How To Prepare Your Business For an Emergency
If 2020 taught us anything it's that no business is safe from an emergency.
Regardless of how the pandemic affected you, we need to be prepared for financial emergencies. Each situation is different and should be approached that way. While your business may be less susceptible to the consequences of a global emergency, your clients may have been impacted (which can have a trickle down effect).
To prepare for the next unknown emergency, I recommend having 3 months of expenses saved in a "vault" account. You'll need enough to cover business expenses and your salary.
If an emergency strikes before you're fully prepared, consider opening another account and label it "Contingency." Set a percentage of your revenue into this account in preparation for a downturn.
As you take your profit distributions, if your business is at high risk of dropping in revenue, consider putting the profit into the contingency account until the storm passes. Then take your distribution as you normally would. If you're actively using Profit First, you're already light years ahead and more protected than most businesses. Your operating expenses are at a healthy percentage and you're already withholding your profits first.
If you haven't implemented Profit First yet. Now is the time, and I can help you do it right. Click here to book a free coaching session.
Most business owners struggle with managing their money, resulting in smaller paychecks for themselves. At Craig Dacy Financial Coaching, we help make managing your money simple. That way you can easily run a business that pays you more. Schedule your free coaching session now.