The number that should worry you I read something this week that made me stop. Analysis of small UK television production companies found their median cash buffer was £42,000. That is not enough to cover a filming overrun. Not enough to survive a delayed commission. Not enough to absorb a single mistake. And I thought: this is not a TV problem. This is the problem. Most people running their own thing have a buffer that covers one error. Maybe two if the errors are small and spaced out. But stack two problems in the same quarter and the business is suddenly fighting for survival rather than building anything. What a thin buffer actually means A buffer is not just cash sitting in an account. It is time. It is the gap between something going wrong and you having to make a decision under pressure. With £42,000, a business paying £8,000 a month in fixed costs has about five months of runway if revenue stops completely. That sounds reasonable until you remember that revenue rarely stops completely. It drops by 30%. A client delays payment by six weeks. A project runs over and you cannot invoice the next one. The real calculation is messier. And the real number is usually worse. I have worked with people who told me they had six months of runway. When we sat down and mapped the actual commitments, the recurring costs, the invoices they were expecting but had not received, they had three. Sometimes less. The buffer you think you have and the buffer you actually have are often different numbers. Why this keeps happening People running small operations tend to reinvest. That is often the right call. You see an opportunity, you put money into it, you grow. The alternative is sitting on cash and watching competitors move faster. But there is a point where reinvestment becomes exposure. I have seen it happen: someone takes on a bigger project, hires ahead of revenue, commits to equipment or premises, and suddenly the margin for error shrinks to nothing. The problem is that the shrinking happens gradually. You do not wake up one morning with a thin buffer. You arrive there through a series of decisions that each made sense at the time. And then something goes wrong. A client pulls out. A key person leaves. A tariff gets announced and your supply chain costs jump overnight. The businesses that survive are not the ones that avoided the problem. They are the ones that had room to respond. The one mistake rule I use a simple test with people I work with at ALIRA. Can your business survive one significant mistake right now? Not a catastrophe. Not a pandemic. Just one thing going wrong that is entirely within the normal range of things that go wrong in business. A project that takes twice as long as quoted. A customer who does not pay for 90 days. A piece of equipment that breaks. A key hire who does not work out. If one of those would put you in crisis mode, your buffer is too thin. The answer is not always to stockpile cash. Sometimes it is to reduce fixed costs. Sometimes it is to diversify revenue so one client leaving does not create a hole. Sometimes it is to build in contract terms that protect your cash position. But you cannot fix what you have not measured. And most people I talk to have not actually run the numbers. What the numbers look like Here is a rough framework. Take your monthly fixed costs. Not your total spend, just the costs that do not disappear if revenue drops: rent, salaries, subscriptions, insurance, loan repayments. Now look at your cash position. Divide. If the answer is less than three, you are operating without a safety margin. One bad month and you are making cuts or borrowing. If the answer is three to six, you have some room. Not a lot, but enough to absorb a shock and respond. If the answer is more than six, you might be over-buffered. That is rare, but it happens. Cash sitting idle has a cost too. Most small businesses I see are in the first category. They just do not know it because they have not done the calculation recently, or they are counting money that is already committed elsewhere. The decisions that eat your buffer Some decisions look like growth but are actually buffer consumption in disguise. Hiring before you have confirmed revenue for the next six months. Taking on premises with a long lease. Buying equipment outright instead of leasing. Offering payment terms to clients without considering your own cash cycle. None of these are wrong on their own. But each one reduces your room to manoeuvre. And if you make several at once, you can go from comfortable to precarious without anything external changing. I worked with someone last year who had grown quickly. Revenue up 40% year on year. They felt successful. But they had also hired four people, moved to a larger office, and extended payment terms to win a big contract. When that contract was delayed by two months, they had to let two of the new hires go. The growth was real. The buffer was not. What to do this week First, calculate your actual buffer. Not the number in your head. Open your accounts, list your fixed monthly costs, and divide your available cash by that number. If you use the diagnostic at alira.london, the financial section will prompt you through this, but a spreadsheet works too. The point is to get a real number. Second, identify the one decision in the last six months that most reduced your margin for error. Not to reverse it, necessarily. Just to see it clearly. Was it a hire? A commitment? A payment term you offered? Know what it was. Third, pick one thing you could change in the next 30 days that would add two weeks to your buffer. That might be chasing an overdue invoice, renegotiating a payment schedule, or cutting a subscription you are not using. Small moves add up. Start with one.