A Guide to Measuring Small Business Financial Health
In this guide, we include nine indicators of small business financial health with two measurement methods (survey data or observed data), as well as corresponding survey questions and suggested data points.
Financial service and small business resource providers are well-positioned to identify and address the financial health challenges small businesses may face in financial management, planning, and accessing capital. By measuring a small business’s financial health, organizations can better understand how small businesses are doing and their unique financial health challenges.
Small Business Financial Health
For a small business, financial health comes about when its daily systems help it build resilience and pursue opportunities.
A small business is financially healthy when it:
• Meets financial obligations
• Maintains sufficient cash reserves
• Maintains a comprehensive financial management system
• Plans for significant business risks
• Plans for cash flow variability
• Has appropriate insurance
• Has access to affordable, timely credit
• Has a sustainable debt load
• Has access to investment capital
This report is made possible through the financial support of JPMorgan Chase & Co.