2009 Franklin Street Art Collective

Arts Cooperative Leadership Group

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Gordon Jameson Anne Shelton Susan Filley Alice Levinson Barbara McFadyen Barbara Tyroler Beth Grabowski Elaine O’Neil Faye Kalman Jan Butta Jon Wilner Judith Ernst Mary Votta Pat Hill Paul Hrusovsky Phoenix Rite Miller Ruth Allen Harden

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STAFF Dwight Bassett, Economic Development Officer – Town of Chapel Hill Laurie Paolicelli, Director - Chapel Hill/Orange County Visitors Bureau Martha Shannon, Arts Commission Coordinator for Orange County Jeff York, Public Arts Administrator – Town of Chapel Hill

[ A R T S C O L L E C T I V E B U S I N E S S P L A N ] A business plan to show the creation of a successful art’s collective for Franklin Street. F r a n k l i n S t r e e t A r t s C o l l e c t i v e Business Plan August 19, 2009 Page | 2

> Executive Summary This business plan is for a non-profit arts cooperative, The Franklin Street Arts Collective, to be located in downtown Chapel Hill. It will be a member-managed, professionally staffed and operated artist cooperative displaying and selling works on the behalf of the membership and consigning artists.

> Organizational Background The Franklin Street Arts Collective will evolve out of Arts Advocates, a nonprofit 501(c)3 organization, making it possible to easily apply for and accept funding. It will be possible to utilize this existing Orange County nonprofit organization - Arts Advocates, Inc. – because it was originally created to support a community art gallery highlighting Orange County artists. The existing board of Arts Advocates, Inc. is supportive of this effort. The Cooperative is envisioned as supporting the Chapel Hill creative class while significantly boosting commerce downtown.

> Mission statement The mission of the Franklin Street Arts Collective is to promote the arts community of Chapel Hill and the region, strengthen community appreciation of the arts, and promote the Town of Chapel Hill and North Carolina as a unique arts destination. It will house a premier sales gallery and exhibition space on Franklin Street, focusing especially on the best regional artists, but will draw from selected nationally known artists as well. As a 501(c) 3 not-for-profit gallery, The Franklin Street Arts Collective is designed to exhibit, promote, and sell the work of visual artists—local, regional and national—appealing to a wide consumer base. It will become a focal point for regional collectors and it will also serve as a cultural draw to the many thousands of people who visit Chapel Hill yearly. The Cooperative will be located on Franklin Street, in a building with approximately 3,000 square feet of space, and it will be staffed by a Director/curator as well as members. The gallery will be run as a collective, showing work by local artist/members, as well as local, regional, and national consignees. A selection of music and books by local artists will also be displayed.

> History Arts Advocates was established in 2004 to help create a community based cooperative gallery for the promotion of area artists. The current active group began meeting in May of 2009 as a meeting organized by Dwight Bassett, Economic Development Officer, Town of Chapel Hill and Martha Shannon, Arts Commission Coordinator for Orange County. The group has been meeting bi-weekly to work on drafting this business plan and to determine the feasibility of establishing a successful co-op model.

> Management Team Directed by voting members of the collective, an executive committee will oversee the daily management of the gallery by our salaried Director. Until membership is solidified, a steering committee of 22 local artists has elected a key team of three to manage the details of initial operation. These members are: Susan Filley, Gordon Jameson, and Anne Shelton. They are supported by Dwight Bassett, Economic Development Officer, Town of Chapel Hill, Jim Norton, Chapel Hill Downtown Partnership, Laurie Paolicelli, Executive Director, Chapel Hill/Orange County Visitors Bureau and Martha Shannon, Arts Commission Coordinator for Orange County. As artists, we are cognizant of our need for partners in the business and local government.

> Marketing Plan The gallery will showcase Chapel Hill’s and the regions finest, edgy and most artistic works in painting, drawing, clay, glass, wood, textile art and more, but will also draw on the exceptional work and the customer base of selected national artists. Understanding that recent research from the NC Arts Council confirms that today's art buyers come from all backgrounds and are not limited by income, social class or geography, the Franklin Street Arts Collective will target a spectrum of collectors with varying price points represented in the gallery. F r a n k l i n S t r e e t A r t s C o l l e c t i v e Business Plan August 19, 2009 Page | 3

The target market for the gallery will be visitors to Chapel Hill related to the University, including parents, alumni, and faculty who come for the University and stay for the town. It will include residents of our area, regional and national art collectors, regional visitors and students. Additionally the gallery will target business and conference travelers, who request information on area walking and shopping districts. Interior Designers of private residences, retirement communities, businesses, and other development projects are also tapped as a potential market. In order to strengthen cultural awareness in our community and thereby raise our profile as well, plans for community outreach include wall space dedicated to promoting local venues such as the Ackland Art Museum, Memorial Hall, Morehead Planetarium, Kidzu and the Chapel Hill Museum as well as local historical venues, directing visitors and locals to various cultural corridors throughout the area.

