In the “old” days, if you had a good relationship with you banker, you could almost always count on getting funds to see you through a rough spot or to help grow your business. In this world of “mega” banks, the chances of having a personal relationship with a bank manager is slim to none, especially if you are a small business owner. It seems that many banks play musical chairs with their branch staff, and unless you are a very substantial depositor, you don’t get one on one time with upper management.
At the present time, the best solution I can offer is that a “reserve” be included in your pricing for all products and services that you offer.
That “reserve” is your life line to be used for emergencies only. It should also be in addition to a regular operating account which should have at least six months worth of operating income.
Nobody does that, is going to be your words or thoughts back to me. For now, businesses will no longer operate as they have before. Redo your budgets ASAP and insert both the reserve and operating ( six months working capital) reserves. Start today, you may have to cut expenses, be more mindful of small expenses, cut out a lunch or two, but it is imperative that you put this plan into action. You won’t achieve your goals over night, but unless you start you will never finish.
In the last few weeks, working capital has been the biggest problem I have heard about. Take a long hard look at your operation and become a fit and trim business machine.
There is always another level to reach for in budgeting, matter how good you are right now.
Have a great day!