Do you have an “emergency savings fund” for your business?
If you don’t, maybe you genuinely like the idea of having one … but just don’t know where to start.
If that’s where you’re at, then this post is for you.
(𝟭) 𝗙𝗶𝗿𝘀𝘁, 𝘄𝗵𝗮𝘁 𝗶𝘀 (𝗮𝗻𝗱 𝗶𝘀𝗻’𝘁) 𝗮𝗻 “𝗲𝗺𝗲𝗿𝗴𝗲𝗻𝗰𝘆” 𝗲𝘅𝗽𝗲𝗻𝘀𝗲
There’s a difference between an “emergency” expense and an “overlooked” expense.
Forgetting about your quarterly property tax bill, or your annual accountant invoice – well, that doesn’t count as an emergency. Those are bills you can plan and budget for normally.
An “emergency” is something urgent and unpredictable, like a burst pipe in a building you own
(𝟮) 𝗪𝗵𝗲𝗻 𝘁𝗼 𝗽𝘂𝗹𝗹 𝗳𝗿𝗼𝗺 𝘆𝗼𝘂𝗿 𝗲𝗺𝗲𝗿𝗴𝗲𝗻𝗰𝘆 𝗳𝘂𝗻𝗱 (𝗮𝗻𝗱 𝘄𝗵𝗲𝗻 𝘁𝗼 𝗵𝗼𝗹𝗱 𝗼𝗳𝗳)
Before you pull from your emergency fund, ask these three questions:
1 – Is this expense unexpected (and not just overlooked)?
2 – Is it necessary? (A cracked iPhone screen, if the phone still works, doesn’t count!)
3 – Is it urgent? (Will the problem worsen, or will a vital opportunity be lost?)
(𝟯) 𝗛𝗼𝘄 𝘁𝗼 𝗳𝗶𝗴𝘂𝗿𝗲 𝗼𝘂𝘁 𝗵𝗼𝘄 𝗺𝘂𝗰𝗵 𝘁𝗼 𝘀𝗮𝘃𝗲 𝗲𝘃𝗲𝗿𝘆 𝗺𝗼𝗻𝘁𝗵 (𝗮𝗻𝗱 𝗼𝘁𝗵𝗲𝗿 𝘁𝗵𝗶𝗻𝗴𝘀 𝘆𝗼𝘂 𝗰𝗮𝗻 𝗱𝗼 𝘁𝗼 𝗽𝗿𝗼𝘁𝗲𝗰𝘁 𝘆𝗼𝘂𝗿 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀)
The best way to start figuring out how much you need to save 𝘵𝘩𝘪𝘴 year – is by looking back at 𝘭𝘢𝘴𝘵 year.
Take an afternoon to sit down and review your expenses from last year. Total up all of the expenses that were ACTUALLY unexpected and divide that number by twelve as a starting point for what to set aside every month.
(Other ways you can prepare for emergencies are to purchase insurance policies relevant to your business, and/or to talk to your bank about obtaining a line of credit 𝘽𝙀𝙁𝙊𝙍𝙀 you need the money)
By the way, if you want to do a deeper dive on this, we added a link to a helpful link below
Unexpected business costs — and how to prepare for them
What about you? Do you have an emergency savings fund for your business? If so, how do you decide how much to put in there every month? We would love to hear!
Or maybe you’d rather talk to someone about how to do this instead of just reading a blog about it
If that sounds like you – no worries! Just reach out We help our clients with budget strategies like this all the time, and we would love to help you, too! www.chooseabacus.com • firstname.lastname@example.org • (352) 432-8104
Kerry Postel – Founder CEO Principal
Abacus Business Solutions
Has Higher National Diploma in Business and Finance, Certified in QuickBooks, Member of American Institute of Bookkeepers, and over 20 years of bookkeeping experience including construction, travel, restaurants, events management, and other various professional services.
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.