Episode 374: How to Build a Proper Emergency Fund for an Unplanned Business Expense

A piece of equipment fails, a big client walks, or a lawsuit lands on your desk, could your business cover it without touching your personal savings?

In this episode of Think Smart with TMFG, we go back to square one on business emergency funds: why it's easy to put off when things are going well, and why the businesses hit hardest are usually the ones doing fine right up until they weren't.

We dig into why mixing personal and business emergency savings is a mistake, your corporation should be self-sustaining on its own cash flow, and why pulling personal money in to bail it out undoes that separation for good. From there, we talk about how to size your fund based on your expense ratio and industry risk, why a revolving credit line is a shaky substitute for cash, and why keeping it liquid inside a holdco, not the operating company, protects it from quietly getting spent.

Finally, we share practical strategies: carving out a consistent percentage of revenue, treating it with the same discipline as setting aside for a tax bill, and why liquidity beats rate of return for this particular pool of money.

📌 If you're not sure where your business stands on emergency reserves, feel free to reach out. We'd be happy to help you work through the numbers:

Schedule a meeting here

🎧 Listen to the full episode on YouTube.

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Hosting this episode: Mike Connon, Senior Financial Advisor and Carlo Cansino, Senior Financial Advisor