Posted By Paul
I know several people who own small businesses of their own, and I often think about the idea of starting my own business.
One thing I realized is that in a very basic sense our lives can be viewed as businesses. I have a product, which are the services I offer. A customer (my employer), who consumes those services in exchange for money, and I use that money in various ways.
You can learn a lot by thinking about whether or not you would want to invest in your life if it were just another company on the stock market.
For example some questions you may want to know about a business are just as applicable to your life:
Is the business profitable?
Does the business have cash flow problems?
Does the business have enough cash on hand to survive a rainy day?
Does the business make sound financial decisions that reap benefits in the long term?
Does the business have a lot of debt?
Is the business run efficiently?
I thought that looking at your financial life as a business was a good way to evaluate the choices you are making, and perhaps recognize dangerous trends in your decisions.