The primary tactics used to reach the target market include:  An integrated PR plan designed by the artists in cooperation with the Chapel Hill/Orange County Visitors Bureau. This will include careful consideration of branding, logo, and signage, all of which will emphasize an upscale look and feel, with consistent messaging created to appeal to the values and desires of the target market.  A direct mail campaign to artists’ portfolio of clients and data bases managed by the individual artists and data bases managed by the Visitors Bureau, Downtown Chapel Hill Partnership, and local merchants groups.  Event marketing, which will involve a schedule of periodic "open house" events at the gallery, with a focus on maintaining an upscale image throughout invitations, signage, refreshments and displays.  The Web site design will reinforce design characteristics developed in the integrated PR plan.  A Membership affinity program will target a prospective list of Society members who will receive invitations to exclusive open house events, as well as notifications of work from new artists and special promotional offers.  The marketing plan will emphasize an upscale look and feel with consistent messaging created to appeal to the values and desires of the target market.  The primary message in all marketing communications will be that The Franklin Street Arts Collective and the town of Chapel Hill want people to experience art. The gallery and its website will promote an experiential destination, encouraging people to come downtown to visit the gallery, versus buying online.  For the Collective to be successful we believe that it must become an integral part of our community’s cultural network. The front window of the gallery can serve not just to showcase rotating artwork, but to tell important local stories, highlight local issues, and in other ways integrate the visual arts into the life of our community.

> Marketing Budget

Start-Up Marketing Budget Description Source Logo Design $1200.00 TBD Collateral Materials $2500.00 TBD Website $2500.00 TBD On-line banners $1000.00 TBD Public Relations Campaign $500.00 TBD Direct Mail Campaigns $500.00 TBD Signage $2000.00 TBD Ad development $1500.00 TBD Ad placement $1500.00 TBD Business cards and related packaging materials $2500.00 TBD TOTAL Marketing Start-Up $15,700.00 TBD

F r a n k l i n S t r e e t A r t s C o l l e c t i v e Business Plan August 19, 2009 Page | 4

> Operational Plan Preliminary guidelines established by the steering committee will provide operational guidance for the gallery. When the full membership has been established, these policies and procedures will be revised as voted on by the Franklin Street Arts Collective membership.

> Organizational Structure The Franklin Street Arts Collective membership will populate initial committees as follows:

(See addendum for full listing of committee structure)

 Executive Committee  Finance Committee  Governance / Membership Committee  Nominating Committee  Jury committee  Gallery Committee / Programs Committee  Marketing and Outreach Committee  Development Committee  Advisory Board  Donors Council

One full time employee, a Director/curator, will be hired and charged with overseeing the day to day management of the gallery. Supplemental staff will come from student internship positions, and/or members. All Franklin Street Arts Collective members will provide assistance to the management and staffing of the gallery, taking into consideration their personal strengths. A professional accountant will be hired on a contract basis and will provide guidance in setting up the accounting systems

> Deployment Plan Franklin Street Arts Collective will present this business plan to Town Council on September 14, 2009. We will apply for financial assistance from the town of Chapel Hill, the Downtown Partnership, and The Orange County Arts Commission. Initial working capital will be provided by membership dues and initiation fees. Additionally, we will solicit financial support from community members and arts patrons. Applications for founding members will be juried in early October; membership will be finalized shortly thereafter. Standing committees will be formed and charged with their duties. Marketing as outlined above will commence immediately upon completion of legal renaming of the Arts Alliance to the Franklin Street Arts Collective. Information technology, inventory, sales tracking, etc systems will be put in place with the guidance of the respective committees.

> Information and Communications Technology Plan Franklin Street Arts Collective’s information technology task force will determine the POS system needed, including telephone service, computer system, internet connection, web host, etc.

> Criteria for Membership Potential Franklin Street Arts Gallery members will be provided with an application and opportunity to submit images of their current work in September. These will be coded in order to create anonymity for the jury process that will follow. Using a PowerPoint format, the images will be viewed, graded and scored on a 5 point scale by each member of the jury panel. These scores will be collated and the artists ranked based on these totals. Memberships will then be offered such that the gallery will have a significant breadth of art forms. Any artist not offered full membership may be offered a consignment position.

F r a n k l i n S t r e e t A r t s C o l l e c t i v e Business Plan August 19, 2009 Page | 5

The Jury Panel will be composed of community members with broad understanding of various media; artists using any artistic medium are encouraged to apply for membership. After the initial selection process, future members will be solicited and juried as positions become available, on a scheduled basis to be determined by the membership committee. We seek high quality, artistic excellence, serious intent and professional presentation in fine arts and crafts, both traditional and contemporary. Work must show: 1) Competence: The applicant must show competence in their medium. 2) Confidence: The work should be original and should show individual style, vision, and execution of design. 3) Commitment: It should be clear in the jury process that the applicant has been engaged in this work for awhile and intends to continue in a committed fashion.

