As every contractor knows, both money-making opportunities and unexpected situations present themselves on a regular basis. Upgrading your equipment to meet new safety standards, receiving your BPI certification, training a college student to increase your bandwidth during the summer rush, or purchasing new measuring tools to reduce callbacks are all ways to grow your business. There are also times when a van breaks down — with no warning — or a project goes far over budget and you need to react quickly. Having cash available is essential to keeping your business moving forward during both types of situations.
However, it can be difficult keeping extra cash on hand to put toward these situations. Many contractors leave enough to pay a regular cycle of bills, payroll, inventory and rent, while the remainder may become a dividend to your own household. Often, the reality of running your own business is that is the sole means of income for your household. While it usually works out, this practice can leave you in a bind when the unexpected arises.