How do you build an emergency fund for your trades or construction business? 🧑‍🔧

Every business owner would love to have a chunk of cash stashed away for a rainy day. 🌧️ What’s the best way of going about this?

When operating a business in the trades or construction industries, the margins are not massive. You don’t have the luxury of major profit margins some other industries may enjoy.

It’s easier said than done, but it’s a great idea to build up an emergency fund for your business. With an emergency fund, if you have a rough couple of weeks or other situation come up with your cash flow, you’ll have a reserve to get you through the storm.

So what’s the best way to accomplish this? Ideally, you would be writing out a budget each month and sticking to it as much as possible.  However, you might not have the time to, or not be sure where to start.

Here’s a simple tip to get on the road to building your emergency fund. Set up an automatic bank transfer that will set aside 10% of every dollar you collect to a separate bank account.

You might think 10% might take awhile to build your emergency fund. It might. But in our experience in working with business owners, it’s enough that will allow you to start making good progress towards building your emergency fund. And 10% is not too much that it will hurt your cash flow.

The more you get into the habit of not touching that 10% and letting your emergency account balance build, the easier it will be over time to build it. Once you have a nice cushion set up, allocate that 10% elsewhere - paying off loans, saving for investments in equipment or vehicles, etc.

There are excellent bank options that will automate the 10% set-aside for you. If your bank doesn’t offer this, contact us for a good suggestion.

The more you can automate the 10% set-aside, the better. This will take the emotion or “decision-making” out of it from your end, and enforce the habit of building that fund up.

Good luck on building your emergency fund! If you would like more information or assistance on our service, click below to schedule a free consultation.

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