Building a business is an adventure filled with excitement and challenges. One of the smartest moves you can make early on? Establishing your business safety net. This fund isn't just a good idea; it's your business's sanity net for those “pull your hair out” moments. Here’s how you can start building yours today:
Safety Net Idea 1: Start Small, Aim Big
Begin by setting aside a small, manageable amount each month. This step is designed to get you in the habit of taking the action. If you need to make it an auto transfer, get that set up. Over time, aim to save enough to cover six months of operating expenses. This means you have to know what your total operating expenses are for six months.
Safety Net Idea 2: Cut Unnecessary Costs
Review your expenses regularly and cut down on non-essential spending. Every penny saved is a penny closer to your safety net. We live in a day of automatic monthly subscriptions. Look at the transactions for the last few months in your checking, savings, money markets, and credit card accounts, explicitly looking for expenses you no longer need. When analyzing the books for a new bookkeeping client, I noticed that they were paying two different companies for credit card processing. This client didn't realize that for over three years, they had been paying a company that they thought they had canceled.
Safety Net Idea 3: Open a Dedicated Savings Account
Your business safety net should be easily accessible without being too tempting to use for non-emergencies. Consider a separate savings or money market account for the right balance of access and growth. For some of my clients, I recommend they open it at another bank so that it has an added level of difficulty and they can't easily spend it.
Set up automatic transfers to your business safety net account. It’s an effortless way to ensure consistent savings without thinking about it.
Safety Net idea 4: Reevaluate and Adjust
As your business grows, so will your operating expenses. Reevaluate your safety net regularly to ensure it matches your current needs.
Now it's time to take action. Even small amounts on a regular basis will begin to make a huge change. This can be the difference between weathering a storm and facing a financial crisis. Start building yours today to ensure your business stays resilient no matter what comes your way.
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