What is the 1% Cash Rule in Small Business?

The cover image for this post includes the number 1 with a percentage sign inside a circle with a black border. At the top of the border, 1 percent of the circle includes a color revealing a small slice of the bigger circle.

The balance sheets of most small businesses in the United States show cash balances that are either too small, about right, or in excess of what is needed on a regular basis.

In this brief discussion, I’ll show you my 1% cash rule of thumb and when to move to the 3% or 5% rule, as situations dictate. Don’t worry, the math is easy and intuitive.

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