Personal Finance Rules You Can Apply to Run a Profitable Business

Managing money is one of the most significant obstacles business owners face. It’s well-documented that a high percentage of new businesses fail. In most cases, this is due to cash flow issues. We can all benefit from applying golden finance rules to prevent stress and money worries. In this guide, we’ll highlight some effective personal accounting strategies you can learn from to run a profitable business.

Tracking spending

We live in a strange world where it’s both easier and harder than ever to track spending. Online banking, notifications and alerts allow us to monitor transactions constantly, but it’s also easy to lose track of where your money goes. Most of us now tap a card or press a button to buy products or pay bills, which can make keeping an eye on spending difficult. To manage your business finances effectively, it’s critical to be meticulous when tracking spending. It’s essential to know exactly what is coming in and going out of your business accounts on an ongoing basis. Being mindful of spending and using a budget can help you control and limit outgoings and identify areas where you can make savings. If you don’t have the time to manage your accounts, consider hiring an accountant or a bookkeeper or outsource financial activities to an external firm.

Managing debt

The total household debt in the US reached over $17 trillion in 2024. People are borrowing more, often to cope with rising living costs. Managing debt is critical for healthy personal and business finances. Being in debt is not necessarily something to worry about if you’re in control of your money and you can cover repayments, for example, you pay your mortgage repayment on time every month. The trouble with debt is that it can spiral quickly. This is particularly relevant when people borrow money via high-interest loans or use credit cards to buy products or pay bills.

Experts like Alex Kleyner, CEO and co-founder of National Debt Relief, recommend implementing credit management strategies, such as paying bills on time consistently, setting up an emergency fund, tracking outgoings and using credit to enhance your financial position. Building up a better credit score is a good example of this approach. If you are struggling with debt, either in your personal life or as a business owner, it’s important to seek help as soon as possible.

Making the most of data

Advances in technology mean that we now have instant access to financial data whenever we need or want it. Whether you’re drawing up a monthly budget for your household or calculating costs for your company, it’s hugely beneficial to use data. Include accurate figures in your budget and forecasts, make use of planning tools and compile financial reports. Use information, facts and figures to help you make decisions to benefit your business. If you have data at your disposal, this can take the guesswork out of financial planning, budgeting and preparing for growth, diversification or scaling up or down.

Lowering outgoings

In business, the focus is often pushing sales to increase profits. Increasing sales plays an instrumental role in maximizing margins, but it’s not the only driving force. Lowering outgoings is an effective way to reduce spending and boost profits. If you can increase your income at the same time as decreasing expenditure, this will make a big difference to your balance sheets.

When you have a budget at home, you can use it to highlight costs that are too high or non-essential luxuries. Apply this technique to your business budget. Trim costs where possible, identify areas where you could save and try to maximize efficiency and regulate spending. If you’re paying a fortune for your employees to travel to meetings, for example, you could save a huge amount of money by swapping to virtual meetings or setting a travel expenses cap. Additional tactics to explore include negotiating better deals with suppliers, shopping around for the best offers, cashing in on loyalty rewards and considering different staffing structures. If you run a seasonal business, for example, you could cut costs during quieter periods by hiring temporary staff during peak spells or offering your employees the option to go part-time.

Managing money can be a challenge for everyone. If you’re an aspiring entrepreneur, or you run a business, there are ways to make accounting easier, including applying personal finance rules. Set a budget, track spending and tread carefully when it comes to borrowing money, using credit and taking on more debt. Seek advice if you’re struggling to keep your business above water and look for ways to reduce outgoings to maximize profit margins. Make use of data and accurate financial information to help you plan, budget and lower risks.