Having a rainy-day fund for your business is just as important as having an emergency fund for yourself. It provides a peace of mind if your business experiences an emergency or unusual event. It’s important to make sure that you can quickly access the money if something happens, so don’t worry about putting the funds in something that will gain a lot of interest – just make sure you can take out the cash if you need it.
You should try to save enough to cover between three months and one year of operating expenses. Try out these seven secrets to start building your emergency fund today:
1. Save Your Change
You may have had a piggy bank when you were little, but probably didn’t think about having one for your business. Get a piggy bank and toss any spare change into it. You’ll be surprised how quickly it can add up.
2. Cut Back on Business Trips
If you’re going on business trips, think about if those trips are really necessary. You might be able to conduct some of those meetings on the phone or through a video conference to save some money. Once you’ve figured out how to cut back on business trips, take the money you’re saving and put it in your emergency fund.
3. Save during the Good Times
If your business is seasonal, don’t worry about saving much during the slower seasons. Save during the seasons when you’re making more money.
4. Keep It Separate
Set up a separate savings account for your emergency fund. If you keep your emergency funds in your normal business account, it will be too tempting to spend it. When you keep it separate, you’ll be less tempted to spend it and you’ll always know exactly how much you’ve saved.
5. Set Realistic Goals
Setting savings goals will give you something to work toward, but make sure you set realistic goals so you don’t become discouraged. Setting goals that are too high when you’re first starting your business could put unnecessary financial strain on your company. Start with small savings goals and work your way up as your business grows.
6. Treat It Like an Expense
Pretend that putting money in your rainy-day fund is a necessary business expense. You’ll take it more seriously and will always pay into it.
7. Cut Out Impulse Buys
Impulse buys could be eating into your potential savings. Every time you ignore the impulse to buy something, you have more money to put into savings.