{
  "@context": "https://schema.org",
  "@type": "Dataset",
  "name": "How much working capital does a small business need?",
  "description": "Most small businesses need three to six months of operating expense in accessible working capital. Inventory-heavy and project-based businesses need the top of that range because cash leaves before it arrives; subscription and prepaid businesses can safely run on two to three months.",
  "url": "https://www.revenuelab.fyi/answers/how-much-working-capital-does-a-small-business-need",
  "dateModified": "2026-08-12",
  "creator": {
    "@type": "Organization",
    "name": "RevenueLab",
    "url": "https://www.revenuelab.fyi"
  },
  "license": "https://creativecommons.org/licenses/by/4.0/",
  "keywords": [
    "Cash Flow Calculator",
    "Break-Even Calculator",
    "Startup Cost Calculator"
  ],
  "distribution": {
    "@type": "DataDownload",
    "contentUrl": "https://www.revenuelab.fyi/api/public/page.json?path=answers%2Fhow-much-working-capital-does-a-small-business-need",
    "encodingFormat": "application/json"
  },
  "json": {
    "type": "answer",
    "question": "How much working capital does a small business need?",
    "shortAnswer": "Most small businesses need three to six months of operating expense in accessible working capital. Inventory-heavy and project-based businesses need the top of that range because cash leaves before it arrives; subscription and prepaid businesses can safely run on two to three months.",
    "tableTitle": "Working capital targets by business model",
    "columns": [
      "Business model",
      "Months of opex",
      "Why"
    ],
    "rows": [
      {
        "label": "Subscription / prepaid",
        "value": "2–3 months",
        "note": "Cash arrives before delivery"
      },
      {
        "label": "Professional services",
        "value": "3–4 months",
        "note": "30–60 day receivables"
      },
      {
        "label": "Retail / ecommerce",
        "value": "4–6 months",
        "note": "Inventory ties up cash"
      },
      {
        "label": "Construction / projects",
        "value": "5–7 months",
        "note": "Progress billing lag"
      },
      {
        "label": "New franchise or startup unit",
        "value": "4–6 months",
        "note": "Ramp before break-even"
      }
    ],
    "context": "Profitable businesses fail on timing, not on margin. The cash conversion cycle — days of inventory plus days of receivables minus days of payables — tells you how long your money is out of the building, and the working capital requirement is simply that cycle multiplied by daily operating cost. Shortening the cycle is cheaper than financing it: deposits up front, shorter payment terms, and faster invoicing each release cash permanently, while a line of credit rents it monthly.",
    "methodology": "Cash conversion cycle modelling across common business models, using median receivable, payable and inventory days per sector applied to monthly operating expense.",
    "dateModified": "2026-08-12",
    "relatedCalculators": [
      {
        "label": "Cash Flow Calculator",
        "to": "/cash-flow-calculator"
      },
      {
        "label": "Break-Even Calculator",
        "to": "/break-even-calculator"
      },
      {
        "label": "Startup Cost Calculator",
        "to": "/startup-cost-calculator"
      }
    ],
    "relatedReading": []
  }
}