> Financial Plan Initial funding will be provided by membership initiation dues, small business loans, grants and fundraising. The gallery will receive a percentage of sales based on either membership or consignee status. Each artist decides his/her own pricing. Financial projections for years one through three are attached. As is true for all new enterprises, financial stability and growth is projected over this time period, and is likely to take that long to become self-sustaining. Chapel Hill Artist Cooperative 3-Nov-09 Required Start-Up Funds for Chapel Hill Artist Co-op

Required Start-Up Funds Amount Totals Depreciation Notes Fixed Assets Real Estate $ - Buildings - 20.00 years Leasehold Improvements 7,000 7.00 years Equipment 3,000 7.00 years Furniture and Fixtures 5,000 5.00 years Vehicles - 5.00 years Other Fixed Assets - 5.00 years Total Fixed Assets 15,000

Operating Capital Pre-Opening Salaries and Wages 3,500 Prepaid Insurance Premiums Beginning Inventory - Legal and Accounting Fees 500 Rent Deposits Utility Deposits 1,000 Supplies 200 Advertising and Promotions Licenses 200 Other Initial Start-Up Costs 500 Working Capital (Cash On Hand) 40,000 Total Operating Capital 45,900

Total Required Funds $ 60,900

Sources of Funding Amount Totals Loan Rate Term in Months Monthly Payments Member initiation fee 18.80% 12,500 Non-profit contributions 0.00% Culture Zone and other contributions 7.52% 5,000 Art Advocates 13.53% 9,000 Local Government Loan 60.15% 40,000 4.40% 100.00 $478.53 Cash Flow Loan 0.00% - 240.00 $0.00 Total Sources of Funding 100.00%$ 66,500 $478.53

Other Funds (not in FSAC budget) Chapel Hill-Orange CVB (marketing) 10000 Town of Chapel Hill - ED (marketing) 5000 TOTAL 15000 Chapel Hill Artist Cooperative 3-Nov-09 Salaries and Wages

Salaries and Related Expenses # Assumptions Wage Base Monthly Year One Year Two Year Three

Percent Change 3.00% 3.00%

Salaries and Wages Manager's Compensation 1 40000 $ 3,333 40,000 41,200 42,436 Part-time Salaries - - - Wages Full-Time Employees 0- - - - Estimated Hours Per Week 40.00 Estimated Rate Per Hour $ 9.00 Part-Time Employees 0- - - - Estimated Hours Per Week 20.00 Estimated Rate Per Hour $ 9.00 Independent Contractors - - - - Total Salaries and Wages 1 3,333 40,000 41,200 42,436

Payroll Taxes and Benefits Social Security 6.20%$ 102,000 207 2,480 2,554 2,631 Medicare 1.45% 48 580 597 615 Federal Unemployment Tax (FUTA) 0.80% $ 7,000 5 56 56 56 State Unemployment Tax (SUTA) 2.70% $ 7,000 16 189 189 189 Employee Pension Programs 0.00% - - - - Worker's Compensation 0.00% 50 600 618 637 Employee Health Insurance 0.00% 500 6,000 6,180 6,365 Other Employee Benefit Programs 0.00% 100 1,200 1,236 1,273 Total Payroll Taxes and Benefits 925 11,105 11,431 11,766

Total Salaries and Related Expenses 4,259 51,105 52,631 54,202 Chapel Hill Artist Cooperative 3-Nov-09 Fixed Operating Expenses

Fixed Operating Expenses Monthly Year One Year Two Year Three Notes

Percent Change 3.00% 3.00%

Expenses Advertising $ 375 4,500 4,635 4,774 Car and Truck Expenses - - - - Commissions and Fees - - - - Contract Labor - - - Credit Card and Bank Charges 150 1,800 1,854 1,910 Customer Discounts and Refunds - - - - Dues and Subscriptions 20 240 247 255 Entertainment - - - - Insurance (Liability and Property) 200 2,400 2,472 2,546 Internet 50 600 618 637 Legal and Professional Fees 50 600 618 637 Office Expenses 100 1,200 1,236 1,273 Postage and Delivery 50 600 618 637 Rent (on business property- $19 PSF) 5,383 48,451 64,890 66,837 Rent of Vehicles and Equipment - - - - Repairs and Maintenance 50 600 618 637 Supplies 25 300 309 318 Telephone and Communications 100 1,200 1,236 1,273 Travel 50 600 618 637 Utilities 438 5,250 5,408 5,570 Total Expenses 7,041 68,341 85,377 87,938

Other Expenses Depreciation - - - Interest Commercial Loan 140 1,679 1,496 1,306 Commercial Mortgage - - - - Line of Credit - - - - Total Other Expenses 140 1,679 1,496 1,306

Total Fixed Operating Expenses 7,181 70,020 86,873 89,244 Chapel Hill Artist Cooperative Projected Income Statement - Year One

