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A tragic irony – Many business owners are good in business but not in handling money. Business and money normally and ideally go together but considering some of the attributes of an entrepreneur, in some cases, they are lousy in terms of managing their personal wealth and investments. Problems occur on how these small businesses handle their personal funds.

First, they are enterprising and are bound to put their personal riches in something that is risky and may have very uncertain results. Second, they are delighted to an idea and put all their effort even if it doesn’t make any profit. Then, their flexibility, which allows their business to grow and makes them mix personal money with business. Lastly, they likely to do things on their own and don’t accept any advice very well. Here are some pieces of advice given by Melvin Esteban, registered planner and president of Motivating Minds.

1.) Personal and business funds should be separated. Entrepreneurs’ typically use a single wallet, for both personal and business expenses. It has to be very clear that whatever you use for the business should be for the business, in that way you will know if you are making profit or not.
Esteban recommends the use of technology to know the limit between business and personal funds. “Excel and Quicken are some of the great tools that you can use for you to see if you are making profit or spending too much.”

2.) Learn to balance your risks.Entrepreneurs should need to know what size of business they could handle. Cash flow needs to be balanced. Owners need to earn from their both entrepreneurial and personal investments. “Business is considered a high risk and you need to set aside your money in lower risk investment. That is the difference between man at work and man’s cash at work. Investing means your money is working to produce you more money,” Esteban said. Also, this involves setting aside enough money for the rainy day. Entrepreneurs tended to commit to their businesses and are tempted to put all their money in their business which is similar to a cockfighting enthusiast who bets the farm. “Once you lose, you lost it all.”

3.) Maintain a long-term objective. Business owners should know how to pay themselves. “They need to make sure that they set aside some of their profit, say 10%, for their retirement. If they always depend on their business to make them retire rich, their business and the business itself are in the same boat. You are exposing yourself too much,” he said.When they strike big, money can flow like honey but their unique disadvantage is also the uncertainty of income.

4.) Hire professional managers. In business, hiring professional managers allows an entrepreneur to expand and grow the business and keep it stable. It is not a bad idea to hire someone who could handle your savings and investments. Entrepreneurs can still do what they are good at and get someone to grow their money for them.

In the end, managing businesses and personal funds can work simultaneously to preserve wealth, even until the succeeding generations. It just takes an appropriate use of fundamental characteristics that can make an entrepreneur a winner or a loser.