Growth, Vitality, and Cash Flows
High-Frequency Evidence from 1 Million Small Businesses
The small business sector, comprised of businesses with fewer than 500 employees, is an important contributor to overall US economic growth. However, the heterogeneity of the sector can obfuscate the ways in which it actually does or does not contribute to economic growth, making it difficult to develop targeted policies to support these contributions.
In this report, the JPMorgan Chase Institute introduces a newly augmented small business data asset to empirically address questions of small business growth, vitality, and economic contribution. We built a sample of 1.3 million de-identified small businesses with Chase Business Banking accounts active between October 2012 and February 2018. The over 3.1 billion transactions we analyze from these businesses provide a novel view of daily revenues, expenses, and financing cash flows for individual small businesses. We use this data asset to develop a revised segmentation of the small business sector, and a new typology of cash flow patterns. These frameworks allow us to inform the contributions of different kinds of small businesses to the US economy, as well as offer new insights about the importance of cash flow management to small business outcomes.