SCORE Small Business Blog

Finance: Finally the Cash is Flowing Again
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Learn What You Need to Know About Capital

Good news from the latest American Express OPEN® Small Business Monitor: Small business owners are having fewer cash flow issues. The semi-annual survey of business owners found that the number of businesses with cash flow concerns has pretty much dropped to pre-recession levels (53% compared to 49% in fall 2007, and down from 60 percent this spring).

How are small business owners handling cash flow issues? They are putting off purchases (28 percent) or using personal or private funds (27%).  This is a subtle shift from to a year ago when more were accessing personal funds than putting off purchases (32% vs. 25%). Six-in-ten entrepreneurs also say they find themselves holding onto cash for their businesses more now than in the past.

Better control of cash flow means business owners are in a stronger financial position to jump on growth opportunities that might materialize. And with fewer cash flow concerns, the number of business owners who believe they can access the capital they need to grow their business has remained steady (57% vs. 60% in the spring).  More entrepreneurs are looking for ways to access capital (62% compared to 45% last fall), which shows they’re optimistic about growth. With several big banks recently announcing plans to focus more on small and midsized business lending, there’s reason to believe small business owners will be able to get the capital they need.

Here’s what I found especially fascinating about the survey: Small business owners’ views on the economy have deteriorated—with 45 percent having a positive outlook on the economy, compared to 51 percent in spring and 55 percent last fall. But while they’re pessimistic about the overall economy, business owners are optimistic about their own prospects. More business owners said they thought sales over the next six months would be higher compared to last year (39% vs. 34% in the spring). Backing up that optimism, the number of business owners who plan to hire full time employees in the next six months has doubled to 10% compared to spring 2010.

To me, that’s entrepreneurship in a nutshell. No matter what the state of the economy, entrepreneurs are confident in their own ability to generate growth and handle whatever challenges are thrown at them. During the depths of the recession, some entrepreneurs may have lost that confidence. Seeing it come back is heartening.

Need help accessing capital for your business? SCORE’s workshops and counseling can get your business in shape for whatever form of financing you’re seeking.

Rieva LesonskyCEO, GrowBiz Media
Rieva is CEO of GrowBiz Media, a content and consulting company specializing in covering small businesses and entrepreneurship. She was formerly Editorial Director of Entrepreneur Magazine and has written several books about small business and entrepreneurship.
www.growbizmedia.com | @rieva | More from Rieva

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