NEW YORK–Just how tiny the margins are at many small businesses is clear in a new report.
A new study from JPMorgan Chase said it found that on average, the companies it surveyed have just 27 days’ worth of cash reserves — or money to cover expenses if inflows suddenly stopped — according to the study that analyzed 470 million transactions by 570,000 small business last year, according to Bloomberg. Restaurants were found to hold the smallest cash buffers, with just 16 days of reserves, while the real estate sector was found with the biggest cash horde, at 47 days.
"Most small businesses are operating on very small margins," Diana Farrell, CEO of the JPMorgan Chase Institute, was quoted by Bloomberg as saying. "The small business sector is less full of future Googles and Ubers and tons and tons of very small operators living month to month.”
Bloomberg said the analysis further found that small businesses attempting to expand (or just keep their head above water) may find it difficult to build up reserves, with daily income outpacing expenditure by just $7, according to JPMorgan's study.
A recent survey by the National Federation of Independent Business said its optimism index recently declined slightly, due in part to political uncertainty. Thirty-nine percent of small business owners cited the political climate as a reason not to expand — an all-time high, according to the NFIB.