Generally speaking, every business model follows a set of rules that make it a functional entity. Regardless of which industry or specialty you choose, businesses succeed and fail based on adherence to these obvious and not-so-obvious rules of handling money management. In this article, we will take a look at eight finance rules you need to understand before starting a successful business.

1. Establish Realistic Financial Goals

Being realistic about your financial goals is the true determinant of success. While the sky's the limit when it comes to how much business could potentially earn, entrepreneurs may needlessly frustrate themselves when reality hits them square in the face. Instead, entrepreneurs need to break financial goals down into reachable and measurable ones instead of “lump sum” goals. After all, what do you do if you actually reach your goal?

If you are just beginning establishing daily financial goals, can you hit them consistently? If so, then proceed with weekly goals, monthly, quarterly, and yearly goals (and beyond). Your success rate may change, but you will find that it is easier to see things as they are instead of grasping at what you once visualized as achievable. These time-based goals allow you to stay on track and make the adjustments as necessary for constant growth.

2. Manage Your Cash Flow

Most businesses fail not only when they run out of money, but how they distribute it. In other words, where the cash flows. For instance, if you have problems with paying subcontractors in an agreed-upon timeframe, you will have difficulty rehiring them. Similarly, your business may only be cash-only, which excludes the growing number of people who insist on using plastic exclusively.

Of course, running out of money is an obvious symptom of poor cash flow, but it may illuminate where your business model is “plugged up”. This may include outstanding invoices or distributors that will not satisfy your demand until you pay a substantial deposit-but, whatever the reason may be, it all comes down to how efficiently you direct the stream of revenue in and out of your business.

3. Track All Spending

There is no worse feeling than checking your business’ account balance and being shocked by how off your estimates were, versus what actually is in the bank. Even if you use the best business credit cards out there, you might find your credit balances growing faster than you thought about them!

If you are just starting a business, you may be flabbergasted by the sheer amount of expenditures and expenses that come from every direction. That is why you must make an effort to track all spending, preferably with accounting software or a costly staff member to handle your bookkeeping. Regular tracking can ensure that you know where every dollar goes and comes from, which helps you make informed - not speculative - decisions.

4. Limit Your Expenses At First to Find What Is Key to Your Business

When beginning your business or startup, you will want to keep the costs as low as possible. The apparent reason is to save money, but you also want to see what vital expenses are versus ones that may seem frivolous. For instance, you may find that paying employees a low salary may results in high-turnover; therefore, you could raise the rates and see if you attract better personnel. Or, if you have a supplier that gives you bulk orders at a discounted rate, you may decide to forgo the savings to save space at your office. If you were to pay outright, you would miss out on finding the “sweet spot” that makes your business run smoothly.

5. Be Optimistic And Pessimistic

Imagine your business as a vehicle. Optimism is the fuel of your business. Without it, your business idea would never be more than just a fleeting thought, and it can carry you through the tough times when it seems like the chips are down. However, every vehicle needs brakes, whether it is to avoid a collision or to miss a setback you might be overlooking. As you will never know what can happen in your business, you need to temper each force with one another and attain a sort of Zen approach that welcomes challenges but does not get caught up in ecstatic flights of fancy.

6. Your Time Has Monetary Value

It is a familiar axiom: time is money. Because your time is finite, and you only get so much of this non-replenishable resource each day, you need to spend it as carefully (and even more so) as you would your business’ capital. If you find yourself bogged down in headache-inducing work, ask yourself whether your time could be spent better? If so, see how you can take yourself out of the minutia and focus back on controlling the macro aspects of the business.

7. Customer/Client Acquisition Is Vital

You have no business without someone who wants to buy a product or a service from you. Therefore, you need to focus on how you attract and keep customers/clients. The sooner you figure out how to best gain new customers/clients, the sooner you can scale your business and increase your company’s chance of turning a profit and beating out the competition. Then, you can start finding ways to make customer/client acquisition more efficient. For instance, you may find that only 1 out of 10 customers that you send outbound mailers to response, while your Facebook ads campaign brings in the broader audience at half the cost. You can then tailor your marketing efforts accordingly, focusing on the most lucrative opportunities.

8. Taking Care Of Yourself

The most valuable asset of your business is yourself. The energy and time that you put into your business should be a reward, not an obligation. Make sure to pay yourself a wage based on your what your business is capable of, but also make sure to treat yourself for accomplishing milestones or up your standard of living. These types of upgrades can make you realize the original purpose of why you started the business in the first place, while also keeping you motivated. You may not want to stay extra hours to do last-minute bookkeeping, but you might feel better about it knowing that it is funding your trip to Bermuda.