Test your business’s financial fitness with this quick quiz from LEAF.
1. My business has enough cash to cover expenses for at least three months of slow business, increased expenses, or both.
There are many reasons businesses fail, but the biggest one is simple lack of cash to pay the bills. That’s why it’s so important to have a cash cushion big enough to tide you over when funds run low due to decreased sales and/or increased expenses. Having cash to cover 6 to 12 months of expenses is ideal, but it’s critical that your business be able to weather at least three months of poor cash flow.