists are having to choose to compete with these huge stock house
libraries or ally themselves with them. Some of the contracts give away
all the artists rights, whereby giving the image user the right to alter,
manipulate and reconfigure the image into a new picture.

I know these trends have had a tremendous impact on the field of illustration because, in the 90s, I had an agent who went bankrupt and cited stock houses and royalty-free companies as having eaten up one half of her income. Indeed, the use of photoshop has flooded the field with amateur photo manipulations. This has taken work even from established illustrators.

OK, fair enough. It's all gloom and doom in illustration. It may be true, but it's still the wrong answer. The only real constant is change. The question to ask is: What markets are most affected by these developments and which are not? Where will my services continue to be valuable in the future? Even when the stock market crashes, there are some people thriving from it.

Stock houses and royalty-free art sellers have a particular product to meet a market. Some of it is high quality and some of it is not. None of it is unique because other art buyers can buy the same images. Seeing this on the horizon, one might focus on areas of illustration where the client needed high-end work that was very specific and targeted, and where they could buy all rights to art usage. To these client, using stock art that was also available to other companies, their potential competitors would not be a good option.

An editorial artist might start creating a new portfolio geared towards product packaging and advertising. She might see the trends and decide she does not want to be competing with other artists on generic subjects based mainly on price. Maybe she decides to sell usage rights rather than work-for-hire. These types of decisions are crucial to a business plan in a field that is constantly changing. And all fields are constantly changing.

4. Your Products and Services

You probably know this, but think about how to best spend your time in your market niche. Focus on what is the best use of your talents. Eg. do you want to provide scanning and other pre-press services for jobs other than your own art? Do you want to be in the local yellow pages? Do you want to do larger, long-term projects or lots of smaller quick ones? Ask these questions:

• Why should clients buy your services?
• Who are your customers, exactly? Describe them in detail..
• What makes your own work unique or special?
• How difficult is it to do your work?
• How will you charge? (More on that later.)

Knowing who your customers are in as much detail as possible is essential. If you decide you want to do food illustrations, go and interview designers in the packaging field. And be selective and go only for the high-end clients. Free lance work is like dating: the only thing worse than no clients is a bad client. A bad client is one who will drain your time and energy without giving back equally in return. That will put you out of business faster than no work at all. During slow periods you can always work on your portfolio and your business plan!

5. The Competition and Market Focus

Think about the relationship between price and quality in your product. You have four choices:

1. High price / high quality. This highly sought after profile depends on your reputation, name recognition, or "branding" value, requires added value, like services. But you can't rest on your laurels. Things change.
2. High price / low quality. This is the profile of a failing product. This is an established brand that is cutting costs while coasting on a former quality reputation.
3. Low price / low quality. You probably don't want this profile either. But it does relate to the competition from generic clip art, and royalty-free stock photography and illustration. This "discount mart" philosophy invites lots of competition in price because the products are more or less the same quality.
4. Low price / high quality. The profile of many GNSI members. ( just kidding) This is perceived to be desirable. This is the ideal profile for the retail business. It is where companies usually want to start out because it out-competes the other three strategies. But in the creative services area, it has limitations because all we have to sell is our time and talent. It invites burn-out over the long term.
5. This is important in analyzing the market you want to work in. This is important because it is better to focus advertising money on a narrow market where it will do the most good. You will want to look at it from two points of view. Analyze each possible market and type of work from the point of view of it's value to you and your business. Then analyze exactly how you will position yourself in the market from the point of view of the client.
   There are some charts and diagrams for doing this very precisely, even attaching numbers for a task's value from 1-10. I'll cover that in a future article.

6. How Much Do I Charge?

This is the real tofu of designing a business. The real beans and tortillas. Can I make a living as an artist? How do I define making a living? Am I doing it? Those are perennial questions to the self-employed person. One of the most difficult things about being self-employed is knowing where you stand at any particular moment. There is a natural ebb and flow to the self-employed business that is completely different from a wage job. Of course you keep track of your income as it comes in and also of what is owed you so you can make your monthly bills. But for stability, you need to know if you are a viable business. If you are just staying alive, you are not a viable business in the long term.
I find it useful to know my break-even point. That is where I am covering my costs of doing business. It is the point at which you start to make a profit. Before that, you are in the hole. Establishing your own pricing procedure, rather than going by what other people seem to charge, is how you find out your break-even point and take control of your income.

