Small business owners who increased their revenues over the past two years are more likely than SBOs that had high negative growth during the same period to rely on cash reserves and to borrow capital to get through tough economic times, a study reveals.
The Guardian Life Insurance Company of America, New York, published this finding in a March 2012 report, “Small Business America: Six Steps to Better Performance in the Coming Year.” The report, based on data from The Guardian Life Small Business Research Institute, polled 1,070 small business owners.
When asked how they would react if their company revenue were to drop drastically in the next 12 to 24 months, 47.1% of “higher growth” companies indicated they would rely on cash reserves. This compares with 38.5% of companies that had “high negative growth” during the past two years, the report discloses.
Likewise, three times as many respondents at high-growth companies (21.9%) indicated that they would borrow capital to get through a rough patch than high negative growth companies (7.1%).