Many small businesses continue to experience cash flow problems – the majority, in fact, according to a survey by the Discover Small Business Watch.
That cash flow is an issue right now for small businesses might sound obvious to most of you that run your own businesses, but a worsening trend might not be. So here’s a chart that shows what has been going on with small business cash flow over the past three years.
The figure plots the percentage of respondents to the Discover Small Business Watch monthly survey of a random sample of 750 small business owners who answered “yes,” they are experiencing temporary cash flow issues. Although there has been a slight down tick over the past two months, the chart shows a (noisy) trend towards an increasing share of small business owners experiencing these problems. (The thick blue line is the actual data; the thin black line is the linear trend plotted from it.)
I tried to see whether other patterns fit the data better than the upward linear trend. Unfortunately, they don’t. An increasing share of businesses experiencing temporary cash flow problems is closest to what has actually happened over the past three years.
Many economists believe that the Great Recession has ended and the economy is now growing again. While that might be true, it doesn’t appear that the recovery is strong enough or broad enough to have fixed the cash flow problems in the small business sector, at least not yet.