How much cash should a small business keep on hand?
Honestly, the thought of a small business not having enough cash on hand terrifies me! I think aiming for three to six months of expenses saved is spot on. Its like a safety net, allowing you to weather unexpected storms. Imagine losing a big client or facing a sudden repair – having that cash buffer could be the difference between surviving and closing shop. Peace of mind is worth something too, right?
How much cash should a small business keep on hand? Ugh, that’s a terrifying question, isn’t it? I mean, the thought of running out of money, especially when you’ve poured your heart and soul (and maybe your life savings!) into something… it’s a nightmare. I really, really get that.
Three to six months of operating expenses? Yeah, that’s what I aim for, and I think it’s pretty solid advice. It’s like, your financial parachute, you know? Think about it – last year, remember that crazy plumbing issue at my bakery? The main pipe burst – a disaster! Cost me a fortune, easily a month’s worth of profit, maybe more. If I hadn’t had that cash reserve, I’d have been toast. Seriously, toast.
And it’s not just about big, dramatic emergencies. It’s the little things too – a slow sales month, a supplier suddenly hiking their prices… those things add up. It’s a real buffer, a safety net, allowing you to breathe. You don’t have to panic about every little dip in sales, you can focus on fixing the problem instead of scrambling for cash. Isn’t that worth something? I find that priceless peace of mind helps so much. Keeps me sleeping better, anyway. Plus, you never know when a fantastic opportunity will present itself, and if you don’t have the cash to grab it, that’s even worse, right? So yeah, three to six months… aim high, my friend, it’s worth the effort.
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