NEW YORK (
) -- What's happening in small business today?
1. Sales not enough to avoid small business cash crunch.
Weak sales as a result of lackluster consumer spending is causing cash flow problems at many small businesses, according to the latest Citibank Small Business Pulse survey. According to the survey, half of the respondents experienced a sudden cash crunch in the last 12 months.
Managing cash flow is particularly difficult when there are slow or delinquent receivables and bankruptcies. About 24% of Citi survey respondents blamed late or non-payments for their sudden cash crunch in the last 12 months. Yet 23% described making a collection call as the most uncomfortable business finance challenge (behind firing staff.
Despite the cash flow crunch that many small business owners find themselves in, more than three quarters have agreed to payment extensions for customers.
Maintaining and increasing sales is the most important short term business issue for 74% of small business owners, the survey found.
The survey was conducted between August 9 and August 30 among a national random sample of 750 small business owners and operators.
2. Twitter's Jack Dorsey on his latest startup, Square.
Jack Dorsey is hoping he can shake up the mobile commerce space just as much as he did with the social media industry when he co-launched Twitter. Two years ago, Dorsey launched
, which lets merchants process debit or credit cards by using a square-shaped card reader for their smartphones or tablets and a flat 2.75% swipe fee. Currently, Square is used by 2 million merchants and will be rolled out at
This week, the startup closed its fourth round of funding, raising more than $200 million. The company is now valued at more than $3.2 billion, according to the
Still, the mobile payments space is crowded with the likes of
, the major credit card processing companies, and on Wednesday, even
getting into the act, launching a payments service.
In an interview with the
, Dorsey shared that even he gets caught off guard at times with potential competitive threats.
His business plans are also not the traditional 40-page documents. "We definitely have a lot of plans and we stick to them and hold ourselves accountable to them. But the way we funded ourselves is not
showing investors a 40-page business plan. It was by asking, 'Do you have a credit card? I'd like to show you the new product.' Once they are hooked, say, 'Here's how we will scale. Here's how we will build it,'" Dorsey told the
3. Corporate venture capital gives less to New York startups.
Investment from venture capital firms backed by big corporations like
rose to $2.1 billion in the second quarter, nearly double that of the first quarter and 16% higher than the year-earlier period. However, one of the biggest hubs for tech startups, New York, saw just $30 million of that money, according to CB Insights as cited by
New York is home to a burgeoning tech scene but it usually attracts smaller, early stage deals led by independent venture capital investors, the article says. Even so, the $30 million in total investments (equating to nine deals for the quarter) was 87% lower than the year-earlier quarter as well as a five-quarter low.
No surprise, California garnered 75% of the quarter's total corporate investment dollars, or $1.45 billion. Massachusetts came in second place, garnering 4%, or $80 million.
-- Written by Laurie Kulikowski in New York.
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