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals

Income Memberships 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000 Members Sales 1,890 3,150 5,040 5,670 6,300 7,560 11,340 11,340 12,600 13,860 15,750 18,900 113,398 Non-Member sales 2,310 3,850 6,160 6,930 7,700 9,240 13,860 13,860 15,400 16,940 19,250 23,100 138,598 Membership fees 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Total Income 5,699 8,499 12,700 14,099 15,500 18,300 26,700 26,700 29,500 32,300 36,499 43,500 269,996 6250 10000 11250 12500 15000 22500 22500 25000 27500 31250 37500 Cost of Sales Members Sales 1,417 2,362 3,780 4,252 4,725 5,670 8,505 8,505 9,450 10,395 11,812 14,175 85,049 Non-Member sales 1,155 1,925 3,080 3,465 3,850 4,620 6,930 6,930 7,700 8,470 9,625 11,550 69,299 (Member sales @25%, - Non-members sales at 50%) - Total Cost of Sales 2,572 4,287 6,860 7,717 8,575 10,290 15,435 15,435 17,150 18,865 21,437 25,725 154,348

Gross Margin 3,127 4,212 5,840 6,382 6,925 8,010 11,265 11,265 12,350 13,435 15,062 17,775 115,649 Payroll Taxes and Benefits 925 925 925 925 925 925 925 925 925 925 925 925 11,105 Total Salary and Wages 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 51,105

Fixed Business Expenses Advertising 500 500 500 500 500 500 500 500 500 4,500 Car and Truck Expenses ------Commissions and Fees ------Contract Labor ------Credit Card and Bank Charges 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Customer Discounts and Refunds ------Dues and Subscriptions 20 20 20 20 20 20 20 20 20 20 20 20 240 Entertainment ------Insurance (Liability and Property) 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Internet 50 50 50 50 50 50 50 50 50 50 50 50 600 Legal and Professional Fees 50 50 50 50 50 50 50 50 50 50 50 50 600 Office Expenses 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Postage and Delivery 50 50 50 50 50 50 50 50 50 50 50 50 600 Rent (on business property- $19 PSF) 5,383 5,383 5,383 5,383 5,383 5,383 5,383 5,383 5,383 48,450 Rent of Vehicles and Equipment ------Repairs and Maintenance 50 50 50 50 50 50 50 50 50 50 50 50 600 Supplies 25 25 25 25 25 25 25 25 25 25 25 25 300 Telephone and Communications 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Travel 50 50 50 50 50 50 50 50 50 50 50 50 600 Utilities 438 438 438 438 438 438 438 438 438 438 438 438 5,250 Total Fixed Business Expenses 1,283 1,783 1,283 7,166 6,666 7,166 7,166 7,166 7,166 7,166 7,166 7,166 68,340

Other Expenses Amortized Start-up Expenses ------Depreciation ------Interest Chapel Hill Artist Cooperative Projected Income Statement - Year One

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals Commercial Loan ------Commercial Mortgage ------Line of Credit ------Taxes ------Total Other Expenses ------

Net Income (2,414) (1,829) 299 (5,042) (4,000) (3,415) (160) (160) 925 2,010 3,638 6,350 (3,797) Chapel Hill Artist Cooperative Projected Cash Flow Statement - Year One

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals

Beginning Cash Balance 40,000 37,586 35,757 36,056 31,013 27,013 23,599 23,439 23,280 24,205 26,216 29,853

Cash Inflows Income from Sales 5,699 8,499 12,700 14,099 15,500 18,300 26,700 26,700 29,500 32,300 36,499 43,500 269,996 Accounts Receivable ------Total Cash Inflows 5,699 8,499 12,700 14,099 15,500 18,300 26,700 26,700 29,500 32,300 36,499 43,500 269,996

Cash Outflows Investing Activities New Capital Purchases ------Inventory Purchases ------Cost of Sales 2,572 4,287 6,860 7,717 8,575 10,290 15,435 15,435 17,150 18,865 21,437 25,725 154,348 Operating Activities Salaries and Wages 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 4,259 51,105 Fixed Business Expenses 1,283 1,783 1,283 7,166 6,666 7,166 7,166 7,166 7,166 7,166 7,166 7,166 68,340 Taxes ------Financing Activities - Loan Payments ------Line of Credit Interest ------Line of Credit Repayments ------Dividends Paid ------Total Cash Outflows 8,113 10,328 12,401 19,141 19,500 21,715 26,860 26,860 28,575 30,290 32,861 37,150 273,793

Cash Flow (2,414) (1,829) 299 (5,042) (4,000) (3,415) (160) (160) 925 2,010 3,638 6,350 (3,797)

Operating Cash Balance 37,586 35,757 36,056 31,013 27,013 23,599 23,439 23,280 24,205 26,216 29,853 36,204

Line of Credit Drawdowns ------

Ending Cash Balance 37,586 35,757 36,056 31,013 27,013 23,599 23,439 23,280 24,205 26,216 29,853 36,204

Line of Credit Balance ------Chapel Hill Artist Cooperative Balance Sheet - Year One

Base Period End of Year One

Assets Current Assets Cash 40,000 36,204 Accounts Receivable - - Inventory - - Prepaid Expenses 5,400 3,600 Other Current 500 333 Total Current Assets 45,900 40,137

Fixed Assets Real Estate - - Buildings - - Leasehold Improvements 7,000 7,000 Equipment 3,000 3,000 Furniture and Fixtures 5,000 5,000 Vehicles - - Other Fixed Assets - - Total Fixed Assets 15,000 15,000

