{"id":1563,"date":"2013-01-10T17:25:09","date_gmt":"2013-01-11T01:25:09","guid":{"rendered":"https:\/\/berkonomics.com\/?p=1563"},"modified":"2013-01-10T17:25:09","modified_gmt":"2013-01-11T01:25:09","slug":"hold-on-to-some-sticky-cash","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=1563","title":{"rendered":"Hold on to some \u201csticky\u201d cash."},"content":{"rendered":"

It is tempting to use available cash in good times to build the business and in challenging times to pay the bills and even to outdo competitors in marketing efforts.\u00a0 Those are both good strategies.\u00a0 But there is a tactic that we need to remember that just might save the business.<\/p>\n

\"Growing_business\"<\/a>Once a business has achieved breakeven and beyond, it should build a cash reserve equal to at least two months\u2019 worth of fixed overhead to protect against unexpected internal or external emergencies, and to allow for a relatively restful slumber at night for those who must worry about cash balances.<\/p>\n

Good businesses keep that \u201csticky\u201d cash in a money market account, not because of its earnings potential, which is usually so small as to be inconsequential, but because it is visible and requires effort to invade the balance.<\/p>\n

Seasonal businesses are more challenged, and sticky cash has more of a meaning, since it must see the enterprise through the low seasons. For these types of businesses, short term bank loans are an ideal way to augment cash flow and finance receivables during high season, always assuming that the loans will be paid off in full from seasonal receipts.<\/p>\n

Remember the term.\u00a0 Isolate the reserves.\u00a0\u00a0 Maintain the discipline as soon as able.<\/p>\n","protected":false},"excerpt":{"rendered":"

It is tempting to use available cash in good times to build the business and in challenging times to pay the bills and even to outdo competitors in marketing efforts.\u00a0 Those are both good strategies.\u00a0 But there is a tactic … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[11,9],"tags":[],"class_list":["post-1563","post","type-post","status-publish","format-standard","hentry","category-growth","category-hedging-against-downturns"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1563","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1563"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1563\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1563"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1563"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1563"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}