How Much Cash Should Your Gym Business Have On Hand?

What Is Cash on Hand?

Cash on hand refers to funds you have set aside for emergencies and other unexpected expenses. Many gym businesses keep money on hand in savings accounts, though choosing the proper high-yield savings account can help you get more out of your money. However, cash on hand can also refer to assets that you can quickly exchange for cash.

Why Your Gym Business Needs Cash on Hand

Having cash on hand is critical for a few reasons. It will help your gym business keep operating even if you go through a few months of no profits, which can happen due to new competition, economic downturns, and sudden losses.

What Is the Average Cash on Hand for Gym Businesses?

The rule of thumb for cash on hand for gym businesses is 3–6 months of operating expenses. That includes:

  • Rent
  • Cost of goods
  • Wages
  • Taxes
  • Etc.

How to Calculate How Much Cash a Company Needs

Every gym business is different. Some businesses need at least six months of expenses in cash on hand, while others need only three or four.

Cash Reserve Formula for a Gym Business

The typical cash reserve formula for a gym businesses is as follows:

Final Word

If you don’t have any cash on hand, you may struggle if you have a few slow months. Use the tips provided above to learn how much cash on hand you should keep in the bank. If you’re interested in learning more, check us out at Fitness Management.

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