Less: Accumulated Depreciation - -

Total Assets 60,900 55,136

Liabilities and Owner's Equity Liabilities Accounts Payable - - Notes Payable 40,000 35,936 Mortgage Payable - - Line of Credit Balance - - Total Liabilities 40,000 35,936

Artist/member Equity Common Stock 12,500 12,500 Retained Earnings - (3,797) Dividends Dispersed - - Total Artist/member Equity 12,500 8,704

Total Liabilities and Owner's Equity 52,500 44,639

Does Not Balance Does Not Balance Chapel Hill Artist Cooperative Year End Summary

Year One % Year Two % Year Three %

Income Members Sales 113,398 PSF Sales 150,605 PSF Sales 179,273 PSF Sales Non-Member sales 138,598 $74 184,073 $98 219,111 $117 Membership fees 6,000 12,000 12,000 Total Income 269,996 100.00% 346,678 100.00% 410,384 100.00%

Cost of Sales Members Sales 85,049 112,954 75.00% 53,782 Non-Member sales 69,299 92,037 109,556 (Member sales @25%, - Non-members sales at 50%) - - - Total Cost of Sales 154,348 57.17% 204,991 59.13% 163,337 39.80%

Gross Margin 115,649 42.83% 141,688 40.87% 247,047 60.20%

Total Salary and Wages 51,105 18.93% 52,631 15.18% 54,202 13.21%

Fixed Business Expenses Advertising 4,500 10,000 12,000 Car and Truck Expenses - - - Commissions and Fees - - - Contract Labor - - - Credit Card and Bank Charges 1,800 1,800 1,910 Customer Discounts and Refunds - - - Dues and Subscriptions 240 247 255 Entertainment - - - Insurance (Liability and Property) 2,400 2,472 2,546 Internet 600 618 637 Legal and Professional Fees 600 618 637 Office Expenses 1,200 1,236 1,273 Postage and Delivery 600 618 637 Rent (on business property- $19 PSF) 48,450 64,890 66,837 Rent of Vehicles and Equipment - - - Repairs and Maintenance 600 618 637 Supplies 300 309 318 Telephone and Communications 1,200 1,236 1,273 Travel 600 618 637 Utilities 5,250 5,408 5,570 Total Fixed Business Expenses 68,340 25.31% 90,688 26.16% 95,164 23.19%

Other Expenses Amortized Start-up Expenses - - - Depreciation - - - Interest Commercial Loan - - - Chapel Hill Artist Cooperative Year End Summary

Year One % Year Two % Year Three % Commercial Mortgage - - 7,971 Line of Credit - - - Taxes - - - Total Other Expenses - 0.00% - 0.00% 7,971 1.94%

Net Income (3,797) -1.41% (1,631) -0.47% 9,037 2.20% Chapel Hill Artist Cooperative Projected Income Statement - Year Two

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals Income Memberships 500 500 500 500 500 500 500 500 500 500 500 500 Members Sales 8,316 7,258 7,106 7,530 13,840 14,344 14,092 15,624 15,624 15,624 15,624 15,624 150,605 Non-Member sales 10,164 8,870 8,686 9,203 16,915 17,531 17,223 19,096 19,096 19,096 19,096 19,096 184,073 Membership fees 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 - Total Income 19,980 17,628 17,292 18,233 32,255 33,375 32,815 36,220 36,220 36,220 36,220 36,220 346,678

Cost of Sales Members Sales 6,237 5,443 5,330 5,647 10,380 10,758 10,569 11,718 11,718 11,718 11,718 11,718 112,954 Non-Member sales 5,082 4,435 4,343 4,602 8,458 8,766 8,612 9,548 9,548 9,548 9,548 9,548 92,037 - Total Cost of Sales 11,319 9,878 9,673 10,249 18,838 19,524 19,181 21,266 21,266 21,266 21,266 21,266 204,991

Gross Margin 8,661 7,750 7,619 7,984 13,418 13,852 13,635 14,954 14,954 14,954 14,954 14,954 141,688

Total Salary and Wages 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 52,631

Fixed Business Expenses Advertising 750 1,000 750 750 1,000 750 750 1,000 750 1,000 750 750 10,000 Car and Truck Expenses ------Commissions and Fees ------Contract Labor ------Credit Card and Bank Charges 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Customer Discounts and Refunds ------Dues and Subscriptions 21 21 21 21 21 21 21 21 21 21 21 21 247 Entertainment ------Insurance (Liability and Property) 206 206 206 206 206 206 206 206 206 206 206 206 2,472 Internet 52 52 52 52 52 52 52 52 52 52 52 52 618 Legal and Professional Fees 52 52 52 52 52 52 52 52 52 52 52 52 618 Office Expenses 103 103 103 103 103 103 103 103 103 103 103 103 1,236 Postage and Delivery 52 52 52 52 52 52 52 52 52 52 52 52 618 Rent (on business property- $19 P 5,408 5,408 5,408 5,408 5,408 5,408 5,408 5,408 5,408 5,408 5,408 5,408 64,890 Rent of Vehicles and Equipment ------Repairs and Maintenance 52 52 52 52 52 52 52 52 52 52 52 52 618 Supplies 26 26 26 26 26 26 26 26 26 26 26 26 309 Telephone and Communications 103 103 103 103 103 103 103 103 103 103 103 103 1,236 Travel 52 52 52 52 52 52 52 52 52 52 52 52 618 Utilities 451 451 451 451 451 451 451 451 451 451 451 451 5,408 Total Fixed Business Expenses 7,474 7,724 7,474 7,474 7,724 7,474 7,474 7,724 7,474 7,724 7,474 7,474 90,688

