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 19-Aug-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 5,000 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 13,000

Operating Capital Pre-Opening Salaries and Wages 3,500 Prepaid Insurance Premiums 1,000 Beginning Inventory - Legal and Accounting Fees 500 Rent Deposits 2,000 Utility Deposits 1,000 Supplies 500 Advertising and Promotions 3,000 Licenses 200 Other Initial Start-Up Costs 500 Working Capital (Cash On Hand) 40,000 Total Operating Capital 52,200

Dwight Bassett: Total Required Funds $ 65,200 This number counts on members of the co-op paying an initiation fee and/or raising dollars to fund the start-up.

Sources of Funding Amount Totals Loan Rate Term in Months Monthly Payments Member initiation fee 33.33% 25,000 Non-profit contributions 13.33% 10,000 Additional Loans or Debt Local Government Loan 53.33% 40,000 0.00% 100.00 $400.00 Cash Flow Loan 0.00% - 9.00% 240.00 $0.00 Total Sources of Funding 100.00%$ 75,000 $400.00 Dwight Bassett: A line of credit is also required in the amount of $ 14,419 The thinking on this item is that this would be a loan that we look to local governments to fund. It would need to be presented and approved. Chapel Hill Artist Cooperative 19-Aug-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 19-Aug-09 Fixed Operating Expenses

Fixed Operating Expenses Monthly Year One Year Two Year Three Notes

Percent Change 3.00% 3.00%

Expenses Advertising $ 3,000 36,000 37,080 38,192 Car and Truck Expenses - - - - Commissions and Fees - - - - Contract Labor 50 600 618 637 Credit Card and Bank Charges 50 600 618 637 Customer Discounts and Refunds - - - - Dues and Subscriptions 20 240 247 255 Entertainment - - - - Insurance (Liability and Property) 150 1,800 1,854 1,910 Internet 50 600 618 637 Legal and Professional Fees 100 1,200 1,236 1,273 Office Expenses 100 1,200 1,236 1,273 Postage and Delivery 50 600 618 637 Rent (on business property- $18 PSF) 5,250 63,000 64,890 66,837 Rent of Vehicles and Equipment - - - - Repairs and Maintenance 50 600 618 637 Supplies 50 600 618 637 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 9,508 114,090 117,513 121,038

Other Expenses Depreciation 179 2,143 2,143 2,143 Interest Commercial Loan - - - - Commercial Mortgage - - - - Line of Credit 43 519 - - Total Other Expenses 222 2,662 2,143 2,143

Total Fixed Operating Expenses 9,729 116,752 119,656 123,181 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 500 500 500 500 500 500 500 500 500 500 500 500 Members Sales 1,688 2,813 4,500 5,063 5,625 6,750 10,125 10,125 11,250 12,375 14,063 16,875 101,250 Non-Member sales 2,063 3,438 5,500 6,188 6,875 8,250 12,375 12,375 13,750 15,125 17,188 20,625 123,750 Membership fees 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 26,400 Total Income 6,450 8,950 12,700 13,950 15,200 17,700 25,200 25,200 27,700 30,200 33,950 40,200 251,400 3750 6250 10000 11250 12500 15000 22500 22500 25000 27500 31250 37500 Cost of Sales Members Sales 1,266 2,109 3,375 3,797 4,219 5,063 7,594 7,594 8,438 9,281 10,547 12,656 75,938 Non-Member sales 1,031 1,719 2,750 3,094 3,438 4,125 6,188 6,188 6,875 7,563 8,594 10,313 61,875 (Member sales @25%, - Non-members sales at 50%) - Total Cost of Sales 2,297 3,828 6,125 6,891 7,656 9,188 13,781 13,781 15,313 16,844 19,141 22,969 137,813

Gross Margin 4,153 5,122 6,575 7,059 7,544 8,513 11,419 11,419 12,388 13,356 14,809 17,231 113,588 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 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Car and Truck Expenses ------Commissions and Fees ------Contract Labor 50 50 50 50 50 50 50 50 50 50 50 50 600 Credit Card and Bank Charges 50 50 50 50 50 50 50 50 50 50 50 50 600 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) 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Internet 50 50 50 50 50 50 50 50 50 50 50 50 600 Legal and Professional Fees 100 100 100 100 100 100 100 100 100 100 100 100 1,200 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- $18 P 5,250 5,250 5,250 5,250 5,250 5,250 5,250 5,250 5,250 5,250 5,250 5,250 63,000 Rent of Vehicles and Equipment ------Repairs and Maintenance 50 50 50 50 50 50 50 50 50 50 50 50 600 Supplies 50 50 50 50 50 50 50 50 50 50 50 50 600 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 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 114,090