Although most illustration work is priced by the project, I often use an hourly rate to estimate jobs. I also keep track of the time I spent on a project, and after it is completed, I calculate my hourly rate to see if I estimated it well. To know if I am estimating it well, I want to know both my "creative minimum wage" and the "prosperity rate". That way I can see where a particular job falls in the range between survival and prospering. I feel OK if I made creative minimum wage, but I feel great if I made my prosperity rate. How do I know what these rates are? I find them for myself.

I did the following set of calculations based on an article published by Creative Business called "Pricing and Billing Standards for Freelances and Creative Services Companies". (See references) My intention was to find out both my "creative minimum wage" and my "prosperity wage".

The goal is to create a comfortable, stable living, free of financial worries, and providing long-term security. We want to stay in business for the long term while avoiding creative burnout. Creative business estimates this at least at $40,000 for a metropolitan area in the United States. We can also go beyond stability and prosper and become rich. That can also be put into writing. But I'm starting with comfort and stability for this illustration.
Labor Costs. First, decide how much you want to make as an annual net salary. Really. I'll say it again: decide how much money you want to make.

Come up with a number. This is personal and unique to your desires and what makes you happy. Remember the imagination exercises. This is the number you use when you are sitting at a bar and the derelict next to you says he's an engineer designing smart bombs and asks you how much you make...

OK, I'm going to pause here because I got a comment from a good friend of mine who actually does design smart bombs. I had forgotten about that. She is a very smart person and she made the point rather directly that engineers also love their work. I agree. I surrender. My point is just to imagine a sort of job where the person is only working for money. No other reason. Money is it. As much as possible and there is never enough. This does not apply to any particular profession or any individual. It's only a made up scenario to make a point. It does happen here in America. OK?

Dollar for dollar, you are doing better because, in addition to your net salary, the expenses deducted were incurred by doing what you love, what you would be doing anyways if you didn't need the money.

Still, you do get to choose your salary here.

The salary you choose will depend on your desired lifestyle: whether you are single, married, have kids, kids in college, a spouse with an extra income, or if you want to collect airplanes as a hobby. From this sum, you pay for your food, transportation, rent or mortgage, taxes, etc. Many researchers who have studied this use a salary of at least 50,000 as a baseline for living at a reasonable level in an American urban area with security. Don't ask me any more about this number. I don't have a clue. There are many ways to do the accounting and they are not important. It's your life. Taking a creative attitude towards that is all that really matters.

Let's use an annual salary of $40,000 because I want to first establish a creative minimum wage. I want to start low and find out my baseline for living. Sometimes you have to start out lean to do what you love. We'll add to that our health insurance and retirement contribution for the year, which is what we'd expect to be part of our salary if we had an employer, like that guy on the barstool.

LABOR COSTS
Annual salary (you) 40,000
Health insurance 2,000
Retirement (IRA) 2,000
TOTAL LABOR COSTS 44,000

A creative business can only sell its time, knowledge, and talent. There is a limit to one's working time in a year if one wants to avoid burnout. It is normal to assume at least four weeks annually for vacation, holidays and sick leave. That leaves 48 work weeks in a year. Assuming an 8-hour day, we get 1,920 hours in a working year. You will always have times when you are working 80 hour weeks to get a project done, but we will use some commonly accepted numbers to see where we stand in general.

In addition to time off and sick leave, you need to define billable time. A self-employed person can not bill a client directly for every hour worked. Experience show that 20-50% of our time is spent on office work like book keeping, promotion, correspondence, and sweeping the floor. This time is necessary to maintain the business, but it is not directly billable in an hourly rate for a project. To be safe, I called 40% of my 1,920 hours unbillable. I sit and stare into space a lot. That is 768 hours of unbillable time in a year. So I subtracted 768 from 1,920 hours to arrive at 1,152 as the number of hours I can reasonably expect to work in a year.

