Obviously, some expenses will come out of nowhere, but, in general, it's possible to plan for most expenses or at least have a plan for those slightly ambiguous situations. Having some things in place that make a company better equipped to deal with surprises is all part of the process. Life will throw curveballs and it's our job to try and anticipate what they'll be and maybe even when they'll hit.
What does this look like?
- Plan for the Unexpected. Yes, it's possible, it's called an emergency fund and every business should have one along with a list stating the general things for which it can be used. This will be different than the fund for the big-ticket items that help grow the business. This account should be accessible (but not readily) and at a bare minimum in a high yields savings account. That money should be working for you.
- Big Ticket Items: There needs to be a different fund, in some shape form or fashion, that is for the big-ticket items. This doesn't have to be a separate account (although that's not a bad idea), but it does need to be listed and recorded. Again, for an account like this, the recommendation would be to have it separate from the operational account and sitting in a high yields savings account. This way the money is less readily available and earning at least a little interest.
- Have a List. There should be a list of expenses for the year. This one should be obvious because hopefully there's a budget... if not, then go create one. There should also be a list of expenses that will come do in the near future. i.e. start saving for replacements immediately. This will require knowing the average shelf life of the product, machine, etc. The best part is that if the product lasts longer than the average, then the money is already there so when it does finally quit the company can pay cash.
What to remember: Do your research and get the numbers as close to reality as possible and even if you're off by a little, you'll still be closer than if you had nothing saved up.