How to Succeed in Small Business - OZY | A Modern Media Company
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WHY YOU SHOULD CARE

Because small-business owners can use a helping hand.

Samantha Saperstein

Samantha Saperstein

Samantha Saperstein is a managing director at JPMorgan Chase.

Everyone wants Main Street America to be full of vibrant businesses that cater to our needs. But the pandemic has caused many small businesses and even some well-known franchises to close. We’ve seen the empty storefronts and “For Lease” signs, and while the virus introduced challenges these businesses could never have prepared for, what ultimately caused so many to shutter was a lack of cash.

To survive and grow, small businesses need access to cash to manage unexpected downturns, which can lead to higher costs and lower profits. Living month to month is precarious, and that’s just as true for businesses as it is for people.

Recent research by the JPMorgan Chase Institute found that half of all small U.S. businesses have fewer than 15 cash buffer days. Because these firms tend to lack access to credit, it is cash liquidity that often makes the difference between staying afloat and closing their doors. Alarmingly, this means 50 percent of small businesses would struggle beyond two weeks of disrupted cash inflows.

The odds are stacked even higher against women, especially Black and Latinx entrepreneurs who start off with less capital and tend to grow their businesses more slowly. These businesses have a more difficult time accessing capital, which is why JPMorgan Chase has committed to helping more female entrepreneurs start and grow their businesses by extending $10 billion in credit to the group. The firm is nearly halfway to meeting that goal.

Another way JPMorgan Chase is helping these small-business owners navigate their cash flow is with a free suite of interactive tools, case studies and actionable insights unique to their business available at cashflow.chase.com.

Here are a couple of tips on how to manage cash flow in uncertain times:

Focus first on increasing the cash coming in the door. Business owners should constantly evaluate and consider new revenue streams, pricing structures and ways to get their products in front of new customers. They should also assess the competition to ensure they can clearly articulate a differentiated value proposition to their customer base. Additionally, business owners should look at which of their customers can and should be billed immediately to ensure incoming cash flow. By seeking bigger down payments on large orders or shortening the payment terms, owners can get much-needed cash in more quickly.

To slow down cash moving out the door, reach out to vendors to try to negotiate extending payment windows from 30 to 60 days or longer to relieve the pressure. If you’ve been with a vendor for a few years, you may find that they’re more amenable to offering you such flexibility.

Samantha Saperstein

Samantha Saperstein

Samantha Saperstein is a managing director at JPMorgan Chase.

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