When I divide my total labor costs (44,000) by the billable hours (1,1520), I usually get $38.19. That is what I have to charge per hour to make my salary plus benefits if I work 1,152 hours in a year.
Lets complete our labor costs:

Of course you, being owners of a creative business, saw right away that it did not end there. We have costs of doing business to consider. These are costs not directly passed along to a client during the course of a project. Next we will factor some representative overhead costs into our spreadsheet to come up with an hourly rate that includes both labor and overhead costs. Let's not discuss the actual figures here. That is not as important as seeing how the numbers you choose can inform you about your business. I check my overhead costs every year and make adjustments. I will use some reasonable numbers here for purposes of illustration. To cut costs, I am using a home office, so what I am calling studio "rent" is simply 20% of my mortgage. I use this number because my studio space is 20% of the total square footage of my house and I can write that portion off as a business expense. A number for outside office space might be more like $4-6000. Remember, this is a thought experiment. Einstein used that ( he called them "gedanken-experimenten") to come up with his theory of relativity.

Next I divided this overhead cost figure by the number of billable hours I thought I had in a year. Overhead costs me 17.98 per billable hour. When I add the hourly labor costs and the hourly overhead costs, I arrive at the magic number: I need to charge 56.17 per hour.

Again, being a business person, you have realized that it still does not end there. Because the fat lady has not yet sung. The final step towards what you really should charge includes labor costs, overhead AND an additional profit margin. This is something every business must consider if they want to grow and prosper over the long term. An accepted profit margin is 10-20%. This enables you, besides growing your business, to build equity in your company. It allows you to have cash in your account to even out the ebb and flows of cash flow that I mentioned above.

This factor does NOT include buying that boat you dreamed about, or going to Las Vegas. That is built into your desired salary. This number is a margin used for real estate like your office, a cushion for down time, or other enhancements to your overall net worth. If you don't know what to do with all that money, put it in a mutual fund. No, it can not be used for buying that new computer either. That will lose it's value as soon as you buy it. Equipment costs belong among your expenses.

I'll use 15% as a profit margin, or "success factor". That's pretty good if it was the stock market. 15% of 56.17, our minimum operating cost, is 8.42. Adding this to 56.17 gives us the really magic number: a successful hourly rate of $64.59.

The fat lady sings.

This rate is well within the generally accepted range of $50-75 / hour as creative minimum wage. I know I am making my business work if I go over my time records and find I have made at least $65/hour. When I am making 100 / hour, I am smiling all the way to the bank. I like that.

In answer to my perennial question stated in the beginning of this article, "Can one make a living as an illustrator?" the data suggests that the answer is yes. $65.00 / hour is well within acceptable market rates. It's actually on the low side of thriving, but I think I will not go and apply for that cashier job at the 7/11 store after all. I can make a better living doing what I love to do, and if I work it right, I can live well and prosper. And so can you.

And I still periodically ask that myself question and have to answer it over and over again for myself. That's a good thing.

Creative Business
An online resource for creative services businesses.
http://www.creativebusiness.com/
See the articles among the many on their site:
"Pricing and Billing Standards for Freelances and Creative Services Companies"
"Business Planning: The exasperating Made Simple"

U. S. Small Business Administration
There's an office in most cities. They have free consultations and hold business courses for small business entrepreneurs.
http://www.creativebusiness.com/

Entrepeneur.com
http://www.entrepreneur.com/Your_Business/YB_Node/0,4507,109,00.html
Articles and online forms for business planning

Graphic Artists Guild
http://www.gag.org/
Publication: "Pricing and Ethical Guidlines"
The Illustrators Partnership of America
http://www.illustratorspartnership.org/

The Illustration Conference
Held every two years or so
http://theillustrationconference.org/2003/

Art Talk
An online forum for illustrators. Also a great portfolio site.
http://www.theispot.com/arttalk/

Paul Mirocha
5/26/04

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