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 - - - - - 3 45 66 87 101 108 108 519 Taxes ------Total Other Expenses - - - - - 3 45 66 87 101 108 108 519

Net Income (9,613) (8,644) (7,191) (6,707) (6,223) (5,257) (2,393) (2,414) (1,466) (511) 935 3,357 (52,127) 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 29,987 20,943 13,351 6,244 ------535

Cash Inflows Income from Sales 6,450 8,950 12,700 13,950 15,200 17,700 25,200 25,200 27,700 30,200 33,950 40,200 257,400 Accounts Receivable ------Total Cash Inflows 6,450 8,950 12,700 13,950 15,200 17,700 25,200 25,200 27,700 30,200 33,950 40,200 257,400

Cash Outflows Investing Activities New Capital Purchases ------Inventory Purchases ------Cost of Sales 2,297 3,828 6,125 6,891 7,656 9,188 13,781 13,781 15,313 16,844 19,141 22,969 137,813 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 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 9,508 114,090 Taxes ------Financing Activities - Loan Payments 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Line of Credit Interest - - - - - 3 45 66 87 101 108 108 519 Line of Credit Repayments ------Dividends Paid ------Total Cash Outflows 16,463 17,994 20,291 21,057 21,823 23,357 27,993 28,014 29,566 31,111 33,415 37,243 308,327

Cash Flow (10,013) (9,044) (7,591) (7,107) (6,623) (5,657) (2,793) (2,814) (1,866) (911) 535 2,957 (50,927)

Operating Cash Balance 29,987 20,943 13,351 6,244 (378) (5,657) (2,793) (2,814) (1,866) (911) 535 3,492

Line of Credit Drawdowns - - - - 378 5,657 2,793 2,814 1,866 911 - - 14,419

Ending Cash Balance 29,987 20,943 13,351 6,244 ------535 3,492

Line of Credit Balance - - - - 378 6,035 8,827 11,641 13,507 14,419 14,419 14,419 Chapel Hill Artist Cooperative Year End Summary

Year One % Year Two % Year Three %

Income Members Sales 101,250 134,469 201,704 Non-Member sales 123,750 164,351 195,635 Membership fees 26,400 12,000 12,000 Total Income 251,400 100.00% 310,820 100.00% 409,339 100.00%

Cost of Sales Members Sales 75,938 100,852 75.00% 60,511 Non-Member sales 61,875 82,176 97,818 (Member sales @25%, - Non-members sales at 50%) - - - Total Cost of Sales 137,813 54.82% 183,027 58.89% 158,329 38.68%

Gross Margin 113,588 45.18% 127,793 41.11% 251,010 61.32%

Total Salary and Wages 51,105 20.33% 52,631 16.93% 54,202 13.24%

Fixed Business Expenses Advertising 36,000 37,080 38,192 Car and Truck Expenses - - - Commissions and Fees - - - Contract Labor 600 618 637 Credit Card and Bank Charges 600 618 637 Customer Discounts and Refunds - - - Dues and Subscriptions 240 247 255 Entertainment - - - Insurance (Liability and Property) 1,800 1,854 1,910 Internet 600 618 637 Legal and Professional Fees 1,200 1,236 1,273 Office Expenses 1,200 1,236 1,273 Postage and Delivery 600 618 637 Rent (on business property- $18 PSF) 63,000 64,890 66,837 Rent of Vehicles and Equipment - - - Repairs and Maintenance 600 618 637 Supplies 600 618 637 Telephone and Communications 1,200 1,236 1,273 Travel 600 618 637 Utilities 5,250 5,408 5,570 Total Fixed Business Expenses 114,090 45.38% 117,513 37.81% 121,038 29.57%

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 - - 6,552 Line of Credit 519 3,577 7,043 Taxes - - - Total Other Expenses 519 0.21% 3,577 1.15% 13,595 3.32%

