A report released by SCORE titled “Finding Your Way, Finding Customers” reveals that adequate cash flow is the biggest concern of small businesses. Poor cash management is the reason for 82% of small business failures.
The survey found that 49% of small business owners started with barely more than $10,000 capital and 42% of them had cash reserves of less than $5,000. Sixty-six percent of their funding is from their personal finance and 27% is from another job. Despite this funding limitation, 78% of the respondents did not seek outside financing. For those who did seek outside financing, only 25% received funding of more than $25,000.
When it comes to the usage of funds, 63% of small business owners used their money to purchase equipment. The other top uses of funds include purchasing inventory, marketing, preparation of business location, product development and employee recruitment.