Cash holdings and resilience in SMEs

Professor Ross Brown and Augusto Rocha and from the School of Management, with Professor Marc Cowling of the University of Derby, have published new research on small and medium-sized enterprises (SMEs) and resilience. The piece has been published in the International Small Business Journal: Researching Entrepreneurship.

The research focusses on cash holdings of SMEs prior to the COVID-19 pandemic. The findings show that only 39% of the of businesses studied were bolstering their cash balances leading up to the outbreak. This suggests that 61% of businesses may run out of cash, including 8.6% that had no retained earnings whatsoever – with micro firms at particular risk.

While recognising the value of key government support such as furlough payments, the article points to the importance of precautionary saving for SMEs, in order to enhance their resilience for unexpected and severe events.

This work is part of a wider programme of research being undertaken by Brown and Rocha to examine the multi-faceted ways in which the coronavirus outbreak has impacted entrepreneurship.

See Did you save some cash for a rainy COVID-19 day? The crisis and SMEs.