Net Income (52,127) -20.73% (45,928) -14.78% 143,567 35.07% 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 7,425 6,480 6,345 6,723 12,357 12,807 12,582 13,950 13,950 13,950 13,950 13,950 134,469 Non-Member sales 9,075 7,920 7,755 8,217 15,103 15,653 15,378 17,050 17,050 17,050 17,050 17,050 164,351 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 18,000 15,900 15,600 16,440 28,960 29,960 29,460 32,500 32,500 32,500 32,500 32,500 310,820 16500 14400 14100 14940 27460 28460 27960 31000 31000 31000 31000 31000 Cost of Sales Members Sales 5,569 4,860 4,759 5,042 9,268 9,605 9,437 10,463 10,463 10,463 10,463 10,463 100,852 Non-Member sales 4,538 3,960 3,878 4,109 7,552 7,827 7,689 8,525 8,525 8,525 8,525 8,525 82,176 - Total Cost of Sales 10,106 8,820 8,636 9,151 16,819 17,432 17,126 18,988 18,988 18,988 18,988 18,988 183,027

Gross Margin 7,894 7,080 6,964 7,289 12,141 12,528 12,335 13,513 13,513 13,513 13,513 13,513 127,793

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 3,090 3,090 3,090 3,090 3,090 3,090 3,090 3,090 3,090 3,090 3,090 3,090 37,080 Car and Truck Expenses ------Commissions and Fees ------Contract Labor 52 52 52 52 52 52 52 52 52 52 52 52 618 Credit Card and Bank Charges 52 52 52 52 52 52 52 52 52 52 52 52 618 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) 155 155 155 155 155 155 155 155 155 155 155 155 1,854 Internet 52 52 52 52 52 52 52 52 52 52 52 52 618 Legal and Professional Fees 103 103 103 103 103 103 103 103 103 103 103 103 1,236 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- $18 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 52 52 52 52 52 52 52 52 52 52 52 52 618 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 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 117,513

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 108 133 190 249 305 326 344 363 374 385 395 406 3,577 Taxes ------Total Other Expenses 108 133 190 249 305 326 344 363 374 385 395 406 3,577

Net Income (6,393) (7,232) (7,405) (7,138) (2,343) (1,976) (2,188) (1,029) (1,040) (1,051) (1,062) (1,072) (45,928) 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 3,492 ------

Cash Inflows Income from Sales 18,000 15,900 15,600 16,440 28,960 29,960 29,460 32,500 32,500 32,500 32,500 32,500 316,820 Accounts Receivable ------Total Cash Inflows 18,000 15,900 15,600 16,440 28,960 29,960 29,460 32,500 32,500 32,500 32,500 32,500 316,820

Cash Outflows Investing Activities New Capital Purchases ------Inventory Purchases ------Cost of Sales 10,106 8,820 8,636 9,151 16,819 17,432 17,126 18,988 18,988 18,988 18,988 18,988 183,027 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 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 9,793 117,513 Taxes ------Financing Activities - Loan Payments 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Line of Credit Interest 108 133 190 249 305 326 344 363 374 385 395 406 3,577 Line of Credit Repayments ------Dividends Paid ------Total Cash Outflows 24,793 23,532 23,405 23,978 31,703 32,336 32,048 33,929 33,940 33,951 33,962 33,972 361,548

Cash Flow (6,793) (7,632) (7,805) (7,538) (2,743) (2,376) (2,588) (1,429) (1,440) (1,451) (1,462) (1,472) (44,728)

Operating Cash Balance (3,301) (7,632) (7,805) (7,538) (2,743) (2,376) (2,588) (1,429) (1,440) (1,451) (1,462) (1,472)

Line of Credit Drawdowns 3,301 7,632 7,805 7,538 2,743 2,376 2,588 1,429 1,440 1,451 1,462 1,472 41,236

Ending Cash Balance ------

Line of Credit Balance 17,720 25,351 33,156 40,694 43,437 45,814 48,401 49,830 51,270 52,721 54,182 55,655 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 $9,000 $10,350 $9,450 $10,800 $11,700 $13,500 $13,950 $16,200 $13,500 $17,100 $16,200 $18,315 160,065 Non-Member sales 11,000 12,650 11,550 13,200 14,300 16,500 17,050 19,800 16,500 20,900 19,800 22,385 195,635 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 21,500 24,500 22,500 25,500 27,500 31,500 32,500 37,500 31,500 39,500 37,500 42,200 367,700 20000 23000 21000 24000 26000 30000 31000 36000 30000 38000 36000 40700 Cost of Sales Members Sales 6,750 7,763 7,088 8,100 8,775 10,125 10,463 12,150 10,125 12,825 12,150 13,736 120,049 Non-Member sales 5,500 6,325 5,775 6,600 7,150 8,250 8,525 9,900 8,250 10,450 9,900 11,193 97,818 Membership fees - Total Cost of Sales 12,250 14,088 12,863 14,700 15,925 18,375 18,988 22,050 18,375 23,275 22,050 24,929 217,866

