Why All Business Owners Need Cash Reserves


Even if you have a business that doesn’t need a lot of startup capital, you should always have some extra money leftover in the bank. More specifically, as a business owner you won’t truly know what expenses you’ll have until you’ve been in operation for a long time. Then again, there could still be an opportunity or expense that pops up unexpectedly. As a business professional, you want to be well prepared with plenty of working capital to get through rainy days and business opportunities alike. This is how you can calculate how much working capital you’ll need and ways that you can acquire more money for your business.

The Art of Securing Business Credit

The longer that your business is open, in good standing, and profitable, the easier it will be to get extended business credit. You can get a business credit card that you use to feed your workers while on the job or pay for supplies. A business line of credit is essentially a loan, in which the cash can be used to buy real estate, make improvements, purchase business vehicles, or do just about anything else related to your business. If you have a new company you’ll need to take the first two years to build enough of a history to apply for any substantial line of business credit. The good news is that you can get large sized business loans after you do get your business credit established.

Business Grants

Women, young people, retirees, minorities, and even certain religious affiliations have business grants geared toward them to help them in establishing and maintaining small to medium sized businesses. Go through the Small Business Administration to get a complete listing on the business grants your company can at least apply for. As long as you meet the application requirements, you can apply until you are awarded a grant or find that you no longer need outside sources to attain additional working capital.

Securing Business Collateral

Do you have a vehicle that you secured for business purposes, that you only use in the course of business? If so, you have some collateral that you can borrow against to gain more working capital. Whether it’s farm equipment, computers, or even an old, dusty van, collateral is great for business owners who need cash for their company endeavors. You can use collateral to get a business line of credit and as long as you stay current with the repayment schedule you’ll hold onto the equipment that you regularly use to keep your company running.

Your business cash reserve consists of the money that you have sitting in your business bank account that isn’t earmarked for payroll, taxes, or payments to vendors. Exhaust your cash reserves too quickly and you can have trouble paying all your business related bills. Always know how you are going to pay the next six months of business expenses so that you aren’t thrown off course if you have a bad sales month or take a financial hit unexpectedly. Businesses that keep a good amount of cash reserves can easily stay running.

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About the Author

Boris Dzhingarov

Boris Dzhingarov graduated UNWE with a Major in Marketing. He writes for several sites online such as Tech.co, Semrush.com, Bizcommunity, Socialnomics.net. Boris is the founder of MonetaryLibrary and Dzhingarov.com.

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