Running a business can sometimes feel like you’re riding a roller coaster. Some months sales can be high, and others take a dip. That’s why having a financial safety net isn’t just smart—it’s the most important step to building a business that will last.
A business emergency fund can give you financial security, allowing you to tackle those unexpected bumps in the road or jump on big opportunities that come your way without hesitation. Let’s check out the basics of creating this money cushion, determine how much you should set aside, and how you can make that money earn interest until it’s time to use it.
Why Your Business Needs an Emergency Fund
Every business faces unpredictable expenses. Whether it’s a sudden equipment or technology failure, or a slow sales season, having a stash of cash means you won’t be scrambling for money when these moments pop up out of nowhere. Think of it as a buffer to keep you calm and your business running smoothly.
And it’s not just about emergencies. A well-funded financial safety net can also help you jump on those opportunities that come up out of the blue, like the chance to expand, partner with someone new, advertise, and even purchase new technology. With this money cushion, you can act on these opportunities without draining your bank account.
How Much Should You Save?
The size of your emergency fund depends on the unique needs of your business, but a general rule of thumb is to have 3-6 months’ worth of expenses saved up. If your business is seasonal, you might want to aim for a little more. Here’s a simple way to get started:
- Calculate your monthly operating expenses. Be thorough—include rent, payroll and utilities (if you have these), but if you are just a solopreneur, you’ll mainly just want to consider the cost of your supplies, subscriptions, or any other recurring costs.
- Set a realistic savings goal. Multiply your monthly expenses by 3, 4, 5, or 6, depending on what feels safe and manageable for your business.
- Break it down into smaller goals. Saving a big chunk of cash can seem overwhelming. Try setting mini goals, like saving one month’s expenses, then two, and on and on. Each milestone will bring you closer to your ideal safety net.
Where to Keep Your Business Emergency Fund
Once you’ve started building your financial cushion, think about where to store it. A regular checking account may feel safe, but we recommend growing your money through interest in a high interest earning business savings account. By keeping your emergency money in an account with a solid interest rate, you’ll build up your savings over time without lifting a finger.
A Members Choice Credit Union High-Yield Business Checking Account not only offers competitive interest rates but also keeps monthly fees at zero when you maintain a balance of $10,000 or more. Plus, you’ll get a free Business Debit Mastercard®, making it easy to access your money quickly if an emergency comes up. You’ll be ready for emergencies, while earning a little extra. It’s a smart way to make your money work for you, even if you’re not actively using it.
Building Your Safety Net Is the Best Business Move You’ll Make
Having a financial safety net isn’t just about protecting your business—it’s about empowering it. By taking a few steps today to build that fund with a high interest earning business savings account, you’re setting up your business to weather storms, tackle challenges, and seize those growth and advertising opportunities. It’s a move that pays off in the long run.
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About Members Choice Credit Union
At Members Choice Credit Union, we are more than a financial institution; we are your partners in bringing you closer to the life you want to live. For over 80 years, we've been dedicated to empowering families across Houston, Texas. Whether it’s buying your first home, driving off in a new car, building your savings, or becoming debt-free, we provide the tools and support to help you pursue your goals with confidence. Join us in discovering your version of "the good life" at www.mccu.com.