Gross Margin 9,250 10,413 9,638 10,800 11,575 13,125 13,513 15,450 13,125 16,225 15,450 17,271 149,834

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 3,183 3,183 3,183 3,183 3,183 3,183 3,183 3,183 3,183 3,183 3,183 3,183 38,192 Car and Truck Expenses ------Commissions and Fees ------Contract Labor 53 53 53 53 53 53 53 53 53 53 53 53 637 Credit Card and Bank Charges 53 53 53 53 53 53 53 53 53 53 53 53 637 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) 159 159 159 159 159 159 159 159 159 159 159 159 1,910 Internet 53 53 53 53 53 53 53 53 53 53 53 53 637 Legal and Professional Fees 106 106 106 106 106 106 106 106 106 106 106 106 1,273 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- $18 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 53 53 53 53 53 53 53 53 53 53 53 53 637 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 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 121,038

Other Expenses Amortized Start-up Expenses ------Depreciation ------Interest Commercial Loan ------Commercial Mortgage 546 546 546 546 546 546 546 546 546 546 546 546 6,552 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 417 464 502 546 581 611 630 646 647 666 666 666 7,043 Taxes ------Total Other Expenses 963 1,010 1,048 1,092 1,127 1,157 1,176 1,192 1,193 1,212 1,212 1,212 13,595

Net Income (6,317) (5,201) (6,013) (4,895) (4,156) (2,636) (2,267) (345) (2,672) 409 (366) 1,456 (39,002) Chapel Hill Artist Cooperative Projected Cash Flow 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

Beginning Cash Balance ------555 336

Cash Inflows Income from Sales 21,500 24,500 22,500 25,500 27,500 31,500 32,500 37,500 31,500 39,500 37,500 42,200 373,700 Accounts Receivable ------Total Cash Inflows 21,500 24,500 22,500 25,500 27,500 31,500 32,500 37,500 31,500 39,500 37,500 42,200 373,700

Cash Outflows Investing Activities New Capital Purchases ------Inventory Purchases ------Cost of Sales 12,250 14,088 12,863 14,700 15,925 18,375 18,988 22,050 18,375 23,275 22,050 24,929 217,866 Operating Activities Salaries 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 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 10,087 121,038 Taxes ------Financing Activities - Loan Payments 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Line of Credit Interest 417 464 502 546 581 611 630 646 647 666 666 666 7,043 Line of Credit Repayments ------Dividends Paid ------Total Cash Outflows 27,671 29,555 28,367 30,249 31,510 33,990 34,621 37,699 34,026 38,945 37,720 40,598 404,950

Cash Flow (6,171) (5,055) (5,867) (4,749) (4,010) (2,490) (2,121) (199) (2,526) 555 (220) 1,602 (31,250)

Operating Cash Balance (6,171) (5,055) (5,867) (4,749) (4,010) (2,490) (2,121) (199) (2,526) 555 336 1,937

Line of Credit Drawdowns 6,171 5,055 5,867 4,749 4,010 2,490 2,121 199 2,526 - - - 33,187

Ending Cash Balance ------555 336 1,937

Line of Credit Balance 61,826 66,880 72,748 77,497 81,506 83,996 86,117 86,316 88,842 88,842 88,842 88,842 Chapel Hill Artist Cooperative Breakeven Analysis

Breakeven Analysis Dollars Percent Annual Sales Revenue $ 251,400 100.00% Cost of Sales 137,813 54.82% Gross Margin 113,588 45.18%

Salaries and Wages 51,105 Fixed Operating Expenses 116,752 Total Fixed Business Expenses 167,857

Breakeven Sales Calculation 167,857 45.18%

Breakeven Sales in Dollars $ 371,513 Membership and Categories Full-MemberConsignment Initiation Fee $500.00 $0.00 Monthly $20.00 Percent 25% 50% Time (monthly) 4 0 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.