Home Business Insights & Advice Building a savings pot for your business

Building a savings pot for your business

by Sarah Dunsby
18th Jul 23 12:34 pm

Every business can benefit from setting aside some savings. Having some savings could be useful for a rainy day, allowing to pay for emergency fixes or cover periods of low income without resorting to a loan. Alternatively, you could save up for new equipment or website updates or other improvements without having to borrow money. Below are just a few tips on how to set aside some business savings.

Plan ahead when growing your business

Periods of growth are the best times to start setting aside savings, because you’ll have lots of extra revenue coming in. Many business owners immediately spend this extra income on personal luxuries or small upgrades around their business, but you should plan to invest some of it into savings if you can. By planning ahead, you can work out exactly how much to contribute to savings as your revenue grows.

Consider cutbacks that could be turned into savings

If your revenue isn’t growing, you may still be able to find revenue to contribute to savings by making a few much needed cutbacks. This could include cancelling software subscriptions you barely use or reassessing insurance packages – the money saved on these costs could then be put into savings each month. This could allow you to start saving without affecting your monthly budget.

Choose the right business savings account

There are many different business savings accounts that you can choose from. Some have greater interest rates than others, allowing you to earn money from your savings each month. However, there may be conditions to consider such as having to maintain a minimum balance in order to receive interest or not withdrawing money in order to keep receiving interest. Take your time to compare different accounts so that you can find the right solution for you.

Consider growing your savings thought other investments

You don’t have to put your savings into a regular savings account. You may be able to earn more money in interest by putting your savings into bonds or CDs. Alternatively, you could try opening a stock trading account and start investing your savings into stocks. There are also options like forex and crypto that can enable you to build even greater returns. Just be wary that the greater the potential return, the more risky the investment is likely to be.

Stick to your savings goals

When opening a savings account, make sure that you have a clear goal as to what you want to use your savings for. This is important for helping you to choose the right account. For example, if you’re looking to build an emergency savings fund, having instant access could be important. If you’re saving for an office refurb or a new coffee machine for your coffee bar, being able to easily withdraw savings may not be as important (in fact, withdrawal penalties could put you off from dipping into your savings for other purposes). All in all, it’s important that you stick to your goals. Once you start dipping into savings for other reasons, it becomes all too easy to keep withdrawing money until it becomes just another account to use for spending.

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