How Manufacturing Businesses Achieved Remarkable Growth During the Pandemic
The pandemic brought devastating hardship to businesses of all sizes, across sectors and left many struggling to find ways to keep their doors open. According to a joint study by the University of Illinois, Harvard University, and the University of Chicago, more than 100,000 small businesses have shut down permanently since the pandemic peaked in 2020.
But for a fortunate few, the pandemic led to unexpected opportunities that helped them achieve unprecedented growth.
We spoke with a few of our clients in the hard-hit manufacturing sector to learn how they were able to pivot during the pandemic, overcome hardships, and achieve new levels of success.
Manufacturing-focused Staffing Company Sees 3X Growth
One of our clients, a family-owned staffing company that serves the manufacturing industry across the southeast United States had been enjoying slow and steady growth prior to the pandemic.
When the pandemic hit, business initially slowed. But that changed dramatically when a long-time client needed help finding 1200 additional workers to help them manufacture COVID-testing kits. This was a staggering increase from the 10 or so workers the client might typically request.
“When this request came in, we had to triple our internal staff,” said the owner. “We could only get it done because AR Funding was able to help us quickly.”
Doubling or tripling a business overnight requires capital, but accelerated growth can make it difficult to access traditional funding.
“We have great relationships with our banks, but accelerated growth scares them,” the owner stated. “When we realized the bank wasn’t an option, we connected with AR Funding. Invoice factoring meant we were able to move quickly and make it happen.”
Though the contract was only for a few months, the staffing company was able to use the increased profits to expand their footprint. With plans to add one or two new branches every year, they see invoice factoring as an essential component to meeting their short-term goals and sustaining long-term success.
“Factoring offers the flexibility and confidence we need to keep growing in the short term and ensure we meet our payroll on a weekly basis,” the owner explained. “They understand our business and our growth plans, and they want to be the solution that gets us to the next level. They genuinely care about us.”
Industrial Service and Solution Provider Gets Set for Success
For another client, a leading industrial service and solution provider, the growth story was different. The company was deeply impacted by the economic slowdown caused by the pandemic, but it provided them the time needed to strategize and plan so that they could be ready for growth once the economy reignited.
“2019 was a good year for us, and it allowed us to invest in new equipment that arrived in the middle of the pandemic,” said the owner. “Once the pandemic lifted, we were positioned to start selling at an increased capacity.”
The company picked up new clients and saw bigger orders that led to 50% growth in four months. But meeting the increased demand put a strain on their cash flow. With banks exercising extra caution in increasing credit lines during the pandemic, the company was forced to find financing elsewhere.
The owner was referred to AR Funding through a client. He reached out to learn more about the process of invoice factoring, and he liked what he heard.
“I could step on the gas and grow my business without worrying about cash. If I was generating invoices, I knew I’d have access to cash until they were paid.”
While a lack of labor and supply chain issues created unexpected hurdles on the path to growth, factoring enabled the company to pay suppliers in a timely manner to ensure they received the materials needed to serve their customers. They’re also using the increased cash flow to offer more competitive salaries to attract the workers needed to meet demand in a tough hiring environment.
Looking ahead, the owner sees AR Funding continuing to play a key role in sustaining success.
“Having the ability to rapidly grow makes it much easier to do business. I don’t need to worry about ‘how are we going to afford this?’ I can just focus on growing.”
Advice for Success
While reliable cash flow is critical to success, it takes more than capital to make a business work. Both companies credited their success to getting to know their customers, maintaining open communication, and focusing on what they do best. They also reiterated that business owners shouldn’t be afraid to look for alternative funding when traditional funding isn’t available. “AR Funding was very flexible. We had things we needed done right away, and they were able to accommodate that. They’re very prompt and have been excellent to work with.”