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how much cash reserve should a start up company have on hand? is there a Formula...

how much cash reserve should a start up company have on hand? is there a Formula for this?

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Answer #1

No, there is no as such any formula.

Further Explaination : It all depends on your business idea, nature and quality of your business

Also, you have to check what all your costs or expenditure are like, upfront costs, any other one time costs, as first these initial costs should be settled off then thereafter, regular operating expenditure (cash outflow) will come into the scenerio and accordingly, how much sales (cash inflow) you are capable of generating.

Therby, cash reserve should not be Undercapitalized nor overcapitalized, one should forcast the need of cash also on Conservatism Approach, as one is not sure that whether start up will prevail or not.

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