Other Expenses Amortized Start-up Expenses ------Depreciation ------Interest Commercial Loan ------Chapel Hill Artist Cooperative Projected Income Statement - Year Two

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals Commercial Mortgage ------Line of Credit ------Taxes ------Total Other Expenses ------

Net Income (3,199) (4,360) (4,240) (3,876) 1,308 1,992 1,775 2,844 3,094 2,844 3,094 3,094 (1,631) Chapel Hill Artist Cooperative Projected Cash Flow Statement - Year Two

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals

Beginning Cash Balance 36,204 33,005 28,644 24,404 20,528 21,836 23,827 25,602 28,446 31,541 34,385 37,479

Cash Inflows Income from Sales 19,980 17,628 17,292 18,233 32,255 33,375 32,815 36,220 36,220 36,220 36,220 36,220 352,678 Accounts Receivable ------Total Cash Inflows 19,980 17,628 17,292 18,233 32,255 33,375 32,815 36,220 36,220 36,220 36,220 36,220 352,678

Cash Outflows Investing Activities New Capital Purchases ------Inventory Purchases ------Cost of Sales 11,319 9,878 9,673 10,249 18,838 19,524 19,181 21,266 21,266 21,266 21,266 21,266 204,991 Operating Activities Salaries and Wages 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 4,386 52,631 Fixed Business Expenses 7,474 7,724 7,474 7,474 7,724 7,474 7,474 7,724 7,474 7,724 7,474 7,474 90,688 Taxes ------Financing Activities - Loan Payments ------Line of Credit Interest ------Line of Credit Repayments ------Dividends Paid ------Total Cash Outflows 23,179 21,988 21,532 22,109 30,947 31,383 31,040 33,376 33,126 33,376 33,126 33,126 348,309

Cash Flow (3,199) (4,360) (4,240) (3,876) 1,308 1,992 1,775 2,844 3,094 2,844 3,094 3,094 4,369

Operating Cash Balance 33,005 28,644 24,404 20,528 21,836 23,827 25,602 28,446 31,541 34,385 37,479 40,573

Line of Credit Drawdowns ------

Ending Cash Balance 33,005 28,644 24,404 20,528 21,836 23,827 25,602 28,446 31,541 34,385 37,479 40,573

Line of Credit Balance ------Chapel Hill Artist Cooperative Balance Sheet - Year Two

End of Year One End of Year Two

Assets Current Assets Cash 36,204 40,573 Accounts Receivable - (6,000) Inventory - - Prepaid Expenses 3,600 1,800 Other Current 333 167 Total Current Assets 40,137 36,540

Less: Accumulated Depreciation - -

Total Assets 55,136 51,539

Liabilities and Owner's Equity Liabilities Accounts Payable - - Notes Payable 35,936 31,690 Mortgage Payable - - Line of Credit Balance - - Total Liabilities 35,936 31,690

Owner's Equity Common Stock 12,500 12,500 Retained Earnings (3,797) (5,427) Dividends Dispersed - - Total Owner's Equity 8,704 7,073

Total Liabilities and Owner's Equity 44,639 38,763

Does Not Balance Does Not Balance Chapel Hill Artist Cooperative Projected Income Statement - Year Three

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals Income Memberships 500 500 500 500 500 500 500 500 500 500 500 500 Members Sales $10,080 $11,592 $10,584 $12,096 $13,104 $15,120 $15,624 $18,144 $15,120 $19,152 $18,144 $20,513 179,273 Non-Member sales 12,320 14,168 12,936 14,784 16,016 18,480 19,096 22,176 18,480 23,408 22,176 25,071 219,111 Membership fees 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Total Income 23,900 27,260 25,020 28,380 30,620 35,100 36,220 41,820 35,100 44,060 41,820 47,084 410,384

Cost of Sales Members Sales 7,560 8,694 7,938 9,072 9,828 11,340 11,718 13,608 11,340 14,364 13,608 15,385 134,455 Non-Member sales 6,160 7,084 6,468 7,392 8,008 9,240 9,548 11,088 9,240 11,704 11,088 12,536 109,556 Membership fees - Total Cost of Sales 13,720 15,778 14,406 16,464 17,836 20,580 21,266 24,696 20,580 26,068 24,696 27,920 244,010

Gross Margin 10,180 11,482 10,614 11,916 12,784 14,520 14,954 17,124 14,520 17,992 17,124 19,164 166,374

