Three out of Four Small Businesses in Miami Turn a Profit Yet Many Have Limited Cash Buffers, According to New JPMorgan Chase...
04 Dicembre 2019 - 12:00PM
Business Wire
New research finds that community
characteristics in Miami vary with small business profitability and
cash liquidity
Today, the JPMorgan Chase Institute released new research,
showing the correlation among characteristics like home values,
college education and the racial, ethnic, and foreign-born
composition of Miami communities and significant factors of small
business financial health. Given data from a sample of 52,000
businesses operating in all 178 Miami ZIP codes and a panel sample
of 32,000 Miami small businesses active in 2013, the JPMorgan Chase
Institute determined that, three out of four small businesses in
Miami turn a profit, yet many have limited cash liquidity.
In 2017, Miami had the 12th highest metropolitan area gross
domestic product (GDP) in the country, which accounted for over two
percent of the national GDP. Small businesses might have benefitted
from and contributed to Miami’s economic strength, with the median
profit margin of Miami small businesses being 13.9 percent.
However, many small businesses had limited cash liquidity.
One-third had seven or fewer days of cash liquidity, while less
than half of small businesses had at least fourteen cash buffer
days – or the number of days a business could withstand spending
without income.
“Analyzing how community characteristics – especially in
vibrant, urban communities like Miami – correlate to the financial
health of small businesses within those communities is a key factor
in understanding small business outcomes,” said Diana Farrell,
President and CEO of the JPMorgan Chase Institute. “This report
aims to identify where growth could be contributing to Miami’s
economic strength.”
This report builds on previous research from the JPMorgan Chase
Institute on community-level differences in small business
financial outcomes, exploring how profit margin and cash liquidity
differ across communities and how socioeconomic conditions may vary
given the financial performance of small businesses.
The new report, “Small Business Financial Outcomes in Miami
Communities,” finds that:
- While the majority of Miami small businesses are profitable,
many have limited cash liquidity.
- Three out of four small businesses in the Miami metro area turn
a profit and the median small business has 11 cash buffer
days.
- The median small business in Miami has fewer cash buffer days
than the median business in our full sample of 25 U.S. metro areas.
One-third of small businesses in Miami have seven or fewer days of
cash liquidity, and less than half of small businesses have 14 or
more cash buffer days.
- The median profit margin for Miami small businesses is 13.9
percent, which is similar to the JPMorgan Chase Institute’s broader
sample of 25 U.S. metro areas.
- Small businesses in majority Black, Hispanic, and
foreign-born communities in Miami have significantly lower
profitability and cash liquidity than businesses in majority White
communities. Less than 10 percent of majority Black, Hispanic,
or foreign-born communities in Miami have many very profitable
small businesses (with profit margins over 20 percent), compared to
44 percent of majority White communities, and the typical small
business in more than 80 percent of majority non-White communities
has a cash buffer of two weeks or less.
- The typical small business had median profit margins over 20
percent in only nine percent of majority Hispanic communities,
three percent of foreign-born communities, and no majority Black
communities, whereas the typical small business had profit margins
over 20 percent in 44 percent of majority White communities.
- While small businesses in 60 percent of majority White
communities have at least two weeks of cash liquidity, just over
one-in-six majority Hispanic communities have a median of at least
two weeks of cash buffer.
- There are also industry differences across Miami communities –
small businesses in majority White communities are overrepresented
in high-tech services, healthcare services, other professional
services, and real estate. Small businesses in communities with
majority non-White populations generally have a higher share of
small businesses in the construction, repair & maintenance,
restaurant, and retail industries.
Overall, this report describes the financial health of Miami’s
small business sector, identifying where any business growth may be
contributing to Miami’s economic strength.
About the JPMorgan Chase Institute
The JPMorgan Chase Institute is a think tank dedicated to
delivering data-rich analyses and expert insights for the public
good. Its aim is to help decision makers–policymakers, businesses,
and nonprofit leaders–appreciate the scale, granularity, diversity,
and interconnectedness of the global economic system and use timely
data and thoughtful analysis to make more informed decisions that
advance prosperity for all. Drawing on JPMorgan Chase & Co.’s
unique proprietary data, expertise, and market access, the
Institute develops analyses and insights on the inner workings of
the global economy, frames critical problems, and convenes
stakeholders and leading thinkers. For more information visit:
JPMorganChaseInstitute.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20191204005132/en/
Media Contacts: National: Parita Shah,
parita.shah@jpmorgan.com Local: Mike Fusco,
michael.f.fusco@jpmchase.com
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