Earlier this year Ernst & Young surveyed business owners about how they plan to finance growth. Most respondents with revenues of up to $40 million said they'd rely heavily on cash flow and profits (much as they had said in last year's survey). But plans to use other types of financing changed. The number of companies preparing to take advantage of lower interest rates by increasing their use of short-term debt surged. Bigger businesses were thinking more about selling stock.
Percentage of business that chose each financing method, by company size
$1Ã‘$14 million $15Ã‘$40 million
in revenues in revenues
|Cash flow/operating profits||71.4%||64.7%||64.4%||68.6%|
|Short-term bank debt||58.9||38.2||53.3||51.4|
|Long-term bank debt||35.7||41.2||51.1||42.9|
Source: Ernst & Young survey of 259 members of the Institute of American Entrepreneurs, Dallas, May 1992.