Keeping a Reserve

One of the things that we track in our business on a regular basis is the amount of cash we have in savings. On a month to month basis we have a checking account into which revenues flow and expenses come out. However since those don't always match, we have had the need to dip into savings at times.

Typically we haven't sent money the other way. If we have exceeded our monthly spend by xx dollars, we've ended up distributing dividends to the shareholders. That's a month to month spend. However we have capped those, so if we had a few really good months I could see us putting some back into savings.

However with the current economy, we've struggled to meet our expense number, and as a result, the savings have been going down. That's a tough thing to swallow, and at some point we might have to close the business.

In making that decision (and we haven't made it) , there are a couple concerns. We have a lease on office space, as well as some short term fixed expenses. The lease has over a year to run, and if we shut the doors today, we couldn't cover the cost with savings. So our plan is to try and keep making enough revenue to meet that number in the short term.

However as we get lower in savings, we have to decide at some point what to do. We're probably still a month or two off from a big decision, and we are trying a few things to build some revenue in the short term. We also canceled plans for an event next year since we don't want to commit the capital now if we can't build up some sales.