What Should Businesses Do in a More Challenging Market and a More Selective Capital Environment?

VCCI’s first Vietnam Private Sector Report presents a thought-provoking picture of the private business sector. Private enterprises remain a central force of the economy, but the business environment has changed. Customers are harder to find, markets are more volatile, access to capital is more selective, compliance costs are higher, while most businesses remain small in scale and their management capabilities have not yet fully caught up with the requirements of a new stage of development.

The figures in the report are not only meaningful for policymakers. They also serve as a practical reminder for business owners: the phase of growth that relied heavily on relationships, experience, accumulated assets and bank credit is becoming more difficult. When markets are favorable, many weaknesses inside a business can be masked by rising revenue, steady orders and fast cash turnover. But when markets slow down and capital becomes more selective, weaknesses in cash flow, asset structure, debt, management and growth strategy begin to surface.

Market pressure is not only a sales issue

One of the most notable signals from the report is the significant increase in difficulties in finding customers. This is often understood simply as a need for better sales, stronger marketing or more new customers. But at a deeper level, it may indicate that the old growth model of many businesses is reaching its limits.

A business may have previously grown based on a few major customers, a familiar customer base, a local market or a product category with stable demand. When the market is strong, that model can still work. But when demand weakens, customers delay orders, order sizes become smaller, margins become thinner and competition intensifies, the business is not merely short of customers. It begins to face a larger question: is its market position still strong enough?

At this point, the issue is no longer about “finding more customers at any cost”. The business needs to reassess which customers truly create value, which segments still offer acceptable margins, which products still have an advantage, which channels remain effective, and which markets may no longer be worth pursuing. Some businesses need to change the way they approach larger customers. Some need to find distribution partners. Some need to move from transactional selling to long-term partnerships. Some need to participate more deeply in supply chains. Others may need to scale down inefficient business lines in order to protect cash flow.

Market pressure, therefore, is not merely revenue pressure. It is pressure that forces businesses to revisit their growth strategy.

Capital is becoming more selective

Access to capital remains a major bottleneck for private enterprises. But the issue is not only that banks are reluctant to lend or that interest rates are high. At a deeper level, capital is becoming more selective. Capital providers are increasingly cautious about cash flow, collateral, the transparency of financial statements, management quality and the repayment capacity of businesses.

For many years, many businesses were accustomed to accessing capital based on collateral. If they had land, factories, real estate or other secured assets, they could borrow. But in the current environment, assets are no longer sufficient on their own. Banks and other capital providers will increasingly ask: does the asset generate cash flow, is the cash flow stable, can the business manage risks, and will new capital genuinely make the business stronger?

This is why many businesses have assets but still find it difficult to access capital. The problem is not necessarily that the business has no resources. The problem is that those resources have not been presented, organized and substantiated into a financial structure clear enough for capital providers to trust.

In the next stage, businesses that want to access capital cannot rely only on collateral. They need to prepare their cash flow, business plan, debt structure, financial records, asset legal status and capital-use story in a more coherent and transparent way.

Having assets does not mean having cash flow

A common reality in many businesses is that assets are not lacking, yet cash remains tight. A business may have land, factories, machinery, inventory, receivables, projects, brands, customer relationships and even growth opportunities. But at the end of the month, it still has to struggle with cash flow, interest payments, supplier payments and day-to-day operations.

The reason is simple: assets do not automatically turn into cash flow.

An undeveloped land plot is an asset, but it does not yet generate cash. A factory with excess capacity is an asset, but it still carries costs. An unfinished project may have potential, but it may also trap capital for many years. Large inventories may make the balance sheet look asset-rich, but they can lock up cash. Growing receivables may go together with growing revenue, but if collection is slow, the business still lacks working capital.

Therefore, when a business is short of cash, the first question should not only be “where can we borrow more?”. The more important question is: “where is cash being trapped inside the business?”.

Cash may be trapped in inventory. It may be trapped in receivables. It may be trapped in a project that exceeds the business’s financial capacity. It may be trapped in underutilized assets. It may be trapped in non-core investments. It may be trapped in short-term debt being used for long-term purposes. Or it may be trapped in the way the business owner allocates capital between core operations and external opportunities.

Seen from this perspective, capital management is not only about borrowing. It starts with understanding how cash flow actually works inside the business.

Assets need to be reclassified by strategic role

In a favorable market, holding many assets often creates a sense of security. But in a more difficult market and a more selective capital environment, not every asset remains an advantage if it does not generate cash flow or serve the core strategy.

