Cash flow management challenges can burden small business owners struggling to pay vendors and employees, but a new report from Kabbage finds that entrepreneurs often go unpaid themselves.
The alternative lending platform surveyed 500 small business owners and found the majority are not paying themselves for several consecutive months in an effort to improve the cash flow of their business, according to a press release issued Thursday (Feb. 28).
Twenty-six percent said they have gone two to six months without paying themselves, while an additional 25 percent said they have lasted more than six months unpaid. Other key concerns for small businesses are the regular stress and anxiety felt as a result of cash flow challenges, cited by 63 percent of survey respondents.
Forty-two percent said their social lives and personal hobbies have suffered as a result of operating their business, while nearly one-third said family life is also impacted negatively. Nearly all companies surveyed said they spend up to 20 hours a week on cash flow management, including payroll, invoicing and inventory procurement.
Kabbage researchers found small business owners often prefer to focus their time on sales and marketing, product development, and family time rather than manage cash flow.
In a statement, Kabbage CEO Rob Frohwein said he is “familiar with cash flow challenges” related to running a small business.
“Sleepless nights were my reality when waiting on customer checks and thinking through needed expenditures,” he said. “These experiences drive Kabbage’s mission to help small businesses easily manage cash flow so they can focus on the skill or craft that allowed them to start their business in the first place.”
Earlier this year Kabbage announced an integration with Alibaba.com to support the platform’s Pay Later program for U.S. buyers, providing small businesses using Alibaba to sell goods with financing that allows customers to delay payment.