Running your household is like managing a small company or overseeing a miniature economy. In the private sector, money comes in, bills require attention, and whatever’s left pays salaries or gets reinvested. Your household cash flow operates in a similar manner. In the government sector, financial managers at all levels are accountable to strict budgets, carving up the public financial pie. Like the nations and localities in which they live, individuals are also tasked with balancing earnings and expenditures, on a smaller scale.
With so many similarities straddling personal and professional financial pursuits, it’s not surprising many personal finance skills directly assist business entrepreneurs. The Guardian recently explored how personal finance skills can help UK entrepreneurs run companies.
Bringing Individual Lessons to the Work Site
Whether or not you’re aware of it, many of the financial moves you make each day resemble professional habits. When you look for the best price on something to buy, you use the same process business leaders rely on when sourcing goods and services. Each time you choose one course over another based on tax benefits and advantages, you mirror business behaviour.
Conventional understanding promotes a well-ordered personal financial life. And for good reason, complex economic conditions and relentless spending demands can leave you in a mess, before you know what’s happened. Cautious business owners relay on a similar approach to navigate complex commercial finance, running a tight ship for professional success.
Many of the measures you take to avoid financial problems mirror those deployed by UK business professionals, in work settings. Matters like purchasing, sourcing, and financing concerns are shared across personal and professional pursuits. When you compare bad credit loans online, for instance, you’re reviewing credit opportunities the same way an owner operator evaluates commercial lending offers.
Cost-Efficiency at Home and On the Job
Budgeting and spending discipline are central features of home finance; the principles carry over to businesses and public organisations. Without a balanced budget, businesses, localities, and individual households are at financial risk, spending more money than they earn.
Have you ever worked out energy spending and considered changing providers? Do you shop for the best price on insurance? Are you interested in savings interest rates? All of these personal financial habits serve entrepreneurs in much the same way individuals benefit from them.
Ironically, entrepreneurs don’t always excel at the same tasks at work that they effectively manage at home. Business owners are focused on costs such as raw materials, logistics, and labour, so they may fall short when it comes to managing things like insurance and utilities – the very same accounts they successfully oversee at home. In such cases, businesses may be missing out on owners’ proven capabilities, due to a separation of work and domestic priorities.
Compared to individual financial affairs, business finance grows complex. Though owners may be equipped with the financial information needed to save money, many are stretched thin managing various aspects of their businesses, unable to effectively apply what they already know. Automating and finding operational efficiencies can help owners find time to address big picture profitability concerns, whilst still employing their personal finance skills, managing business basics.
Getting What’s Due
Working out what’s owed and getting prompt payment are important matters to individuals managing their money. Businesses professionals naturally share similar concerns, but entrepreneurs don’t always bring the same personal finance sensibility to commercial finance. Waiting for payments – far longer than would be tolerated in private life – can leave business cash flow in arears, yet owners and managers are consistently more relaxed about commercial finances than they are at home. If you’ve chosen self-employment and struggle with commercial cash flow, a proactive approach collecting outstanding invoices is a good personal finance rule to apply at work.
Self-employment has been on the up in the UK, whether from part-time “gig” workers, supplementing their day jobs, or full-time entrepreneurs having a go. Good news for self-employed Britons; your personal finance savvy directly translates into commercial know-how as you work out business finance, armed with personal experience managing money.