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New American Express Survey Finds That More Than Three Quarters of Small Businesses Are Looking To Consolidate Their Cash Flow Management Tools

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New American Express Survey Finds That More Than Three Quarters of Small Businesses Are Looking To Consolidate Their Cash Flow Management Tools

50% of small businesses believe cash flow management tool consolidation positively impacts profitability.

Our new American Express survey of 1,100 U.S. small business leaders shows that small businesses are seeking consolidated cash flow management tools to foster greater efficiency, profitability, and business growth.

Small businesses are starved for time and need business-designed tools that can make their lives easier. The data shows streamlined management from integrated, seamless cash flow tools has become critical for them.

The Current State of Cash Flow Management

This latest survey stresses the importance of product integration in cash flow management. According to the survey results, 60% of small businesses use between two to three cash flow management products to run their business with 62% spending at least five hours a week on various platforms and 18% spending 10-20 hours a week. With productivity in mind, 73% of all small businesses are considering changing cash flow management providers to consolidate their data and products into one platform.

Notably, this survey showed that 78% of all small business owners agree that having all their business cash flow management products and data in one platform would help grow their confidence as a small business owner. It also found that 84% of small business owners also say consolidating their cash flow management tools would save them time each week, with around half saying the savings would be between 3-8 hours.

 A Need for Greater Ease & Cost

Amidst economic headwinds, tailwinds, dips, and growth — cash flow management is a constant when running a business. Our latest survey data shows that ease of use (43%) and price (36%) are the top two features that small businesses believe their cash flow management tools could improve. 71% of small business owners report that consolidation of these tools would have a positive impact on efficiency for their business and 50% report that it would have a positive impact on profitability.

Time also continues to be top of mind. 68% of small business owners agree that they would like to spend less time managing their business’ cash flow – giving them more time to spend doing what they love, working on their actual business.

 The Broader Benefits of Streamlined Management

The data also shows that consolidated cash flow management tools can help boost productivity and simplify running a business. Respondents said they would feel better prepared to manage inventory (37%), solve cash-flow gaps in advance (37%) and expand their business (36%) if given the opportunity to analyze their cash flow management data all in one place.

Streamlined cash flow management can have a wide array of benefits for the small business sector, and the data indicates the importance of it to help unlock additional profit, efficiency and time for small businesses.

Brett Sussman is Vice President Head of Sales & Marketing, American Express Business Blueprint & Banking, a digital cash flow management hub designed exclusively for small businesses, which features cash flow insights, digital financial products, and an easy way to reach and manage their Business Cards.

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60% of U.S. Small Businesses are Investing in Cash Flow Tools Ahead of the Holidays 

Kabbage from American Express issued its inaugural Small Business Holiday Report, which highlights the major trends among U.S. small businesses heading into the holidays. Polling 550 small business leaders, the report shows that the businesses surveyed are gearing up for the fast-approaching holiday season by prioritizing their holiday cash flow, strategizing ways to promote employee and customer retention, anticipating economic hurdles, and prioritizing sales through social media. 

Small businesses understand the criticality of successfully navigating this time of year. As we approach this holiday season, they’re making the necessary preparations and adjustments to win the holidays.

Prioritizing Holiday Cash Flow

The survey data illustrates the importance of the holidays for small businesses—especially this year. Nearly one in four (24%) of businesses surveyed reported that their upcoming holiday sales will determine if their business can survive into next year. Understanding the gravity of this period, businesses are prioritizing their health and growth, while closely examining their cash flow.

60% of small businesses surveyed are focused on investing in new tools as they consider their cash flow management and increasing costs. The top tools noted were marketing tools (23%) and payment transaction systems (e.g., line of credit, a business checking account and new payments provider) (20%). Similarly, respondents noted overall business cash flow is the top concern for them heading into the holiday season (32%) followed by budgeting (25%) and inventory management (25%).

The data shows that small businesses are taking action to overcome these cash flow concerns. 21% of respondents plan to take out a small business loan this holiday period, and 32% plan to use the loan to cover costs to support their business, from inventory bills to common cash flow gaps. 

Eyeing Employee Retention and Customer Attraction

To fully capitalize on the upcoming holiday season, 64% of small businesses plan to increase marketing to attract customers. The top two strategies noted were to send seasonally targeted email campaigns (26%) and to offer holiday product bundles (26%). Likewise, 25% of small businesses are budgeting to offer holiday customer promotions and incentives.

While 53% of small businesses plan to adjust their budget for additional holiday expenses, employee retention is also a priority. The top way small businesses surveyed are preparing their workforce for the holidays is by giving holiday bonuses to current and new employees (32%).

