In times like these it’s all eyes on the bank account.
How many months of cash in the bank do you need?
3 months worth? 6 months? 12?
A more interesting question is:why do you want it there?
It feels stable, right? And stability can help you sleep at night.
Although it’s better to have it that not, the only stability cash in the bank gives you is the ability to lose money.
You can make a loss and dip into reserves or you can reduce your own salary to break even (this second one is also making a loss).
You will need this at some point.
But it’s passive, it might provide a crash mat when you fall but it doesn’t give you something to grab onto and pull yourself back up.
Active stability
Cash doesn’t make you resilient like:
- Long term commitments from clients
- Valuable relationships
- Positive reputation
- Leads in the inbox
These are the things that will make you actively stable.
The reputation and relationships are the foundation that bring new work and bigger commitments. They are the ability to keep winning work and keep your clients, even in the slow times.
Unlike cash, reputation and relationshipsdon’t run out.
You need to balance how you achieve stability and invest cash to establish resilience.
Something for you to consider
Let’s look at that list again
- Cash in the bank
- Leads in the inbox
- Commitment from clients
- Strong valuable relationships
- Your reputation.
Where are you strong?
What could you work on?
Which, if it disappeared, would leave you wobbling?
Which if it was ten times as good would bring the rest up with it?