Check Margin and Cash Before Using Personal Money

You are looking at a bill the business cannot cover, and your personal account is the source you are about to use. Before moving that money, check two numbers: margin and cash. Then fix the cheapest problem first: pricing, supplier costs, or hours.

The Chase 2025 Midyear Business Leaders Outlook Pulse surveyed 563 U.S. businesses with annual revenues between $100,000 and $20 million from June 5 to June 16, 2025. In that survey, 76% of business owners expected higher profits in 2025, a nine-point increase from November 2024. Among June 2025 Chase survey respondents, 57% put materials and other cost-of-goods inputs in their top three expense pressures, and 48% did the same for new tariffs.

Most owners are thinking about borrowing: in the same survey, 86% said they were weighing some kind of financing over the next year. 48% said they would use a business credit card, and personal-card and crowdfunding use had climbed sharply from November.

Personal money has limits. In early 2025, the median U.S. household checking and savings balances were 23% above pre-pandemic levels, below the 40% increase expected from historical trends. Total U.S. household cash reserves had returned to positive growth compared with the year before by May 2025.

Margin shows whether the business can pay itself

Margin is the money left after the business pays for what it sold. Say you sell a product and pay for materials, labor, and direct costs. Your margin is the amount left, or the percentage left. If costs rise, the margin falls to a lower amount, or a lower percentage. The business still sells, but it earns less on every unit.

When costs rise, start with the price, not the loan. The price must cover the cost of making or delivering the thing. If the margin is thin, a small cost increase can create a large cash gap.

Cash shows whether you can pay this week

Cash is the money actually available to pay bills. A business can show a profit and still run out of cash. Customers may pay slowly, suppliers may demand payment now, and personal money may be the only source available before a missed payment.

Check cash in two directions. Look at what is coming in, such as invoices already sent and deposits expected. Look at what is going out, such as payroll, rent, materials, and taxes. The gap is the difference between the two, not the difference between revenue and profit.

Fix the cheapest gap before you borrow

Work through the list in order. The first three questions measure the gap, the next three test the cheap fixes, and the last one tests borrowing.

• Can you name the dollar amount of the cash gap for next month?
• Can you name the dollar margin on your main products or services?
• Can you list cash on hand, money due from customers, and bills due next month?
• Can you name a price you can raise without losing the customer?
• Can you name a supplier cost you can question or replace?
• Can you name an hour or task that does not directly serve a paying customer?
• Can you state the monthly interest cost on a possible loan and the monthly margin you would lose by cutting too deep?

If you cannot name the gap, the margin, or the cash position, build the next-month cash picture before choosing a fix.

Pricing is the first fix, and it changes the margin on every future sale. Next, supplier costs can reduce the gap without changing what the customer pays. Finally, hours protect the business from spending time on work that does not bring in cash.

Use personal money only after the gap is measured and the cheap fixes have been tested. Borrowing can be useful when the gap is temporary and the margin can support the repayment. If the margin cannot support the cost, borrowing adds interest to a gap that the business cannot close. Put the fix on the calendar and review it before the next bill is due.

This article is general information, not tax or financial advice. Consult a qualified professional about your situation.