Short YouTube conversation where Jayson Lowe advises entrepreneurs to keep a readily accessible surplus reserve equal to at least three months (1/4 year, ~90 days) of operating expenses (OPEX). He argues this prevents panic during external disruptions (weather, economic, tariff events) and enables planning instead.
Questions this video answers
A minimum of 1/4 year — at least 90 days — worth of OPEX (operating expenses), readily accessible on demand.
Okay, so if we're talking about your capital or your money must reside somewhere.
Yeah.
Then how much of that should reside and be left in the business?
Also a really good question. So if you understand that your capital must reside somewhere, how much of it should reside within the business? What entrepreneurs that we work with embrace wholeheartedly is having accumulated a minimum of 1/4, 90 days worth of what we call OPEX operating expenses. And, and that should be readily accessible on demand in short order when the business needs it. So look no further than any instance where a business owner's day to day is interrupted by something outside of their control. Whether it's a weather event, whether it's an economic event, whether it's a tariff event, something that puts the business owner in a position where they're no longer in control. If they have a surplus reserve equal to at least three months of their operating expenses, they're not hitting the panic button, they're hitting the planning button. Both buttons send the entrepreneur in two completely different directions. So that's what we coach our entrepreneur clients to build.
So that's, yeah, preparation is definitely good because if you're not planning, then you're just planning to fail.
Well, yeah, I mean, that's a really good point. And the truth is that when a business owner gets going, they're so excited, understandably so, about their business idea, their method, their product, their service, combination of all the above. And they get really, really focused on growth. We need to grow, we need to expand, we need to scale the company. And nobody's whispering in their ear loud enough to say, make sure that you've got a surplus reserve of capital in the event of whatever it is. So when the sky starts falling with the entrepreneurs that we coach, they're not reaching for their hard hat, they're reaching for their capital surplus reserve. And thank goodness they've got it because keeps stress at bay.
