How much should my business have in savings?

The importance of saving

If you run a small business, you tackle a number of challenges every day. From managing staff to keeping clients on side, keeping everything running smoothly can be a full-time job. Your finances can have a big impact on how well you’re able to navigate these hurdles and savings play a key part.

The economy – and clients – can be unpredictable. So having some savings to tap into in times of uncertainty can be an invaluable resource for your business.

But how much should a business have in savings?

How much should you save?

As a rule of thumb, businesses should have between three to six months’ worth of working capital in savings to protect you if your income suddenly stops. 

It's common for overheads and expenses to fluctuate throughout the year. For this reason, it’s best to work out an average across the year and work out a realistic savings goal based on that. 

Many businesses also have a separate account for more low-key unexpected expenses, such as repairs. This sum can be deposited into a business current account* or savings account*  for you to dip into whenever you need to without impacting your larger savings target. 

The key thing is to get started. When you learn how to save as a business, reaching your goals will become much easier. Even if you’re only able to set aside a relatively small amount each month, your savings will build up over time. 

Building up a cash reserve

Putting money into business savings is much easier if you’re in a strong position with your finances. Here are some general tips to help make sure you’re maximising your finances:

  • Understanding your current financial situation is key to knowing how to make progress, whether through savings, investment or growth. If this isn’t your natural skill set, looking into outsourcing this could be beneficial.
  • Once you’ve got a good grip on where you’re at currently, looking into realistic ways to reduce expenditure can help free up cash flow. This may include finding cheaper energy suppliers, switching office locations to make rent more affordable or investing in renewable energy.
  • Choosing a specialist bank account for both your savings and income that’s right for you and your business. How much interest you get and how much you need to deposit will depend on your agreement but having an account tailored towards businesses will help make the most of your finances.
  • Researching and looking into grants and funding to support your business will make sure you’re getting any financial support you’re entitled to.
  • Having a business debit or credit card will keep your personal and business finances separate, making it easier for you to keep track of what your spending as a company.

Implementing some of these measures can help you free up additional funds for your savings so you can build a cash reserve you know you can rely on.

Related content

Want to know more about business banking or the benefits of opening a savings account? Take a look at these other helpful guides from NatWest: 

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* Specific account eligibility criteria and conditions apply

Contact us

Want more support with business savings accounts?

Chat to us online using our digital assistant Cora available 24/7.

For basic banking support, you can contact us on 0345 711 4477 – call centres are open 24/7.

If you have lending and other specialist business banking enquiries, our team is available Monday to Friday, 9am to 5pm.


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