Margin of Safety

Every arts entrepreneur knows it can be helpful to have some margin of safety when getting a new venture off the ground.  Margin of safety is an investing term that describes how the potential for loss is reduced when an asset is purchased at a price lower than its actual value. Because an artist’s biggest asset is human capital—the talent that creates the art, music, etc., they can avoid loss by arranging adequate resources to learn and hone their craft, which increases the value of their art and gives more time to succeed. 

Those resources are usually comprised of some combination of savings, outside funding, low operating/living costs or a separate income stream.  For new artists, a separate income stream and operating costs are usually the easiest to control, but they also create some challenges.   

The image of a “starving artist” or the thought of working at a job you don’t like in order to pursue your art are well known in the arts, but in reality both are emotionally and physically draining.  We all know arts entrepreneurs who have burned out and stopped trying to pursue their passion.  There’s a balancing act that has to occur while the venture is growing and “life happens.”  
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That’s why it’s often helpful to find a part-time job related in some way to your goals.   This will allow you to optimize your time as you grow your human capital and give you a better understanding of the overall market.   Plus, you can apply what you learn to your own venture and build a broad circle of contacts.  You may even find that your colleagues will want to collaborate with your budding venture and you can ultimately help each other while growing your network.

If you’re working in the arts, please reply in the comment section below with an answer to the following questions:  Were you able to start your venture without a margin of safety and how did you do that?  If not, what comprised your margin of safety and were your income streams related or unrelated to your art? 

​Thanks for reading,
​Nick