Growing Firms In 2026: What To Prepare For

Transcript

Hi, I'm Jay Douglas, Vice President of Strategic Markets at Oak Street Funding. Today I'm going to be answering some frequently asked questions about growing firms in 2026 and what to prepare for. Some things I'll be covering today are having the right financing structure in place, financial risks that tend to limit growth, timing growth in 2026 and more. 

Before trying to grow in 2026, what financial pieces do RIAs need in place, so growth is properly funded and doesn’t strain cash flow or operations?
This is really a great place to start because so many firms jump straight into growth mode without making sure the foundation is solid. Before firms should even think about expanding, they really need to get a clear picture of their current financial health. That means understanding your cash flow inside and out. Not just revenue, but the timing of when money comes in and when it goes out. A lot of RIAs look profitable on paper, but are actually running pretty thin month to month. Firms also want to have a realistic operating budget that accounts for growth related expenses. Things like additional staff, technology upgrades, maybe a new office space. Having a cash reserve or line of credit already in place could be huge. Firms don't want to be scrambling for capital in the middle of a strategic growth push. The firms that scale successfully are the ones that plan the financial side before they need it, not after. 

As firms plan for growth in 2026, how should they think differently about funding expansion or new initiatives compared to how growth was financed in the past?
You know, for a long time, a lot of RIAs funded growth almost entirely out of their own cash flow, just reinvesting profits back into the business. And that can work when growing slowly. But the landscape has really changed the pace of growth today. The competition for talent, the technology investments, these are all table stakes now and they all require more capital and they require it faster. So firms should be thinking about strategically outside financing options. The key shift in thinking is this. Using smart leverage to grow isn't a sign of uncertainty. It's actually a sign of sophistication. The sharpest RIAs are preserving working capital for day to day operations while deploying borrowed capital towards things that can generate a return. It's the same advice advisors give their own clients about their portfolios. Diversify your sources of capital and be intentional about how you deploy it. 

Growth often puts pressure on people, systems, and cash flow. How can having the right financing structure in place help firms scale more smoothly over time?
This is such an important point because growth, even well planned growth, creates stress on the business. Let's think about it. You bring on a wave of new clients and suddenly your team is stretched pretty thin. You need to hire, but hiring takes time and money up front before the new advisor or support person is generating revenue. That gap can really pinch cash flow if you're not prepared. Having the right financing structure is like having a shock absorber for your business. It smooths out those bumps. Having access to a credit facility can allow you to move ahead of the curve. Instead of playing catch up, you can invest in better technology or systems before they become a bottleneck. And the beauty of it is it won't be a rushed decision under financial pressure and become. It can become thoughtful strategic investment because you have the Runway to do so. That's really what separates firms that grow sustainably from firms that may stumble. 

What financial risks tend to quietly limit growth for RIAs, and how can access to the right capital help firms address those risks before they slow down momentum?
It's the quiet risk that are sometimes the ones that get us. There are. There are a few that I. That I really see come up over and over again. First is key person risk. If a firm's revenue is highly tied to one or two people and then something happens, they leave, they burn out, they get sick. That's a huge vulnerability. Having having capital available lets businesses build out the team and reduce the concentration before it becomes a crisis. Second is technology debt. A lot of firms are running on systems they've outgrown and they know it. But they keep putting off the upgrade because the cost. Meanwhile, it's quietly eating into efficiency and client experience every single day. That's a hidden drag on growth. And third, I'd say just the lack of general financial cushion. Markets are unpredictable. If a business is running lean and we hit a downturn, revenue may drop right when you might need to invest more in capital retention or client retention. Having access to capital gives you the ability to play offense, even when the market is maybe making everyone else play defense. 

As firms look toward long-term growth and continuity in 2026, how should leadership depth and succession planning be approached from a financial standpoint?
This is one of those topics that everyone knows is important, but it tends to get pushed to the back burner. And look, I get it, there seems to be always something more urgent. But secession planning, in my mind is fundamentally a financial conversation, not just an HR exercise. If a firm's owner is thinking about transitioning leadership over the next five to 10 years, they need to start investing in that now. That means developing the next gen of leaders. And that costs money, whether it's training, mentorship programs, or giving them equity stakes to keep them invested in the firm's future. It might also mean bringing in some outside talent at the senior level, which as we know, sometimes doesn't come cheap. From a financing perspective, having access to capital can make internal secession far more viable. This can allow structuring buyout over time, fund leadership development and ensure the transition doesn't drain the firm's operating capital. The firms that handled this well are the ones where it's not a sudden event. It's a gradual, well funded process. And honestly, having a solid succession plan in place also makes firms more valuable. Clients, employees and potential acquirers all want to see that the business doesn't depend on any one or two persons. 

With continued uncertainty in the market, how should firms think about timing their growth in 2026, and why does having financing prepared ahead of time matter so much?
That answer is simple, but we have to remind ourselves constantly. Don't try to perfectly time your growth. It doesn't work for investing, and it really doesn't work for business growth either. There's always going to be uncertainty. If you wait for perfect conditions, you could wait forever. What firms can control is how prepared they are. Having financing prepared ahead of time gives firms optionality. It allows leadership to move decisively when the right opportunity arises, rather than scrambling to line up capital under pressure in uncertain markets. Flexibility is a competitive advantage, and preparation is what creates that flexibility. The best growth strategies aren't about waiting for the perfect moment. They're about being so well prepared that you can capitalize on any moment. 

I really hope this video gave you some deeper insights on what to consider when planning for growth in 2026. There's a lot to consider, but taking the right steps in planning can really make an impact. Thanks for watching and I wish you an abundance of success in the year ahead.