Times are tough and as an entrepreneur you may be experiencing a drop in income as costs rise, and spending power diminishes. Your cash flow, which is a small business’s lifeline, may be suffering.
If you regularly find yourself in a bind due to cash flow issues, you need to adopt a smart savings strategy, which you can do using TymeBank’s savings tools.
Do you have a business rainy day fund?
Various unforeseen circumstances can cause a drop in sales or other unexpected disruptions for a business. To mitigate these, you should establish a business emergency fund. The importance of having such a fund has never been more pronounced than during the pandemic, which saw many SMEs struggle to stay afloat since they had no precautionary funds.
For everyday expenses and emergencies you can start by putting away a portion of your revenue into TymeBank’s GoalSave tool – where you can open up to 10 ‘buckets’ for different needs. You can access this money any time and top it up as you go – just note that you cannot exceed R100 000 across all your savings pockets.
Creating savings pockets for your business is as important as it is for your personal savings. In a business context, consider things like VAT, marketing expenses, office rental, etc. Creating a GoalSave for each one of these financial needs not only helps you keep your finances organised – as each has its own “bucket” – you earn interest on what you put in too. The more you save, the more you earn. It’s that simple.
This is extremely helpful when you have cash flow issues as there is some money on hand, instantly. The other benefit of using GoalSave is its attractive interest rates – the longer you save, the higher the interest rate. For example, currently you earn up to 11% on your money when you perform 10 or more transactions for 3 consecutive months and give 10-days’ notice on a payout.
Having the financial discipline to allocate a portion of your business’s income to a savings pocket (or 10) every month can help you keep afloat when the next crisis happens.
Plan for your growth
For longer-term goals, like expansion, you can transfer a lump sum into a 3, 6- or 12-month TymeBank Fixed Deposit, which currently offers the best rates in the market. This is where your money can really work hard for you. The bank’s Fixed Deposit account does not have any minimum or maximum limits and your interest is guaranteed – as long as you keep to the selected term.
Depositing an amount, say R50 000, into a 12-month TymeBank fixed deposit, will earn you 11% interest over the period, which equates to R5 500. Or if you want to make use of a shorter term, you can use a 3-month fixed deposit which earns you 9% in interest (R4 500); a six-month deposit earns you 10% (R5 000).
Match your goals to your savings products
A savings strategy that uses various products and tools as suggested above allows you easy access to some of your funds (in the GoalSave), while some will be locked away (in the Fixed Deposit) to help fuel your future plans. To take advantage of the abovementioned savings tools and products, you first need to be a TymeBank Business Banking customer. Doing so takes just 5 minutes, and it can all be done online. Once registered, you can access TymeBank’s highly attractive GoalSave tool or Fixed Deposit account.
When you start your own business there is a lot to learn quickly, and there are usually a few hiccups while you find your feet. Adopting a smart savings strategy and shopping around for the best savings tools and rates will help you gain a firm foothold early on.