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Navigating Growth: Financial Strategies for Expanding
Manufacturing Businesses

by Dustin Gresen

In the manufacturing industry, expansion never comes easily. In one of the most resource-intensive industries in the world, growth often comes through sound investment decisions and a significant degree of financing to fuel them. This article will cover a few strategies and approaches that you can use to fuel growth and achieve success in the fiercely competitive manufacturing industry.

Loan and line of credit acquisition

Acquiring a loan or a line of credit from a bank is one of the best steps you can take to move your manufacturing business on the path of growth. Whether you are purchasing new equipment, hiring new personnel, expanding your facilities, or embarking on any kind of growth strategy – banks can provide you with the financing you need to fuel it.

However, not all lenders are made equal. Acquiring a loan or a line of credit is a very pivotal decision that requires intense consideration. When searching for a lender, you will want to find a lender that has the following qualities:

  • Willingness and ability to support your company through good times and bad times
  • Financing options that strongly align with your company’s needs, rather than prioritizing their own needs
  • A strong level of knowledge and/or experience in the manufacturing industry, or a willingness to learn

Alongside each of the above qualities, a great lender will offer flexibility, personalized service, and generous terms, all of which are needed to survive and thrive in a complex, fast-paced industry.

Workforce management

One of the best ways that manufacturing companies can expand their growth is to invest extensively in their working capital. In an industry reliant on skilled labor and experiencing a labor shortage, it’s important to focus on retention and internal development as much as you can.

Building a skilled and loyal base of employees is a significant investment, but one that pays off in the long term. Your company will be better suited to excel in current market conditions and adapt to those of the future.

Do you have a star performer that you want to upskill, re-skill, or move to a leadership position? Invest in a training program to help them along the way. Need to focus on keeping people around for the long run? Listen to their concerns and invest in whatever you need to solve their day-to-day problems and offer long-term support.

Small Business Administration (SBA) resources

If you’re a small manufacturing business, the Small Business Administration is one of the best resources available to you. The SBA can connect you with financial institutions, provide them with guarantees, and open up a whole world of competitive financing options for you.

The SBA offers a variety of programs designed to help small manufacturing companies grow, including:

  • Microloans: for companies who need loans under $50,000
  • 7(a) loans: flexible, general purpose loans for companies with a broad set of needs
  • 504 loans: loans up to $5 million for fixed assets like long-term machinery/equipment, new facilities, and existing buildings or land

Mergers & acquisitions

Following a couple years of downturn, PwC expects mergers and acquisition deals to increase in 2024 in volume on the back of improved and more clear macroeconomic conditions. They explain that mergers and acquisitions can help manufacturing grow in many different ways, including but not limited to the following:

  • Diversifying geographical footprint
  • Acquiring modern technological assets and building redundant facilities
  • Address supply chain uncertainties
  • Increase adherence to sustainability standards

M&A deals can be financed through a variety of options, including bank loans, lines of credit, private lending, Small Business Administration resources, and more. Growth in the manufacturing industry is made possible with sound investments and smart purchases on the back of secure financing adjusted to your needs. Seek out reputable organizations and flexible lenders like the SBA and local banks that will gain you access to the capital you need to invest in your people, invest in your facilities and equipment, or expand your presence either organically or through an acquisition.