How Family Businesses Get Out of Debt — And Why Cash Flow Is Key
For many family businesses, debt seems like an unavoidable part of growth. You take on loans to buy buildings, trucks, inventory, or even cover payroll during tough months and before long, it feels like debt is just the cost of doing business.
But it doesn’t have to be that way.
Some family business owners are proving that you can grow without being crushed by debt. And the secret isn’t complicated, it starts with understanding and managing your cash flow.
The Problem: Growing Debt, Shrinking Options
Betsi Bixby of Meridian Associates has worked with countless family businesses who believed their debt levels were “normal” until the day they couldn’t ignore it anymore.
One owner in California realized his bank was about to call his loan when real estate values fell and his property no longer covered what he owed. Another owner watched costs rise so quickly that his line of credit was maxed out before he could react. A third decided to act when his son joined the business and he didn’t want to leave his next generation saddled with millions in debt.
Each of these owners experienced the same turning point: realizing that their debt was holding back their business, creating stress, and putting the future at risk.
The Solution: Focus on Cash Flow
Getting out of debt doesn’t happen overnight but it starts with identifying where your cash is tied up.
According to Betsi, the 3 most common culprits are:
- Receivables: Slow or inconsistent billing and collection habits drain cash fast
- Inventory: Letting inventory balloon beyond what’s needed ties up precious dollars
- Supplier relationships: Failing to negotiate favorable terms or overpaying suppliers eats away at margins
In each of these stories Betsi shared, the owners focused on one or more of these areas and saw results surprisingly quickly.
For one, the key was reducing bloated inventory. For another, it was cleaning up receivables and bad debts. For another, it was doubling down on payments to chip away at a massive balance.
The Result: Peace of Mind and Financial Freedom
These owners didn’t just improve their balance sheets, they regained confidence, slept better, and created a stronger foundation for future generations.
One of them even emailed Betsi just two lines: “We’re at zero on the line of credit. It feels wonderful.”
When you understand where your cash is going, and take control, you grow wisely, preserve your legacy, and free yourself from the stress of being overleveraged.
If you want to hear these full stories and get actionable steps to tackle debt in your own family business, listen to the full podcast episode here on the Family Business Breakthroughs podcast.
