Most small and midsize businesses don’t have much in the way of cash reserves and, when they do, are much more likely to keep it on hand than invest it.
That’s according to a recent survey of 103 entrepreneurs and small businesses from small-business online lender Kabbage. The survey shows 65 percent of respondents closing each month with $ 10,000 or less in surplus cash with 9 percent finishing the month with under $ 1,000. (Kabbage co-founder and CEO Kathryn Petralia is an Inc.com columnist.)
On the flip side, just a third reported surpluses of between $ 10,000 and $ 50,000.
Investment is rarely the next move for those with cash on hand. Sixty-four percent said they hold onto extra cash for emergencies, and 30 percent spend it immediately on the business, usually in the form of upgrades to space and equipment or the purchase of additional supplies.
That’s compared to just four percent who said they would move the money into an investment account. Just 11 percent said they would spend the money on staffing through increased staff or raises.
The survey did find some interest among business owners in learning how to optimize investment. Thirty-two percent of respondents said they’d invest in technology to understand how they could use their surplus cash more efficiently and another 40 percent said they were unsure about this option.