Knowledge. Is. Power.
At the time of writing, we’re only one week into the new year and I’m thinking back to some good ole sorting done over the holidays. Whereas I’m normally State-side seeing family, this time around I stayed put in London – and wow, did some paperwork sorting get done!
The exercise resulted in reflecting upon the concept of Knowledge is Power, specifically in relation to finances as well as general life and business sorting.
Here’s the thing: As challenging as it can be to face up to the reality of finances, it is seriously empowering to do so. Although you may wish your finances were in a different state, you at least have a starting point. This enables you to get on top of the situation and to start chipping away at moving forward.
My favourite saying when it comes to finance as a business owner (of any sized enterprise) is this:
Turnover is vanity, Profit is sanity and Cash is reality.
As enthralling as it might be to sell a piece for $10,000 (the turnover), what profit are you getting at the end of the day? Artist readers should consider direct costs incurred and time it’s taken, and dealers the percentage going to the artist, transportation, costs of meeting the client and so on. The profit less direct costs will get you to the ‘sanity’ piece of profit margin.
And what about this all-too-common scenario for small business owners: Even if you know that a big purchase is coming through, what’s the reality of cash flow for paying rent and/or other essentials that you *need* to run the business (your overheads)? Or what if a large company is taking months to pay on delivered work? Hence cash being reality.
Coming back to the sorting and filing of paperwork, consider something that will take a minute of your time (which is 60 seconds well-invested):
For annual payments that you make (such as insurance and memberships) or yearly things that must be done (like having the car serviced), make a note in your calendar. Better yet, in addition to noting it on the due date, pop in reminders for the month ahead and two weeks ahead, too. This will help you to a) ensure that you have the funds in place in time and b) not miss important deadlines (and start incurring fees, reminders and the like).
If diarised digitally, you can even set up the to-do as an annually occurring event. BOOM.
Considering the case of an artist I mentored who was sorting finances, getting on paperwork made a world of difference to her self-confidence. She went from wondering how much savings she had – assuming that the amount had been dwindling with very little remaining, to realising that the position was better than she’d anticipated. Furthermore, when going through various insurance policies that had been set up by an advisor many moons, found out that she had two life insurance policies! This put her in a position to cash in one account to use the funds where they were needed. The exercise provided clarity, and enabled her to see the woods from the trees at long last.
While it’s not typically realistic to sort everything in one go, working out how to start chipping away at sorting finances and paperwork is important. And it’s empowering. Trust me, I work with many creative beings who are not comfortable addressing money matters, and witness change for the better when people go there. You move from being in the murky dark to being in a position of clarity.
What do you need to address? And how will you make it happen? Stop what you’re doing and make a plan that you’ll act upon. It’s that important.