Starting a new business is no easy job. I read somewhere on Google that 90% of the new business fail in the first 5 years! Thats 1 in 10!

What is the number one reason for such failures? Do you know? Not having enough funds for the bad moments and bad days.

Having a good amount of money just in case is the best thing you can ever do for your business. Did you know that Bill Gates used to have a sum of cash in reserve enough to run Microsoft for a year even if the had no profits? Now you can see how important is to have an emergency fund.

With an emergency fund you avoid 90% of the reasons why businesses fail.

Now how can you get such fund? The easiest way is from personals savings. I hope you are that kind of person that saves about 20% of the total income for situations like this. If you have a good savings account you can start a business with much less stress since you got some security.

Now how can you use your saving for your business?

1. Making an investment with the funds while you dont need them. Money that is not being used loses value over the year because of inflation. Money invested not only avoids such loss but also gives you some good revenue just for being invested!

2. Purchasing better price/quality items. For example if you purchase a bigger amount of any good or service, the price per item is cheaper! This is one of the biggest reasons why big business have a big advantage over the small ones. take the supermarket business for example.

3. Solid guarantee for investors. When you look for potential investors the first thing they want to know is how much you got for dificult days. This way you attract better investors!

4. Increasing the enterprise value. A good employee would rather work for a company with higher financial value than a company with very little money. Dont you agree? Employees need security too and if you dont have plenty of cash, sooner or later they will start to wander and look for a better place to work...

5. Finally, High Yield Investments. This is the objective of most businesses. Making money to invest in risky businesses with very high profits. Its a common thing to have a profit of more than 10% investing in such businesses

Learn more about this author, Pedro Pacheco.
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