You may have heard statements like “cash is king” and “cash is the lifeblood of business”. These statements are true, especially for small businesses. Small businesses don’t seem to have access to capital (cash) from lenders and investors like large businesses. Below are some reasons why a healthy cash balance can be beneficial.
Bridge Through Slow Times
The economy and markets can cycle up and down. Perhaps your business has seasonal factors associated with the level of sales. Cash can help you through these slow times. Consider working towards having six to twelve months of operating cash set aside in a business emergency fund.
Take Advantage of Opportunities
For example, if your company has received a large new order or contract, a short term cash infusion may be required as additional working capital. Additional working capital is required for growing companies in general. Other opportunities might include buying equipment or inventory from other companies that are going out of business. In some situations, acquiring entire companies or product / service lines can be beneficial.
Peace of Mind
Finally, depending on your personality, a healthy cash balance can offer an emotional peace of mind. Years ago, in Kiplinger magazine, was the quote: “Cash is the equivalent of financial Valium. It keeps you cool, calm and collected”.
Please contact us today for assistance in building your cash balance.