Cash Money Monday Video: How Much Money Should I Keep in the Bank
This week’s tip is about how much money you should keep in your business bank account.
A lot of experts will tell you that a healthy business has six to twelve months worth of cash on hand. For most small businesses that’s probably unrealistic.
A more realistic number is one month worth of expenses. So that means that if in an average month you spend $10,000 on payroll, rent and paying yourself, you want to have at least $10,000 in the bank at the end of every month.
That would mean if you don’t get another dollar of revenue coming in, at the very least you can pay your expenses.
If one month is the minimum, what’s a good amount? That depends on a lot of things including credit card availability, lines of credits, and other access to capital.
One of the big things you can do as a business owner is try to figure out exactly what amount of cash is right for you. That’s something we do for all of our clients at Numberwise. So if you need help with that, give us a call or check out our page on how to get started.