You know the phrase Cash is King? Well it’s true..
A cash reserve is the life line of any business. A reserve is simply the amount of cash your business has in the bank that is not dedicated to any expense. Better known as savings or an emergency fund. Sadly enough, research shows that the majority of us have enough to last just 2 weeks. While 1 in 5 don’t have any reserves at all.
So now that I have your attention.
If a disaster strikes your business, can it survive? If so, how long?
If your largest client goes out of business, or leaves you for another vendor, can you survive? If so, how long?
If your top producer goes to another job, or as my good friend Kat say’s gets hit by a bus, can you survive? If so, how long?
3. What if sales just go flat for a period, can you survive? If so, how long?
All of these are important questions, which a business owner should answer. What other risks are you open to and how could a cash reserve help you mitigate the risk?