Strategic Advice Overcoming 3 obstacles to business growth

Securing funding to support your growth goals may mean improving cash flow and finding ways to increase efficiencies.

“It’s really looking at inventory turns, accounts receivable collections, and how much you can stretch out your accounts payable,” says Hughes. “Truist can do a thorough analysis and come out with an equation that says to improve cash flow by X, you need to reduce AR collection days by Y and stretch out AP collection days by Z. Then we find solutions for what you’re up against in order to create excess cash flow to fund growth.”

Hughes says this type of thorough analysis may look different depending on your stage of business. “At the earlier stage, it may be the first time that many of these companies have done this, and it can be very impactful,” he says. “With more established companies, it’s more about listening to what solutions they’re already using and seeing how we can improve upon that.”

In any stage, the key is to first understand what you’re trying to accomplish with growth and then find ways to create more capacity to move in that direction. 

Economic volatility can cause uncertainty around business valuations. That could create challenges if your business growth strategy involves acquisition—or if you’re preparing to sell your company.

“It’s human nature not to want to overpay for a business whose valuation could go down or to sell for less than what you think your company is worth,” says Hughes. “So, in times like this, everybody goes pencils down and waits.”

Hughes stresses that patience is key during periods like these. Often, you’re just waiting for confidence in the market to build enough that activity picks up again. The key thing to focus on during these times, he says, is maintaining your margins.

“You don’t want to lose the ability to go out and purchase on the other side of this,” says Hughes. “So, if you had a predominantly inorganic growth strategy, you really want to focus on your margins so you keep the capacity to purchase when the timing is right.”

Your business lifecycle stage can also influence how you weather a downturn in M&A. Hughes says many established businesses have the ability to wait it out, but some early-stage companies are more likely to decide to sell quickly rather than deal with the uncertainty.

“That’s where you see some of the more opportunistic M&A that you sometimes see even in down cycles,” says Hughes.

Ensuring you have backup plans, agile financial processes, and comprehensive risk management strategies in place can help you build resilience in the face of any economic conditions. That’s why Hughes says resilience is key to nurturing long-term sustainable growth.

“Getting caught up in wishing things were different won’t help you figure out how to get through it to what’s next,” he says. “The more of these disruptions that happen, the more valuable it becomes to have a bank that knows and understands your business and is willing to help you ride out the storm.”