Total Salary and Wages 4,517 4,517 4,517 4,517 4,517 4,517 4,517 4,517 4,517 4,517 4,517 4,517 54,202

Fixed Business Expenses Advertising 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Car and Truck Expenses ------Commissions and Fees ------Contract Labor ------Credit Card and Bank Charges 159 159 159 159 159 159 159 159 159 159 159 159 1,910 Customer Discounts and Refunds ------Dues and Subscriptions 21 21 21 21 21 21 21 21 21 21 21 21 255 Entertainment ------Insurance (Liability and Property) 212 212 212 212 212 212 212 212 212 212 212 212 2,546 Internet 53 53 53 53 53 53 53 53 53 53 53 53 637 Legal and Professional Fees 53 53 53 53 53 53 53 53 53 53 53 53 637 Office Expenses 106 106 106 106 106 106 106 106 106 106 106 106 1,273 Postage and Delivery 53 53 53 53 53 53 53 53 53 53 53 53 637 Rent (on business property- $19 P 5,570 5,570 5,570 5,570 5,570 5,570 5,570 5,570 5,570 5,570 5,570 5,570 66,837 Rent of Vehicles and Equipment ------Repairs and Maintenance 53 53 53 53 53 53 53 53 53 53 53 53 637 Supplies 27 27 27 27 27 27 27 27 27 27 27 27 318 Telephone and Communications 106 106 106 106 106 106 106 106 106 106 106 106 1,273 Travel 53 53 53 53 53 53 53 53 53 53 53 53 637 Utilities 464 464 464 464 464 464 464 464 464 464 464 464 5,570 Total Fixed Business Expenses 7,930 7,930 7,930 7,930 7,930 7,930 7,930 7,930 7,930 7,930 7,930 7,930 95,164

Other Expenses Amortized Start-up Expenses ------Depreciation ------Interest Commercial Loan - Commercial Mortgage 664 664 664 664 664 664 664 664 664 664 664 664 7,971 Chapel Hill Artist Cooperative Projected Income Statement - Year Three

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals Line of Credit ------Taxes ------Total Other Expenses 664 664 664 664 664 664 664 664 664 664 664 664 7,971

Net Income (2,931) (1,629) (2,497) (1,195) (327) 1,409 1,843 4,013 1,409 4,881 4,013 6,052 9,037 F r a n k l i n S t r e e t A r t s C o l l e c t i v e Business Plan August 19, 2009 Page | 6

> Addendum Committee Structure:

Executive Committee The Executive Committee will be comprised of members with the knowledge and experience to lead, and will include the chairs of the major standing committees. The board will have authority to meet and take action between board meetings. The Executive committee will act as: . advisor to the Director / chief executive officer . Liaison between the Director and the full membership. . oversight of the organization’s chief executive officer - hire and fire . establishes Director’s goals for the year, evaluates performance, and sets compensation . Charged with long range planning and general oversight. . Finance Committee  oversees the preparation of the annual budget,  keep all members informed of budget policy  Reviews performance of the organization in meeting its budgeted revenues and expenses.  recommends compensation packages for staff  research and recommends cost projections as needed by Director

Governance / Membership  Works with the Director to ensure adequate members assistance with gallery operation  develops criteria for membership  develops strategies and oversees member participation, hours, duties, fees  recommends members benefits  Engages enforcement of a conflict of interest policy and a code of conduct among the members.  establish structure for member initiatives and complaints

Nominating/Jury Committee (may initially be part of Exec. Committee)  responsible for board recruitment, orientation, self-assessment, continuing education, and management  Nominating Committee for new board members and officers.  Establish mentoring program for new members and board members (over time)  Develop regular jury schedule and policy  Select jury members with a rotation policy  Process - call for members and jury process

Gallery Committee / Programs  develops annual exhibition schedule  works with Director to receive and set up special exhibitions  Works with Director to rotate artists and gallery space to maintain a fresh and exciting look.  sets policy for rotation and space opportunities F r a n k l i n S t r e e t A r t s C o l l e c t i v e Business Plan August 19, 2009 Page | 7

Marketing and Outreach

 Institute and maintain marketing campaign  research to build networking opportunities  develop programs with other key arts organizations, such as the Ackland, schools, guilds, museums,  identify potential audiences and how to reach them  recommend annual budget for marketing

Development Committee

 Develop fundraising strategy  Research grants opportunities  identify individuals qualified and able to write grant requests  Build a ‘Donors Council'  Plan fundraising events

Advisory Board

The Advisory Board will be populated by experts in a specific field who are able to provide advice and guidance to the organization.

Donors Council

This council will provide volunteer involvement opportunities for donors. For their generosity they will receive:  Special access to the president and board and advance briefings on issues.  Special invitations to the organization’s events.  The ability to help a major arts related organization become an integral part of the community.