Anticipating Economic Hurdles

The data shows that small businesses are predicting the impact of economic hurdles, such as supply chain challenges and rising inflation, throughout the holidays and creating a strategy to navigate them. 

While 64% of respondents plan to prepare their business in some way for the upcoming season, the top way they are doing so is by stocking up on inventory (30%). This supports the data that 74% of small businesses are worried about supply chain issues heading into the season and 25% are diversifying the number of suppliers they work with.

Working to overcome these future challenges, 27% of small business are managing customer expectations and sharing realistic shipping dates to protect themselves from potential supply chain issues. Also, considering their cash flow, 30% of respondents expect to use funds received from a small business loan to purchase additional inventory.

Capitalizing on Social Media

In a progressively digital world, 46% of respondents reported that at least 20% to 30% of their holiday sales will come from online channels. 

Almost half (47%) of respondents reported that at least 10% to 20% of their holiday sales will come from social media channels. Facebook remains a key marketing and customer acquisition channel as 53% cite Facebook as the top social media platform to make the most revenue followed by Instagram, YouTube, LinkedIn, Twitter and TikTok. This is in line with our latest Small Business Recovery Report which found that small businesses are increasingly capitalizing on social media advertising; 47% report it to have the greatest impact on customer acquisition. Out of which, Facebook was also reported as the top platform of choice for advertising, nearly double that of the second choice, Instagram.

U.S. Small Businesses Nearly Doubled Revenue, Report Being Impacted by Inflationary Pressures

Kabbage from American Express issued the seventh installment of its Small Business Recovery Report, which tracks the recovery trends and growth outlook of U.S. small businesses. Polling 550 small business leaders, the latest report shows that the businesses surveyed have nearly doubled monthly revenue between July 2021 and July 2022 while profits slightly declined amidst economic hurdles. They are facilitating growth by modifying their business tactics – offering increased benefits and flexibility for workers along with investing in digital transformation. 

U.S. small businesses are adjusting to not only survive but flourish during challenging economic times.  Inflationary pressure and challenges with hiring and retaining talent, among other factors, are driving small businesses to fine-tune their business practices.

Offsetting Economic Costs & Supporting Growth

In the June 2022 Small Business Recovery Report, the data showed 80% of small businesses are confident they could withstand a potential U.S. recession. The data from the latest report helps illustrate why. Since March 2021, the Small Business Recovery Report has captured self-reported revenue and profits from small businesses across the U.S. Cross-analyzing the survey results between July 2021 and July 2022, the data shows U.S. small businesses revenues have increased on average by 87%. 

While revenue is up, the data also revealed overall profits among U.S. small businesses have slightly declined 4% over the same time period. The data shows small businesses continue to anticipate future economic obstacles as 75% of respondents report feeling impacted by inflationary pressures and 56% expect pressures to last at least a year until summer 2023. 

Yet, small businesses are actively balancing increased costs. From the latest Small Business Recovery Report, 37% stated they plan to raise prices, 22% aim to negotiate better deals with suppliers, and 22% are cutting lower margin products and services from their offerings. An additional 33% of small businesses plan to prioritize customer relations and strengthen customer loyalty to help increase future revenue. 

The New Way to Work Is Working

As small businesses contemplate costs, they’re also rethinking how best to navigate employee recruitment and retention. 47% of all small business respondents reported that inflation is impacting their labor market by pushing them to accommodate and compensate for higher healthcare, enriched employee benefits and more frequent pay raises. 

Small businesses are also leaning into the new way of work by offering hybrid and remote work options. 49% of small businesses have started offering flexible work options to stay competitive in the labor market with hybrid work (27%) being the most popular option. This has proven effective as 77% of respondents reported it has made a positive impact on their ability to attract new employees. 

When analyzing hybrid and remote working options by business size and age, the highest adoption rate is among businesses less than two years-old (57%); and these options are nearly twice as likely to be implemented among the largest small businesses compared to the smallest small businesses. 

Expanding Investments for Growth

U.S. small businesses feel a heightened need to invest in areas for growth. The top two areas of focus were prioritizing digital transformation (41%) and digital marketing, as 47% stated they have increased digital marketing spend already this year.

When asked to better define this digital transformation, 29% of all small businesses stated they aim to strengthen their data analytics capabilities while nearly one third (31%) of respondents want tools to reexamine their cash flow to help predict future financial gaps. Further, 29% of small businesses are prioritizing mobile and are investing to build a mobile app for their small business. 

Small businesses are capitalizing on social media advertising as 47% expect it to have the greatest impact on customer acquisition. Facebook is reported as the top platform of choice among small businesses, nearly double that of the second choice, Instagram. These are followed by YouTube, LinkedIn and Twitter; then followed by TikTok, Pinterest, and Snap.