Loading...
Answers
MenuWhat is your range for emergencies?
Answers
One of the considerations to answering this question is the business type, I mention this only because of the tax treatment of earnings. With an LLC or S Corp the owner pays taxes on the earnings of the business regardless of whether they are distributed or not whereas a C Corp pays its own taxes on earnings.
Having said that I think the best way to approach this is to set a goal of a fixed amount (and review that annually), in order to build that fixed amount up it usually a good idea to set aside a solid number like 10% or 20% of monthly earnings. I think it's also important to set this amount and be disciplined in funding it, rather than take the approach that you will just put whatever is left over at the end of the month, taking that approach often leads to nothing happening because people often find other things to spend the money on.
This would definitely vary depending on the client and the industry. In general, I always recommend having a cash reserve (somewhere from 3-6 months of expenses) plus putting away the 10-20% of retained earnings. If you establish a reserve first for emergencies, then what gets put away on top of that can be used for growth and future planning. In general I'd use the 10-20%, but this will really vary based on each clients individual goals.
Range depends upon the strategies you can apply. Every business has objectives that guide policy and in their most basic form include survival, profitability, and growth. So, while the primary financial responsibility from an ownership viewpoint may be to maximize value, the financial executive’s primary managerial responsibility is to preserve the continuity of the flow of funds so that no essential decision of top management is frustrated for lack of corporate purchasing power. Considered in these terms, the task of financial management involves anticipating the pattern of release of funds from, and commitment of funds to, various specialized uses, identifying points where a surplus or deficiency of liquid funds may be expected, and taking action to employ the surplus or cover the deficit. It is the need arising with little warning and great urgency that tests the financial officer’s mettle.
You can read more here: https://hbr.org/1969/11/strategy-for-financial-emergencies
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Related Questions
-
How to earn money from home ?
In this time of crisis, it is quite difficult to find a job outside the home, but there is a technological side that can make our lives easier and increase our income. ------------------------------------------------------------------------------------ Here are a few premieres that are a real boom at this time 1.E-Learning 2.Online gaming 3.Software Developer 4.Multimedia editor 5.Copywriter 6.Referral program 7.Advertiser 8.Online strategist 9.Live streamer 10.Chat supportDB
-
What is the ideal percentage of revenue you should apply to a marketing budget for a new business?
I think differently about this, because of two reasons: 1) I've always (and only) been involved in bootstrapped startups; and 2) I've been lucky that those startups grew organically and fast (enough) which minimized our need on marketing spend. Instead of deciding on a specific budget for this, I would instead look at your current priorities (in terms of budgeting and re-investment into your team): 1. Build a great team. 2. Build a great product. 3. Craft incredible customer experiences. 4. Spend money on marketing. If you've already hit all 3 top priorities and you can't reinvest any further into those, then you should start spending money on marketing. If you don't have revenues today and you are hoping to generate revenues through marketing spend, you're on slippery slope (says the bootstrapper). Whilst not wrong, this is tricky and you'd need to take a realistic look at your customer acquisition cost (CAC) and how much you can invest into acquiring new customers.AP
-
Any advice on starting up small businesses in two countries at the same time?
Please realize that my suggestion would be slightly different if I knew which two countries. However, without knowing that here's what I'd suggestion: 1. Since you're just getting started figure out which country provides the best legal benefits for starting a company. This should include tax benefits, legal protection, and ease when it comes to filing paperwork (incorporating, managing payroll, taxes, etc.). This will undoubtedly save you time and money moving forward, and staying lean. 2. Once you've established your home base country, you'll still need to hire people in the other country as you scale. You may want to think about using a service like oDesk or Elance, not necessarily to recruit people but to manage ALL the paperwork associated with hiring international people. They will of course be given contract status. If you are going to be providing employees equity then I'd suggest consulting a lawyer for how people in the non-home base country will be treated. 3. Reporting revenue. You need to be very careful about whether you are providing goods and services. If it's goods keep in mind that you might be subject to tariffs. If you're providing services then I think you might be in the clear, but please double check. Finally, some countries might have an issue with where the revenue was actually made i.e. are you sitting in your office in your home based country while servicing clients in the non-home base country, or are you actually in the non-home base country. 4. No matter what you'll need to setup a remote working environment for yourself. Invest in the best technology you can, and find clients who are willing to utilize your services on a remote basis. Here are a few additional posts on running a remote team that I've written: http://femgineer.com/2013/09/running-remote-and-making-progress/ http://femgineer.com/2013/03/how-to-transition-to-a-remote-team/PV
-
How do i handle gift certificates when buying a business?
Great question, this is something that can be handled with a proper deal structure involving some vendor financing. I recently did a video about this very topic for one of my YouTube followers. Check it out here: https://youtu.be/hWm4ZQxWlEw You basically make the vendor's outstanding gift certificates a 'currency' which can be used by the buyer to repay the vendor loan. It's a net-sum game for the seller since he's already received the cash without having to provide the goods or services. Hope this helps. Feel free to schedule a call anytime you have a question about business transactions. DavidDC
-
What is the best way of coming up with business name ideas?
A good name is unique, and stands out but should ideally create a positive association with it, especially your target demographic. When it comes to naming new products, companies will spend sometimes months and go through thousands of options before arriving on the one that they'll ultimately go with. Don't rush this process because its ultimately much more costly to have to go back or change, or ultimately fail because the name did not resonate enough with your target demographic. The name is not everything but it's a huge part. Go to techcrunch or cruncbase and look at any number of new start ups which are probably all great ideas or products but because they have either a dumb name or a not so unique name, they can fail. My personal pet peeve is the stilted and formulaic neologism of adding "ly" at the end of any noun or verb---perfectly hilariously noted throughout HBO's Silicon Valley. At this point, we are all more clever than this. Anyway, when you have only seconds to make an impression on a consumer, the last thing you want is cognitive dissonance caused by the name. Cognitive dissonance occurs when the signifier is not what is signified and vice versa; you're looking at a bicycle but someone insists it's a fish. And you're like, wtf. This happens when you're looking at a great product but then it unexpectedly has a weird or dumb name, a range of slight neorological impressions then occur, effecting the emotional relationship between consumer and product: confusion, annoyance, distrust, etc. All of these slight negative responses are not what you want associated with your product when you only have seconds to make an impression. That's why a good name matters. Now to your name: Dude Undies. Scrap this immediately. First of all, when it comes to men's underwear (I'm assuming this is your product), this is dangerous minefield territory because whether you like it or not, you're automatically dealing with issues of male insecurities involving self worth, virility, potency, etc Some light word association exercises (maybe among your friends) might be helpful in yielding an alternative to "undies" which i associate with: children, bedtime, potty training, etc.Absolutely not what men want to be wearing. You can see why this word next to "Dude" is cognitive dissonance in and of itself, never mind your product. I suggest you go back to the drawing board on this. Think about what makes your product different from your competitors', what value are you bringing to the market? Play with these ideas make a list of at least 50 words (thesaurus.com is very helpful) find a word or words that at least create that same impression. From my own observations, I've found that men love products with as few syllables as possible. If this is too daunting for you, enlist the help of a good copy writer with experience in product naming (I know a few if you need one), they should be able to give you a list of ad campaigns that they worked on. Paying them $100 for a good name is worth it in the long run. I hope this helps, best of luck to you!VG
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.