Relay, a small business banking and money management platform, has released new data showing 88% of American small businesses are currently facing cash flow disruptions. The data comes from the second and latest edition of Relay’s Cash Flow Compass report. It surveyed more than 1,000 U.S. small business owners to unpack their money management trends and highlight the challenges and opportunities facing specific industries.
The report reveals significant differences in cash flow management and business preparedness among small businesses across various industries. While conversations about the challenges facing American small businesses often treat them as a monolith, the reality is much more complex—a patchwork of concerns addressed with different strategies across sectors.
The Cash Flow Compass enables business owners to navigate current economic conditions by combining findings with expert commentary. It features insights from small business advisors, fellow owner-operators, and Mike Michalowicz, creator and author of the Wall Street Journal bestseller, Profit First.
Relay is the official banking platform of the Profit First money management method. Michalowicz chose Relay as the official banking partner of Profit First for its ability to create multiple, individual, no-hidden-fee accounts.
Here are some key report findings on small business cash flow management across the board:
- Main Street has a cash flow problem. Most small businesses admit to money management challenges. They expect growth this year, but their cash flow is clunky and many are unprepared for curveballs.
- 88% face regular cash flow disruptions.
- 94% expect growth this year, but only 31% are optimizing their cash flow (e.g. tightening spend-tracking, streamlining payroll, etc.) to prepare for it.
- 33% are unprepared to handle a financial or economic downturn, with inflation, and trade and tariff actions cited as the top two economic factors impacting businesses today.
Here is a deeper look at the sector-specific small business cash flow data:
Real estate businesses lead the pack. Today, real estate entrepreneurs—e.g. realtors, real estate investors, and short term rental owners—are more optimistic and financially stable than most small business owners.
- 62% describe the current economic climate positively, as strong or bouncing back.
- 55 days is their average cash runway, compared to 43 days for small businesses overall.
- 53% say that new professional partnerships (e.g. with home inspectors, mortgage brokers/lenders, marketing consultants, etc.) will be a growth driver for their businesses.
- Skilled trades have the tools in hand but cash on hold. Blue collar trades (e.g. construction, HVAC, electrical, plumbing, etc.) are feeling the squeeze of rising costs, and it’s impacting their hiring.
- 53% describe the current economic climate negatively, as uncertain or challenging.
- 40% want to hire new employees to prepare for growth in the coming year, and yet 47% say rising costs (i.e. materials) have made it challenging to achieve consistent profitability.
- 25% of owners don’t have someone ready to take over if they had to stop working today.
Retail and e-commerce are looking to the future. Supply chain issues are a present reality, but retail businesses owners are already thinking about their business’ financial future.
- 36% are hitting disruptions in their retail supply chains.
- 66% would trust AI to manage their business cash flow, above the average reported by small business owners overall. Specifically, they can already point to their top 3 AI use cases: 1) expense and income-tracking, 2) automating bill payments, and 3) predictive cash flow modelling.
“Cash flow chaos is real, and it’s wrecking good businesses. The Compass report is proof of that. But here’s the truth: it’s avoidable. When you ditch the ‘wing it’ approach and plug into Profit First with Relay, the game changes. You’re not guessing anymore. You’re making smart moves with your money, every time,” said Michalowicz.