less profitable, more exposed and with less liquidity



Academic research on liquidity in small businesses in the United States carried out by the institute of the financial firm JPMorgan Chase reveals that small businesses run by Latinos and African-Americans are usually the most exposed to crises, the ones with the least profitability Furthermore, they have less liquidity than white or Asian people.

According to the results, the majority of small businesses in the United States have irregular cash flows and the majority also show limited cash liquidity, which is accentuated in those Hispanic and African American businesses.

According to the JPMorgan Chase study, the majority of Latino (87.7%) and African American (88.5%) businesses have an average of 7 to 14 days of liquidity to be able to endure in the event of a forced stoppage in activity or a unforeseen expense, while most businesses run by white people (56.9%) could last between 14 and 21 days or more than 21 days (13.5% of cases).

"Small businesses in predominantly black or Hispanic communities have significantly less cash liquidity than businesses in largely white communities. Most Latino and African American small businesses, about 90%, operated with a two-cash reserve. weeks or less, compared to about 30% of white communities in this situation and only 2.3% of Asian communities, "the study details, which also reveals that business in areas where housing is Cheaper or few college graduates also have less cash liquidity.

RICH NEIGHBORHOOD, POOR NEIGHBORHOOD

In this sense, the research points out that although differences in the ability of small businesses to prosper and contribute vary by city and region, the financial results of small businesses vary "even more" between neighborhoods within a city, which It causes the profitability of the businesses to be uneven depending on the area in which it is located.

In this way, according to a graph in this study, the example of New York shows that the profitability of small companies is much lower in those businesses located in neighborhoods where socioeconomic differences are more noticeable and there is greater racial diversity.

For example, in the New York district of Queens or the Bronx, with a large Hispanic and African-American population, profit margins for businesses do not usually exceed 10%, while in some areas of Manhattan that figure can reach 15 and 20%.

As detailed in this research, median margins for communities in the Chicago, Detroit, Houston, Miami, New York, and San Francisco metropolitan areas typically exceed at least 15% since there are large areas where small businesses are quite profitable. . However, in those areas contiguous to the metropolitan core, most of the small companies had low profit margins.

GENDER GAP

In addition to economic differences based on race or ethnic minority, the study concludes that a company founded by a woman starts out smaller than one founded by a man, in addition to registering slower growth.

Thus, the first-year median earnings for women-owned businesses is about $ 50,000 compared to $ 75,000 for those businesses started by men, a 34% difference.

Among new and young companies, revenue growth is slight but significantly slower for those companies founded by women, compared to those founded by men.

"Starting with lower incomes and growing more slowly results in smaller businesses: For the fourth year, the typical woman-owned business has an income of $ 68,000, compared to the $ 104,000 averaged by those owned by a man "he concludes.

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