Every so often there comes a time when you wish that pressure of the business was less, MUCH less! Here’s one way to help give your business a break and develop some breathing space.
This little gem comes courtesy of a big time Entrepreneur, who gave me the catalyst for this idea. Jim Penman from Jim’s Mowing developed a Debt Reserve Fund for one of his enterprises at one stage (I feel sure he probably does it for a number of his businesses.)
He would set aside a percentage of funds from each transaction and put it away in a separate account for a ‘rainy day’. It probably would have ‘disappeared’ into ‘consolidated revenue’ but by having it separated when funds were required (e.g. during a down turn) this fund could be used to keep things going.
I guess you could say it’s like a ‘Christmas Club’ savings account people have with their bank, so at the right time of the year their savings can be used to fund Christmas festivities. The same principle applies here.
The big bonus is that when times are tight and the wolf is knocking at the door you have funds set aside. The benefit is that you have peace of mind in knowing you have covered your business with a forced saving contingency fund. When the pressure is on you can breathe easier knowing you have a reserve of funds to cover a challenging period for your business.