From the course: Financing Your Business

Why financing is so important to excel

From the course: Financing Your Business

Start my 1-month free trial Buy for my team

Why financing is so important to excel

“

- JP Morgan Chase conducted a survey of over 600,000 small businesses nationwide. They found the median small business in America has less than one month of cash buffer days. This means they only have enough money in the bank to survive 27 days without additional funds. The median business spends about $374 every day, with daily earnings of about $381, so that's not a lot of cushion should anything interrupt their business. In fact, according to a recent survey conducted by the 12 Federal Reserve Banks, 65% of small businesses with one to 499 employees experience some kind of financial challenge on a yearly basis. Top challenges include paying for operating expenses, making payments on debt, and purchasing inventory or supplies to fulfill contracts. These challenges could easily sink a firm. So how do these small businesses typically respond to these problems? They often turn to personal funds, take out additional debt, lay off employees, cut staff hours or even downsize. They react to the situation. Now, if they had financing available to weather those ups and downs, they could have avoided taking drastic measures.

Contents