Governments have reserves. Banks have reserves. Large corporations have reserves.
Entrepreneurs should think strategically about reserves too.
I think of a Strategic Reserve as capital designed to do more than sit idle.
What a Strategic Reserve does
Its jobs can include: protect. Compound. Create liquidity. Create opportunity. Reduce forced selling. Increase optionality.
The worst time to need capital is when everyone else needs it too. A reserve lets you use liquidity and borrowing intelligently rather than being forced to sell assets at bad times.
It depends — and that's the point
The exact strategy depends on the individual, business, risk profile and stage of wealth. There's no universal number. But there is a universal principle.
Don't just earn money. Build a balance sheet.
Key takeaways
- —Reserves aren't idle cash — they're capital with defined jobs.
- —A reserve's biggest benefit is never being a forced seller.
- —The right structure depends on your business, risk profile and wealth phase.