Cash flow issues starting to hurt small businesses
November 8, 2008 by ShannonCherry
Filed under Business
More than half of current small business owners are having some cash flow problems. That’s according to the most recent American Express small business survey of 768 owners of small businesses, defined by companies with fewer than 100 employees.
And unlike other surveys, more than a third are feeling the pinch of a tightening economy. So what are they going to do about it?
Those responding to the survey said they will be accepting lower margins on sales, work longer hours, as well as cut capital and marketing expenses in the near future.
Maintaining current business and sources of revenue (35 percent of respondents) has replaced growth (29 percent) as the number one priority of business owners.
I just celebrated my first year in business and this sucks! I’m hanging on by my finger nails! Fortunately, for an e-commerce and supplying a niche market, I am hoping to survive if not benefit from this ‘pot hole’ in the road.
Businesses with cash flow issue should have a back up plan. At Coface I can give you a free consultation on how our products can help you Meet your objectives, grow your business and protect you from bad debt losses. This off is free and comes with valuable business intelligence on your customers for no extra charge.
American Express recognized their small business clients were experiencing cash flow problems through a survey, okay! The real story, however, is what American Express has done with that information. I’m sure I’m not the only small business owner who has had their credit limit reduced to next to nothing by American Express.
My Platinum Charge Card went from No Limit to $9,000.00 because they reviewed my credit report and determined I owed too much money. Of course they wouldn’t say specifically what amount of debt would be acceptable, I was told they don’t discuss their guidelines with clients. They did admit there was nothing negative on my credit report and acknowledged my payment history with them and others was great.
Over the last 18 months I have charged and paid off around $300,000 with American Express, an average of $16,000 a month and I pay in full every month as I’m required to with a charge card. I have lived up to my responsibilities and held up my end of the bargain. So, $9,000, Really? When you know I need a minimum of $16,000.
It’s hard enough to handle cash flow issues in a service industry where you may get paid up to 30 days after the job is completed. It’s destructive when the company that promotes themselves as the small business champion and who has encouraged you to grow your business by using their resources to eliminate any cash flow issues suddenly gets cold feet. Cutting my ability to purchase cost of goods sold by 44% puts me out of business.
American Express has taken the survey to heart and decided to jump ship, shutting down businesses, putting people out of work, turning their back on the very people they convinced to take the plunge in the first place, all the while you know they would have their hand out to the U.S. Government for a taxpayer supported bailout if possible.
July was the best month we’ve had since opening the doors 2 1/2 years ago. Without the line of credit from American Express those doors are going to close. Heck of a way to celebrate your best month.