One of the most practical ways to take care of your employees during hard economic times is to make sure you have cash reserves on hand to pay them.
If you have six months of operating expenses saved up, you can ensure that when something such as a recession happens you can take care of your employees.
Business owners should work this into their business plan. Putting money aside can be difficult when you feel the pressures of increased costs and lower revenue, but ultimately having those reserves on hand helps you take care of your employees.
HERE ARE 4 WAYS YOU CAN BUILD YOUR BUSINESS’S CASH RESERVES
SET A MONTHLY GOAL OF MONEY TO PUT ASIDE
The first step toward building your cash reserve is to set a monthly goal of what you want to set aside for reserves. This is the revenue you are earning that you put aside for immediate savings. This can be a hard pill to swallow for business owners, especially in times of a recession, but understand the ultimate goal here: saving money now helps you protect your employees later.
TAKE A HARD LOOK AT YOUR BUDGET
When you’re looking to save toward your cash reserve, take a look at your budget line by line and determine whether or not something is needed. If something isn’t totally necessary, you can get rid of it and take those savings and add them to your reserves.
INVEST IN NEW TECHNOLOGY
There’s software out there that makes it easier for you to help manage your cash flow. For example, outsourcing your HR and payroll services can help you save by giving you access to technology and support to keep you compliant and improve profitability. This requires an initial investment, but ultimately it will pay off for you in the end by eliminating any worry, risk and financial burden placed on your business.
SELL AWAY COSTLY ASSETS
If your business has items that it doesn’t need, selling them is a quick way to add to your cash reserves. You could also look to lease equipment vs. purchasing outright or liquidate any materials or equipment you may have in excess to add to your reserves.
Having a cash reserve is one of the most important financial decisions your company can make to protect its greatest asset. Having reserves on hand can help give your business financial stability in the short term and it helps you confidently lead your business in times of economic instability.
There are many cost-saving measures you can take to save your business money, but ultimately your biggest concern is to make sure your employees are taken care of. We have a long history of helping businesses save money by removing the HR burden from their shoulders. Read more about how we help you do that.