# LearnSurvey results: How much cash you have in the bank

Ryan
writes on March 20, 2007

There was some really interesting comments on How much cash should you have in the bank?. Thanks everyone!

A lot of the comments said that a better measure would’ve been how many months of expenses were in the bank. I agree, but this was still really interesting to me. The actual cash in the bank has a much more nitty-gritty realness to it 🙂
View the full results of the survey here. I’ve also included a screen grab below. It’s interesting to me that the majority of the survey participants are from small businesses (1-10 people) and have less than \$10K in the bank.

### 0 Responses to “Survey results: How much cash you have in the bank”

It is interesting to see the majority of people had less than \$10,000 – intersting because of one reason. I never knew that before I read the blog.. So for interests sake… it was..um Interesting..

2. Agreed! 2 months…..3 months if you can help it

3. Iâ€m not sure how I can compare your business to mine or anyone elses. But somehow I want to! Iâ€m wondering if itâ€s also a combination of what you have (financially), how you make it work for you (lifestyle) and what your chances are of sustaining the business into the future by exploring new opportunities or by developing what you already do (future-proofing to ensure the above remain positive).

That would be an amazingly useful metric, but alas, it’s probably impossible to quantify.

You didnâ€t tell us how much cash reserves we should be keeping in the bank – which was your initial question few days ago. What do you think?

I believe it’s wise to have at least two months cash in the bank. But this must be coupled with a pessimistic cash flow Excel sheet.

That way, you should know way before two months in advance, whether the company is in trouble.

4. Ryan,

You didn’t tell us how much cash reserves we should be keeping in the bank – which was your initial question few days ago. What do you think?

By the way, I also agree that “how many months expenses” are in the bank would be a better measurement than the actual cash amount. I run a company in Serbia and I need less money to pay salaries and expenses here than for someone in the UK.

5. I know I dont have a ton of cash in the bank for a few reasons. A) I just bought an engagement ring..wowza those suckers are not cheap and B) I am boot strapping a startup! After paying all living expenses and company bills, the rest is dumped into the startup. Sometimes I wish I would go after VC funding, but after reading many horror stories, I think I will bootstrap as long as possible.

6. Another point to consider is that the credit reference agencies will give you a bad credit rating if you do not have enough surplus funds. A lot of companies do credit checks beffore hiring a company or letting them open an account etc.

A few years ago we had a parasite make a dirty offer for one of our companies because the last set of accounts and our credit rating were both less than bright.

What he failed to grasp was that when he approached us everything was running very well.

Sometimes you have to keep a stupid amount of money on deposit to prove that you don’t need credit or any work from a client – how mad is that ?

7. Hmm… the middle of my comment got cut out. I essentially suggested some parameters for a finer breakdown, as follows: Employees: 1,2,3-5,5-10 : Cash: 10k

Sorry for the double post.

8. I’d love to see a finer breakdown of the big category (1-10 people with \$10000

… or something similar?

9. I’m not sure how I feel now seeing these results.

In someways I now need to know more!!

So small businesses (1-10) have less than Â£10,000 (I’m doing a straight pounds to dollars conversion). Well I run a small business and have more than that so do I feel good, better, sucessful? Nope, not really.

Maybe all these others have personal wealth and assets, maybe their prospects for the next few years are better than my company’s. Perhaps their order books are full with new projects.

It’s really difficult comparing how individual businesses are actually doing. And while I’m very keen to know about peoples finances I’m also aware that there are other factors which I’m interested in too.

Take “Carson Systems”, for example, based in Bath – that’s a nice town to be based in, you seem to be doing well, diversified in a number of areas, You (RC) have achieved a good reputation in your field. You also seem to have achieved a good work/life balance. You appear to be doing what you want to do and what you’re good at. If you have cash in the bank to pay your staff for the next few months then I guess all is rosey.

I’m not sure how I can compare your business to mine or anyone elses. But somehow I want to! I’m wondering if it’s also a combination of what you have (financially), how you make it work for you (lifestyle) and what your chances are of sustaining the business into the future by exploring new opportunities or by developing what you already do (future-proofing to ensure the above remain positive).

Just my thoughts!!

10. Ryan

I’ve got to agree with the sentiment that you referred to in your post.

The amount of cash is meaningless. How long your business would last without another penny coming in is the relevant sum. Call this “runway” or the “drop-dead” date, it’s the day you can’t pay your bills.

11. Ryan

Care to elaborate on why you find it ‘interesting’? 🙂

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