How Much Cash Does My Business Need?

I’m always happy to pass on great info like this! I’ve included a few snippets below lifted from the full article.

Your business needs cash. Cash is what keeps your company in operation and enables it to grow, so you should know how much cash your business needs to survive. Although many people think the answer is linked solely to operating expenses, this isn’t the case.

There is no single factor that determines how much cash every business needs to have on hand. Somewhere between 3-6 months of operating expenses is a good baseline to start from, but there’s more to it than that.

Here are some factors that determine how much cash your business needs.

1. Your income

The source of your income helps determine if you need more or less cash. If your income isn’t highly diversified—that is, if the majority of your income comes from one or two main clients—you’ll need to have more cash on hand. That’s because if your main client leaves you, you’ll suddenly find yourself with significantly less money coming in.

If your income is diversified, you’ll be better able to withstand losing a client, so you’ll need less cash available. But if the majority of your income comes from one source, you need to be prepared to have little income if they leave.

Likewise, if your business has investors, they could request their money back at any point. You’ll need to cover that.

Do you need more detail on this subject? Head on over to the full article. Click?here?for more ideas and perspectives. Afterwards, why not drop me an email to share your thoughts at [email protected]