My answer: Three months of operating capital is a reasonable amount. It gives you time to react. You can obtain financing, implement operational changes, cut costs, react to market trends and conditions, and a whole host of other uncertainties. (COVID restrictions, changes in tax and regulatory laws, licensing requirements, catastrophes, cyber-attacks, changes in the economy (ok, I’m just making things up, but it’s also a dose of reality). 

Additionally, planning goes hand-in-hand with reserve funds. A monthly review of operations, all phases of the business, is the key. When you are well planned and well-funded, you are a force to be reckoned with.

Imagine for a moment having to compete against a company like that, one that knows what to doing and how to do it. 

And now…imagine that YOU are that company.     

The post Answering an Important Question from a Client appeared first on Salt Lake City's CPA's.