Before meeting with a prospect, you’d do your homework. You can look up the prospect on LinkedIn to study the person’s background. Look for connections and things you have in common. Go to the prospect’s company website and read up. Identify their mission and what problems they solve. Check out their clients to get an idea of what types of companies they serve.
Doing your homework can give you the upper hand in landing the prospect.
It can also help when you’re searching for working capital to scale your services and take on bigger opportunities that will grow your business.
What may not be clear is what to do before you meet with the bank or a company that offers financial services.
Start by pulling together the following:
- Your business plan.
- Financials: past, current and forecast.
- Marketing strategy.
- Management team bios.
- Success stories.
- Customer list.
- Examples of how your employees solved problems.
Once you have the documentation, here are four things you can do to improve your chances of getting to yes.
1. Document clear business objectives.
When asked what they do, many people provide answers that confuse more than help others understand their business. Although you’re seeking more working capital, that’s not your objective. If you’re in the oilfield services business, then your objective is whatever it is you do such as provide equipment with a 15-year guarantee or repair rigs within 48 hours.
This is a good time to review your business plan to see if it needs updating to reflect your current business goals and objectives. These change over the years as you find better solutions and hone your target market. While you may know why you need the money, the lender or financial services will want to know how funding will support your goals. So have an answer ready.
After updating and syncing everything, ask someone outside of your organization to review all of this to see if it’s clear. Encourage him or her to provide honest feedback. You want to feedback that goes beyond “It looks good.”
It’s hard to listen to feedback pointing out mistakes. Isn’t it better to know about them and fix them before meeting with the lender?
2. Research lenders and financing options.
Different lenders have different requirements. Some don’t do personal loans. Some don’t do business loans. Some only work with retailers. You want to approach the lenders who work with businesses like yours. Also, look at other options besides banks such as credit unions, regional banks, and private lenders.
After you’ve created a list of lenders, you can cut it by contacting the candidates and asking a few questions. See how they handle your call and questions. (See No. 3 for questions.) You want a lender that puts customer service first throughout the relationship.
Depending on your business, you may have another option that won’t involve borrowing money. Do you have unpaid accounts receivable? A factor pays you a discounted rate for your unpaid invoices. This allows you to get the money faster, save time in chasing down payments, get cash management under control and get rid of the headaches that come with trying to get paid.
3. Find out what the lender needs from you.
When you request working capital, here are 10 common questions lenders ask. Save time and show you did your research by answering these questions before meeting. Also, look at the questions to ask financing sources for more ideas.
When you make the initial call to the lender, find out what information they need from you and what you need to bring to the meeting.
4. Practice your presentation.
The meeting with the bank or lender is no different from any other business meeting in which you should dress professionally. You can practice answering the common questions. Write a short introduction explaining why you need the money and how you will pay off the loan.
Banks have rules and specific things they look for in a business. They turn down many successful companies — especially service-based ones — because they lack collateral. Private lenders have fewer rules to follow and can look at other areas of your business to determine if you qualify for funding.
Yes, it takes time to do your homework. But it can also save you time as you’ll go to the right place first and avoid wasting your time with the wrong lenders. And when you meet with the right lender, being prepared increases your chances of getting to yes.
What else can you do to prepare for meeting to ask for working capital?
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Need working capital to support your business strategy? Learn about accounts receivable financing that gets you the cash you need without a loan. Contact us at (800) 499-6179 or fill this form for a no obligation conversation.