No one can predict the future. One day your company is growing and booming and on the next, it’s on a free fall. There are hundreds of factors that can spell doom to a business, many of which are beyond your control. We cannot control calamities, market trends and national economy, we can only prepare for it. As entrepreneurs, we must always be prepared for the worst. Brisbane bookkeepers encourage businesses on building an emergency fund. Having an emergency fund will give you access to ready resources when you need immediate funding to react to unplanned events.
- Set Your Target
Take it one step at a time and never set unrealistic targets. With the help of your Brisbane bookkeeping and accounting team, calculate the appropriate amount your business can afford to set aside as savings monthly. Take into consideration the economic and performance fluctuations your business is predisposed to. Although saving higher will get you to your goal faster, it might also trap needed resources and slow down business performance.
- Outline How You’ll Meet the Target Budget
After setting your goal, it is time to outline how you are going to meet your specified amount. Aside from cutting into your profits, another way to save is to cut unnecessary company expenses. Streamline your processes to eliminate wastage. If you don’t have the best deals in your company’s contracts, then it may be time for you to shop around for better contacts and/or renegotiate deals.
- Leave the Fund Alone
One of the common financial mistakes of business owners is maintaining a single bank account for the business. You can earmark the emergency fund but keeping it in the same account will lead to you losing track of the money and ultimately, spending it without awareness that you are already using funds. Be sure to create a separate account for it that should not be touched unless the situation met the criteria for using the emergency budget.
- Do Regular Checks
Do not just stop at creating your target, planning how you are going to meet it and creating a separate bank account for an emergency fund. Follow through every month and make sure that your company is able to fulfil the monthly payments for the fund. Monthly checks of the account will also put your mind at ease that no one is touching the account and that you are slowly reaching the target set.