How Much Should a Business Have in Savings?
Similar to some of the most popular personal finance methodologies behind saving money, small businesses should be routinely putting away at least 10% of their profits until the business has up to 6 months of operating expenses in reserve. These funds in your savings account can be used to get your company through a low sales cycle, or any other unpredictable fluctuations in revenue that could be thrown your way. To make sure you're saving enough you'll need to first calculate how much cash you immediately need each month. This should help you glean the major expenses that you definitely need to spend on, for example- rent, wages, insurance, equipment, marketing spend, and utilities. For businesses in the hyper-growth stage, it may be harder to save as investing in the business will garner more returns, but in any case, there is some portion of funds that can be set aside for savings to insulate the company from failure. Business owners, we want to hear from you! How much are you routinely saving each month for your business?