Growing pains: Shaheen talks cash flow issues with Salem small business
SALEM, N.H. — Foxx Life Sciences needs more space, employees and capital to continue funding the company’s growth.
The business that develops and manufactures lab equipment has seen over 40% growth in six of the last seven years, and that growth doesn’t happen easily, according to President and CEO Thomas Taylor who started the company out of his Windham home in 2008.
"We face a huge cash flow crunch,” he told U.S. Sen. Jeanne Shaheen, when the Democrat visited the 55,000 square-foot facility for a tour Monday morning.
The company currently holds dozens of patents for laboratory equipment and employees are working to produce more.
“This is a diverse, growing company,” Taylor said. “It’s because of the growth — you have to be able to hire more people, buy more equipment and you have to buy more inventory for all the customer sales. And those three things challenge your cash flow and that is why the grants and the loans are so important.”
Taylor has taken advantage of various initiatives from the Small Business Association to grow his business into a multinational company that sells its North American-made products across the country and the world. Shaheen was there to see the growth and celebrate small business week.
Taylor explained that the federally-funded small business programs such as lending assistance, the State Trade Export Promotion (STEP) program, and the Export-Import Bank — a government agency that assists with the export of goods and services — have helped Foxx thrive, he said.
“It’s six out of seven years with 40% growth each year,” Taylor said. “The company has doubled six times.”
In 2010 Shaheen helped to create the STEP program used by Foxx. The program gives grants — supported by a mix of federal and state funds — to small businesses to help with increasing foreign exports and international marketing.
Small businesses “create two out of three new jobs and they have produced 16 times more patents than larger companies, so it’s a good place to invest,” Shaheen said. “That’s why, as we are looking at the tax code, we ought to be thinking about how we can provide assistance to small- and medium-sized businesses because the big corporations don’t really need those tax breaks.”
While talking with Taylor, Shaheen gained insight into the cash flow crunch that small businesses can face, “so, thinking about what else we can do to help out with that” is going to be part of her work as a senior member of the Senate Committee on Small Business and Entrepreneurship.
Foxx has also been able to take advantage of a variety of federal loans that aim to help manage cash flow for small businesses. Those loans come from a variety of sources that can help pay for equipment and property to working capital.
“All the programs tend to extend out when a bank wouldn’t be able to do it without the enhancement,” said Charles Withee, president and CLO of Provident Bank, which is the bank Taylor uses for funding the business. The enhancement Withee is referring to is a type of guarantee from the government to pay back the loan, typically up to 75%.
“We (banks) are governed and regulated and there’s risk tolerance that you have to have,” Withee explained, adding that the Small Business Association’s specific loans help mitigate some of the risk.
"The company can be growing exponentially, but like these guys, (it needs) to invest in inventory, but inventory isn’t cash yet — inventory gets sold, and turned into a receivable and then it turns into cash,” Withee said. “If a company grows at 40-plus percent a year, it’s going to outstrip its ability to earn."
With the growth, Foxx Life Sciences currently employs about 50 people, but it is searching for talent in every department. A full staff would be more than 60 employees, Taylor said.
Part of hiring for the business means looking for international talent, Taylor told the Shaheen. Employees with various language skills and advanced degrees are important for building the company’s international sales.
When asked about the visa process for hiring international talent, Taylor acknowledged that he and other small business owners felt the process was cumbersome.
“It’s a formal process that’s taxing for us because our (human resources) people have to deal with the lawyers to help them get the paperwork through,” Taylor explained. “And that’s where, if the government had a program, that if you were a certain size and could help out (with that process) it would be huge.”
