Jayson Lowe recommends two ways to maintain cash flow: build a capital surplus reserve by allocating a percentage of gross revenue, and hold that reserve in dividend-paying whole life insurance contracts that accumulate guaranteed daily cash value for tax-deferred growth and ready access to capital.
What would you say are some ways that businesses can maintain cash flow?
What are some ways that businesses can maintain cash flow? One of which is to prioritize accumulating a surplus. So in businesses that we coach entrepreneurs that we work with, we lead them to developing what's called a capital surplus reserve. So from every dollar of gross revenue that they generate through their business activity, they automatically assign a percentage of that gross dollar. Not a remarkable amount. It could be just a couple of percentage points. And you take that capital, you set it aside as a surplus reserve so that when you need to create a smoothing effect in cash flow for the business, especially if your business experiences variability or seasonality, you've got ready access capital to smooth out the cash flow of the business. And you're not experiencing those tense moments where it's like, oh my goodness, where's the money going to come from to cover insert whatever expense here. So developing a capital surplus reserve and maintaining it are two completely different things. We coach the entrepreneur on both how to develop it responsibly and how to maintain it with discipline.
Okay, so that capital surplus reserve is one way to manage the cash flow.
In a business a hundred percent. Because it's not just about developing it and maintaining it. It's where does that capital reside? Money must reside somewhere. And where we have our entrepreneurs put the money is into dividend paying, whole life, these insurance contracts that accumulate guaranteed daily cash value growth. It bolsters the balance sheet of the business, gives the business owner ready access capital on demand. On their terms. You can contribute almost unlimited sums and you're attracting no tax on the buildup. And you are exempt from the passive investment income tax rules. All of these things are music to the ears of the entrepreneurs that we work with. And so it's, it's not just a function of building it and maintaining it, it's understanding that it has to reside somewhere and there's no better place to have it reside. Thank.
You.
