MICHAEL LI, BBA, CFP
NANAIMO – Starting or running a small to medium size business is rewarding but can be complex. You may find yourself wearing the hats of the CEO, CFO, IT solutions, bookkeeper, and staff at the same time—no small feat! The last thing you want to worry about is immediate access to funds in the event of an emergency.
Issues like the ongoing pandemic, global or local supply chain delays, natural disasters like wildfires and the recent flooding, IT security breaches, legal issues or unexpected employee changes may create an urgent need for emergency funds to stay afloat. That’s when a solid emergency fund strategy plays a crucial role.
How much should be in an emergency fund?
As a rule of thumb, a minimum of 3 months of business expenses is a good starting point. If your expenses are around $10,000 a month, then plan to save up $30,000. Ideally, you should aim to have 6 to 12 months of expenses in your emergency fund. With that amount of money tucked away, you would have peace of mind knowing your business is prepared for anything.
Tips for building your fund
Open an account and start saving on a regular basis. It’s much easier to build your fund over time than find the money all at once.
Have a business line of credit or business credit cards. Available credit can help you through tough times.
Reduce variable expenses. Review your statements and determine what expenses can be cut or reduced. For example, sharing real estate could help to reduce your overhead cost for continuing operations.
Finding ways to build an emergency fund can feel overwhelming or confusing, so a great first step is to reach out for advice. A trustworthy professional can guide you through the process and let you focus on what you do best. Don’t hesitate to call me if you would like to learn more about what Coastal Community can offer. Cre-dential Securities is also here to help with your investment needs so your hard-earned money can grow, leading to a solid financial future.
Michael Li, BBA, CFP, is a Financial Consultant with Coastal Community Credit Union and an Investment Advisor for Credential Securities. For more information, call 250.668.5723, email michael.li@cccu.ca or visit www.coastalwealth.ca.
Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.