Amortization Statement 4.4% Interest (LIBOR) Year Principal Interest Cuml Prin Cum Int Prin Bal 1 $40,000.00 $1,760.00 $40,000.00 $1,760.00 $41,760.00 2 $41,760.00 $1,837.44 $41,760.00 $1,837.44 $43,597.44 Year 3 1 650.95 159.86 650.95 159.86 42946.49 2 653.34 157.47 1304.29 317.33 42293.15 3 655.74 155.07 1960.03 472.4 41637.41 4 658.14 152.67 2618.17 625.07 40979.27 5 660.55 150.26 3278.72 775.33 40318.72 6 662.97 147.84 3941.69 923.17 39655.75 7 665.41 145.4 4607.1 1068.57 38990.34 8 667.85 142.96 5274.95 1211.53 38322.49 9 670.29 140.52 5945.24 1352.05 37652.2 10 672.75 138.06 6617.99 1490.11 36979.45 $7,970.90 11 675.22 135.59 7293.21 1625.7 36304.23 $664.24 12 677.69 133.12 7970.9 1758.82 35626.54 Year 4 13 $680.18 $130.63 $8,651.08 $1,889.45 $34,946.36 14 $682.67 $128.14 $9,333.75 $2,017.59 $34,263.69 15 $685.18 $125.63 $10,018.93 $2,143.22 $33,578.51 16 $687.69 $123.12 $10,706.62 $2,266.34 $32,890.82 17 $690.21 $120.60 $11,396.83 $2,386.94 $32,200.61 18 $692.74 $118.07 $12,089.57 $2,505.01 $31,507.87 19 $695.28 $115.53 $12,784.85 $2,620.54 $30,812.59 20 $697.83 $112.98 $13,482.68 $2,733.52 $30,114.76 21 $700.39 $110.42 $14,183.07 $2,843.94 $29,414.37 22 $702.96 $107.85 $14,886.03 $2,951.79 $28,711.41 23 $705.53 $105.28 $15,591.56 $3,057.07 $28,005.88 $8,328.78 24 $708.12 $102.69 $16,299.68 $3,159.76 $27,297.76 $694.07

Year 5 25 $710.72 $100.09 $17,010.40 $3,259.85 $26,587.04 26 $713.32 $97.49 $17,723.72 $3,357.34 $25,873.72 27 $715.94 $94.87 $18,439.66 $3,452.21 $25,157.78 28 $718.56 $92.25 $19,158.22 $3,544.46 $24,439.22 29 $721.20 $89.61 $19,879.42 $3,634.07 $23,718.02 30 $723.84 $86.97 $20,603.26 $3,721.04 $22,994.18 31 $726.50 $84.31 $21,329.76 $3,805.35 $22,267.68 32 $729.16 $81.65 $22,058.92 $3,887.00 $21,538.52 33 $731.84 $78.97 $22,790.76 $3,965.97 $20,806.68 $8,702.73 34 $734.52 $76.29 $23,525.28 $4,042.26 $20,072.16 $725.23 35 $737.21 $73.60 $24,262.49 $4,115.86 $19,334.95 36 $739.92 $70.89 $25,002.41 $4,186.75 $18,595.03 Year 6 37 $742.63 $68.18 $25,745.04 $4,254.93 $17,852.40 38 $745.35 $65.46 $26,490.39 $4,320.39 $17,107.05 39 $748.08 $62.73 $27,238.47 $4,383.12 $16,358.97 40 $750.83 $59.98 $27,989.30 $4,443.10 $15,608.14 41 $753.58 $57.23 $28,742.88 $4,500.33 $14,854.56 42 $756.34 $54.47 $29,499.22 $4,554.80 $14,098.22 43 $759.12 $51.69 $30,258.34 $4,606.49 $13,339.10 44 $761.90 $48.91 $31,020.24 $4,655.40 $12,577.20 45 $764.69 $46.12 $31,784.93 $4,701.52 $11,812.51 46 $767.50 $43.31 $32,552.43 $4,744.83 $11,045.01 $9,093.47 47 $770.31 $40.50 $33,322.74 $4,785.33 $10,274.70 $757.79 48 $773.14 $37.67 $34,095.88 $4,823.00 $9,501.56

Year 7 49 $775.97 $34.84 $34,871.85 $4,857.84 $8,725.59 50 $778.82 $31.99 $35,650.67 $4,889.83 $7,946.77 51 $781.67 $29.14 $36,432.34 $4,918.97 $7,165.10 52 $784.54 $26.27 $37,216.88 $4,945.24 $6,380.56 53 $787.41 $23.40 $38,004.29 $4,968.64 $5,593.15 54 $790.30 $20.51 $38,794.59 $4,989.15 $4,802.85 55 $793.20 $17.61 $39,587.79 $5,006.76 $4,009.65 $9,501.56 56 $796.11 $14.70 $40,383.90 $5,021.46 $3,213.54 $791.80 57 $799.03 $11.78 $41,182.93 $5,033.24 $2,414.51 58 $801.96 $8.85 $41,984.89 $5,042.09 $1,612.55 59 $804.90 $5.91 $42,789.79 $5,048.00 $807.65 60 $807.65 $2.96 $43,597.44 $5,050.96 $0.00

*The final payment has been adjusted to account for payments having been rounded to the nearest cent.