According to an article on CNBC , last year, many large corporations broke the #1 rule of personal finance. They failed to have several months’ worth of expenses available in cash in the event of an unexpected circumstance–like a global pandemic.
You must prepare.
As a small business owner, you will have the wherewithal to withstand seasons of uncertainty if you have a BAIL team. In The Classy Hustle, I explain a BAIL team as the intentional relationships you should foster with a banker, accountant, insurance agent, and lawyer. With these allies by your side, you will not need anyone to bail you out. Yes, a BAIL team will help you establish a self-sustaining business.
During the COVID-19 crisis, I could rest easy because I knew I had roughly three months of cash reserves on hand. If I did not receive one tuition payment from a student, my business was able to survive for at least 3 months. I did not realize this was a monumental feat until my CPA sent me this article, documenting how little large corporations had on hand to support their businesses. Because of my cash reserves, I was able to defer roughly 20% of student tuition payments during the months where many students were furloughed or unemployed.
Many multi-billion dollar infrastructure companies had to lay off employees within the past year. My heart breaks when I consider how many dedicated employees are without income because of their employers’ greed and mismanagement of funds. Large, billion-dollar companies should be able to survive two months’ worth of payroll. The fact that these companies could not afford the loss puts things in perspective. Start planning your self-sustaining business. I encourage you to form your own BAIL team. At the very least, make sure you have “several months’ worth of expenses on hand, in cash, in case something unexpectedly goes wrong.”