See more at

How have you always thought about your company’s finan­cial strength? As a func­tion of ongo­ing cash flow? As cash in the bank? As your avail­able line of cred­it? As your debt to equi­ty ratio? As inti­mate­ly inter­twined with your per­son­al finan­cial health.

Or a com­bi­na­tion of the above- which it invari­ably is.
What­ev­er your old par­a­digm, it like­ly did not impact from a glob­al health pan­dem­ic requir­ing a gov­ern­ment ordered shut down of “non-essen­tial” business.

So now that you have a new real­i­ty, what best prac­tices should you consider?

1. Always keep a min­i­mum of 90 days of cash head­room in your busi­ness . Cash head­room is cash in the bank today, plus receiv­ables you expect to col­lect in the next 30 days, less payables you expect to pay in the next 30 days, plus your avail­able line of credit.

2. Mon­i­tor your cash head­room week­ly. Ready to get start­ed? Email me at for a fill in the blanks template.

3. Build a strong rela­tion­ship with a local bank and local banker.

4. Secure the max­i­mum line of cred­it your busi­ness can cur­rent­ly qual­i­fy for based on your oper­a­tional results and cur­rent debt to equi­ty. This will cost you a few hun­dred dol­lars a year and pro­vide immea­sur­able peace of mind.

5. Main­tain a line of cred­it on your per­son­al res­i­dence and keep it unused for emer­gen­cies. This too will like­ly cost you a few hun­dred dol­lars a year but could save your home and pro­vide sta­bil­i­ty in a per­son­al eco­nom­ic crisis.

6. Con­sid­er if you are ade­quate­ly diver­si­fied in your assets so that all your per­son­al net worth is not in the busi­ness, or real estate relat­ed to the business.

7. Devel­op a per­son­al finan­cial plan that you update at least annu­al­ly with your spouse. DIY, or find a plan­ner who spe­cial­ized in work­ing with busi­ness owners.

Remem­ber in times of cri­sis, no one is going to step up and loan you or your busi­ness mon­ey. Rather, build your own peace of mind by liv­ing below your means, build­ing a strong bal­ance sheet both per­son­al­ly and in your busi­ness and ade­quate­ly diver­si­fy­ing your assets.