Whether it’s an unexpected equipment repair, the loss of a major client, or an illness that sets you back, in a world of unpredictability, an emergency fund for your business can be a lifeline to get through tough times.
An emergency fund can help your business financially, without forcing you to rely on credit, or dip into your personal funds.
Your emergency fund can even help you take quick advantage of an unexpected business opportunity, such as a super-low price on prime inventory.
Building your emergency fund will require you to make it a focus. If possible, set aside a certain amount from each month’s profits and try save enough to get you through between 3 months and a year of operating expenses.
While you’re saving, the most important part of where you store your fund is quick access in times of need, so consider storing it in a business savings account, money market fund, or a CD at your financial institution.
Once you reach your emergency fund goal, you’ll want to leave that money alone until you need it – and you’ll be glad it’s there.
No matter what happens, you’ll be prepared.