CHART OF THE WEEK: Microbusiness Cash Flow Improving

In March 2011, Discover Card’s monthly survey of owners of companies with fewer than six employees (i.e., microbusiness owners) showed that 43 percent reported experiencing temporary cash flow problems.  The good news is that this figure was down seven percentage points from the previous month.  The bad news is that it remains higher than its 39% average before the recession.

The thin black line in the figure below shows the measure’s three month moving average. It indicates improvement in the cash flow situation of micro-businesses since the middle of the summer of 2010.

Percent of Microbusiness Owners Reporting Cash Flow Issues

August 2006 – February 2011

Microbusiness cash flow in recessionCLICK FOR LARGER CHART


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

3 Reactions
  1. Looks to me like the number hasn’t been under 30% in a while. Are microbusinesses really that poor with cash management?

  2. Our experience shows that many small businesses ignore the old adage that “The sale isn’t made ’til the money’s in the bank” and very possess a pro-active and effective credit control system.

  3. Wow. It seems like too many microbusinesses just can’t seem to control their spending. Mike had a good point…”The sale isn’t made ’til the money’s in the bank.”