Spend wisely, not more

These have been demanding years for many Vietnamese companies. In 2025 about 195,000 new enterprises were founded and more than 100,000 returned to business, both encouraging signs. At the same time, around 114,000 temporarily suspended operations and some 36,000 completed dissolution. Behind every one of these numbers are owners who worked extremely hard.

The tempting leap

When sales slow and loans weigh heavily, it is natural to look for a big answer: a new production line, a new market, a new software system, a new project that will finally earn enough to pay everything back. Sometimes that is exactly right. But when the new investment is financed with more borrowing, a difficult situation can become a harder one. According to Fitch Ratings, credit in Vietnam grew by about 19 per cent in 2025 and reached around 145 per cent of GDP, high by international standards. Money is available. The real question is whether each loan will earn clearly more than it costs.

Psychologists have a name for part of this. In a well-known study from 1976, Barry Staw found that people who felt responsible for a disappointing decision tended to put more money into it, not less. It is a very human reaction, and worth knowing about, because it affects experienced leaders as much as anyone.

Small, cheap and effective

Often the most valuable improvements cost very little. In the ILO's SCORE programme in Vietnam, which helped mainly wood and furniture factories with workplace cooperation, quality and productivity, 91 per cent of participating firms reported cost savings, 29 per cent reduced defects and 42 per cent reduced staff turnover. None of this required large machines. It required clearer routines, better communication and staff who were invited to improve their own work.

The same is true of cash. Customers who pay slowly, stock that sits in the warehouse and unclear payment terms can quietly absorb more money than a new loan would bring in. Freeing that money is usually cheaper than borrowing it.

A calm order of steps

A sensible sequence often looks like this. First, understand clearly where the company makes and loses money. Second, steady the cash flow and talk early and openly with lenders; the World Bank recommends that viable firms under strain restructure their debts early rather than wait. Third, make the low-cost improvements that people inside the company already know are needed. Only then invest, in the one or two things that will clearly pay back. Investing is not wrong. Investing in the right things, at the right moment, is what makes it work.