• Half of small businesses only have a large enough cash buffer to allow them to keep business going for 27 days, according to the JPMorgan Chase Institute. 
  • Labor-intensive industries have even less of a buffer, with restaurants only having 16 buffer days on median. 
  • Read on to see how different industries compare when it comes to how long they could survive without bringing in money. 
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Most small businesses in America are potentially less than a month away from going out of business if they stop bringing in money. 

A JPMorgan Chase Institute analysis of 597,000 small businesses from February to October 2015 found that half of the companies held a cash buffer large enough to support 27 days of business. Half do not. 

Cash buffer days are the number of days that a business can continue paying its typical outflows — such as payroll, purchasing supplier, or loan repayment — without bringing in any money, in the form of things like revenue, tax rebates, or transfers from investors' or owners' private savings. 

JPMorgan Chase Institute calculated cash buffer days by computing the ratio of how much money a business had at the end of the day on average to its average daily outflows. Most companies ran out of buffer days within a month. 

The median number of cash buffer days across all small businesses was 27 days. And, a quarter of small businesses hold fewer than 13 cash buffer days in reserve. 

Some industries have less of a buffer than others. On median, restaurants only have 16 buffer days, in part because of how labor-intensive they are to operate. The lack of buffer is becoming a massive problem currently, as restaurants and bars are forced to stop serving customers due to the coronavirus outbreak, sparking fear that many will close for good.

Meanwhile, real estate companies have a median of 47 cash buffer days. 

Here's a chart showing how different industries compare: 

cash buffer days
JPMorgan Chase Institute

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