It’s generally recommended that individuals have enough cash or liquid assets set aside to continue to live for about six months in case of emergency. Not everyone does or even can manage to do this, but it’s a good idea.

Your small business should have at least the same amount set aside—for the same reasons—to be able to continue to operate for at least six months in case of emergency.

The way to achieve this for your business is to start setting aside some money in the beginning and as you go along.

Here are our five tips to make that rainy-day fund happen painlessly.

1. Plan for it in the beginning in your business plan.

Research in the UK has shown that a shocking 25% of small businesses have no business plan. And in Australia, 80% of small businesses have no business plan.

It’s a good idea to have a business plan, and if you’re going to have one, include the concept and method for a rainy-day fund.

2. Put the money in a separate account.

Label the account for emergencies only, and that should remind you to keep your fingers out of it unless it’s absolutely necessary. If you’re a little short for funding your Christmas party, that’s not a good enough reason to touch your rainy-day fund. If you can’t make payroll, that’s a good reason to dip into it.

3. Put a certain amount into the account regularly and automatically, just like individuals pay to their own savings or retirement accounts.

If the payment is automatic, you’re less likely to overlook doing it or to think of reasons why you need the money somewhere else.

4. Save all the time, whether your company’s business is booming or just squeaking by.

When things are going great, it’s hard to think of what it would be like if your business falls on hard times. But you will only be prepared for the bad times if you prepare while the going is good.

5. Don’t underestimate the importance of your business having savings.

Having a rainy-day fund for your business can literally save your business. There are as many different ways the wheels can fall off your business as there are grains of sand at the beach. It’s never too late to start a rainy-day fund for your business. If you don’t have one, start it today.

If you have any questions about this article or how to save money in a small business, in general, or you want to make an appointment with an accounting professional at Naicker & Associates, please contact us at (604) 469-9369. We are based in Port Moody, BC