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For most small businesses, disaster planning is going the full Dave Ramsey. Be debt free in your personal life. Have a 6 month emergency fund. Don't hire in you
by rietta 7y ago
For most small businesses, disaster planning is going the full Dave Ramsey. Be debt free in your personal life. Have a 6 month emergency fund. Don't hire in your business until it hurts and is impossible without the additional help. Build up 3-6 months of cash cushion in the business. For most businesses, this take a decade or more of delaying self gratification but the end result is stability. You're much better off if you don't owe a bunch of bills and have a little cash in an emergency.
- quickthrowman 7y agoJust as government finance isn’t like personal or business finance, business finance is not like personal finance. For one, the cost to borrow money is far cheaper for a business. Please don’t apply personal finance rules to businesses, they do not apply. A business is not a household.
- PaulDavisThe1st 7y agoYou're not describing a company with payroll as a (or the) major expense.
- rietta 7y agoPayroll is a lot easier when the owner/executive can skip income for one or more months. It's easier if the business has the cash that in good times allows them to pay payroll even when collections are weak. In my own agency/consultancy business, payroll is constantly on my mind and the source of most of my anxiety as I double down and do the technical work that is in front of me along with my team. It takes YEARS to build cash savings when the margins on top of labor are so thin.