Nonemployer Businesses Are More Likely to Fold than Hire Employees

A study from JP Morgan Chase Institute tracked the employer status of businesses during the first 4 years of operations. It found that nonemployers are greater than 5 times more likely to exit than hire employees. But many small businesses are stable employers (5-20 employees); they are likely to use electronic payroll. Small businesses with volatile expenses (relative to revenues) are much more likely to exit than those with other cash flow patterns, suggesting that large and perhaps unexpected expenses could be especially difficult to manage.