Even though the economy has been showing signs of improvement, small business owners don't plan on hiring much in the next 12 months, potentially signaling a rocky year for these companies.
When small- to medium-sized businesses go through periods where cash flow falls below normal levels, taking on additional business can be a struggle. With that being said, once these companies get through these trying times, they may need to rely on financing in certain instances.
For example, small- to medium-sized wholesalers could opt to use purchase order financing if they receive an order they are unable to handle using their own resources.
It appears as though trying times are ahead, with the Wells Fargo/Small Business Index survey revealing more small business owners are letting employees go than hiring them.
Gallup chief economist Dennis Jacobe told the Los Angeles Times that should the economy continue to improve, confidence will leak into the small business sector.
"Because small businesses are the key driver of job growth in the U.S. economy, it is hard to see how the recent surge in economic optimism – at least on Main Street – can continue to increase without increased small-business job growth," he told the source.
Even if small businesses begin to reap the benefits of a growing economy, wholesalers will still likely need to rely on purchase order financing. Oftentimes, smaller companies don't have the available resources to fill a large order.
This type of financing agreement allows them to obtain up to 100 percent of the funds needed to fill an order. One of the major benefits is that it prevents a small business from having to sell equity in their company to take on additional business.