There are three things you can do to better survive the next business cash crisis.
(1) Build a cash reserve of 3–6 months of your expenses
(2) Get access to lines of credit or other debt while your company is healthy
(3) Keep your personal finances healthy
Cash is king in a crisis.
1. Build cash savings: Don't spend or invest every cent in your business. Build a cash reserve of 3–6 months of your expenses. Many businesses considered this extreme advice until COVID shut them down for that long.
2. Lock in bank loans: Get access to lines of credit or other debt while your company is healthy. Loans can be your source of cash until you can build your cash savings from operations. If you don't need the money right away, use a line of credit where you only pay interest when you borrow on the line.
3. Keep your personal finances healthy: You may need to invest cash into your company during difficult times. Keep a strong credit score so you can borrow money personally to invest in the business or so you can guarantee a loan for your business. Fraud has recently exploded so watch your credit scores.
I wish you the cash to survive (and thrive) in any crisis. I wish you well.
- Rob Stephens
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