An asset may have been very important in a previous stage but may no longer be appropriate for the next stage. A factory may have been suitable when the business was expanding production, but it may become a burden when capacity utilization declines. A land parcel may be a good accumulated asset, but it may also deprive the business of working capital if too many resources are tied up in it. A project may have potential, but if the business lacks sufficient capital to execute it, the project becomes a bottleneck rather than a growth driver.

The key question is not simply whether to sell or hold. The key is to reclassify assets.

Core assets are assets that directly create the business’s competitive advantage. Supporting assets are assets needed for operations but not necessarily assets that must be owned at all costs. Non-core assets are assets that no longer contribute clearly to cash flow or strategy. Potential assets are assets that can create value if placed into an appropriate structure such as partnership, joint venture, lease, partial transfer or co-development with a suitable partner.

Once assets are classified by strategic role, business owners have more options. The choices are not limited to borrowing more or selling. Assets may be better utilized, partnered, leased, contributed into a joint project, partially transferred, used in debt restructuring, or developed together with a strategic partner. In some cases, a transfer may be appropriate to release capital for core activities with higher returns.

Before seeking capital, a business needs to make itself clear

The need for capital often appears in very specific forms: working capital, debt repayment, project completion, raw material purchases, factory expansion, customer retention or simply the need to get through a difficult period. But for capital providers, the question is not only how much money the business needs.

They will ask: what will the capital be used for, where will repayment cash flow come from, is the collateral clear, is the legal status complete, are margins sufficient, can receivables be collected, does inventory turn over, are customers stable, which risks remain unresolved, and how will the business become stronger after receiving capital?

This is the major gap between how business owners see their own businesses and how external parties evaluate them.

Business owners understand the history, assets, relationships, opportunities and efforts behind their businesses. External parties do not see all of that. They see documents, reports, cash flow, legal status, contracts, ownership structure, debt obligations, operational risks and business plans.

If a business cannot present itself clearly, capital providers will become more cautious. They may reject the opportunity, request additional collateral, impose stricter conditions, extend the review process or apply a lower valuation in the case of investment cooperation.

Therefore, preparing for capital is not only about meeting banks, investors or partners. It is about making the business clearer, more verifiable and more trustworthy.

Restructuring is not only for weak businesses

Many people think of restructuring only when a business is in serious difficulty. In practice, restructuring should be understood more broadly: it is the process of reorganizing resources so that the business can operate more efficiently, withstand pressure better and gain more strategic options.

A growing business may need restructuring if cash flow cannot keep up with revenue. An asset-rich business may need restructuring if its assets do not generate cash flow. A business with expansion opportunities may need restructuring if its debt structure is too short-term. A business seeking capital or partners may also need restructuring if its financial, legal and operational records are not clear enough.

In this sense, restructuring is not a sign of failure. It is a way for business owners to regain control before market pressure, banks, creditors or partners force decisions from a weaker position.

A well-restructured business does not necessarily have to sell assets or sell the company. But if it needs to raise capital, enter into a partnership, form a joint venture, transfer part of its assets or pursue M&A, it will enter the process from a more proactive position.

What businesses need in the next stage

The next stage may not only be a game for businesses with many assets, many relationships or many years of experience. It will be a game for businesses that are able to look deeply at themselves.

Businesses need to understand more clearly which markets are still worth pursuing. They need to know where cash flow is being blocked. They need to reclassify assets by strategic role. They need to reassess their debt structure and financial resilience. They need to prepare their records before working with banks, investors or strategic partners. Most importantly, they need a map of options before making major decisions.

That map may include many directions: improving internal cash flow, restructuring debt, better utilizing assets, scaling down inefficient activities, finding co-development partners, raising capital for part of a project, forming joint ventures, transferring non-core assets partially, or in some cases preparing for an M&A transaction.

The key is that these options should be considered before the business falls into a passive position.

Conclusion: The question is not only “where can we find capital?”

In a more difficult market and a more selective capital environment, business owners should not stop at the question “where can we borrow more?” or “which investor should we approach?”. The deeper question is: has the business been structured well enough to receive capital, utilize its assets and enter into strategic partnerships?

A business with assets that do not generate cash flow will still face difficulties. A business with revenue but weak cash flow will still find it hard to convince banks. A business with opportunities but unclear records will still struggle to attract partners. A business with potential but an inadequate structure may be undervalued in any transaction.

For business owners who have revenue, assets and growth opportunities but are under pressure from capital and cash flow, this may be the right time to begin with something fundamental: reviewing the structure of assets, cash flow and strategic options before making larger decisions.

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Reference: Vietnam Private Sector Report 2025, VCCI