Finance Roll

Today, more small business CEO's who have been hit with financial challenges are applying personal finance basics to the business arena. Here are five money management habits to apply in business and personal finance.

Don't Overextend Finances

In business this can show up in the form of excess inventory, high labor costs, and assets that are not being utilized for good returns. Small business owners may find hidden costs by reviewing bank statements regularly and monitoring investment portfolios for those that are doing poorly.

Know the Breaking Point

The breaking point is where you begin to veer off course. For some this means a constantly overdrawn bank balance or others experience creditor harassment. Instead of paying down debt, you might avoiding making payments until more money arrives. Other signs to watch are a high debt-to-income ratio, consistent business losses, and warnings from your money manager that its time to increase income or forego the lifestyle you desire.

Identify Your Money Personality

In order to manage money well, it's best to have an idea of what works best for you. This starts with being aware of your unique attitudes, thoughts, and behaviors toward money. For example, some people have the discipline to manage finances responsibly while others tend to fall off the deep end of the spectrum requiring constant monitoring and accountability to keep them in check. Then there are people who are responsible but fall off from time to time. Your behavior may be someplace in between.

Get Competent People to Help Manage Finances

There are many ways to get help with money. To start, seek the assistance of an accountant or money manager, who will prepare forecasts of cash flows. Financial advisors are another source because they provide investment advice to keep liquid cash working to build wealth. Additionally, if you are comfortable with keeping watch over your money on your own, consider financial tools that simplify the process. Some resources to help manage and reach your financial goals are ING Financial Services and Microsoft Money.

Analyze Your Investments

Pay attention to where and how well money is performing. Ask questions to help you understand the financial side of business. What type of investments do you have? What returns are they bringing you? How much have you gained/loss so far? At what point will you get out?

When you really think about it, although the language in business and personal finance is different, the basics are pretty much the same. Which of these strategies will you put in action?