Keep cash reserves

Apparently over 60% of failed businesses are profitable.  They fail because people don’t keep enough cash on hand to deal with:

  • the delay from accounts payable to accounts receivable
  • emergency/unexpected expenses
  • expected expenses that increase due to unexpectedly high demand

I found this shocking at first, but then I remembered that most people don’t keep a reasonable cash cushion in their personal lives to deal with the analogous situations.  This makes me sad!  Low probability events are not likely to happen individually, but it’s likely that a low probability event will happen to you at some point!

Whether it’s in your personal life or your business life, I urge you to take a look at your cash reserves and consider revising them.

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