Questions to Answer in Asking for Working Capital

March 10, 2011

Before you meet with a financial institution to ask for working capital to support and grow your business, be prepared by having the answers to these common questions. Even if you're not looking for financing, answering these questions verifies you're on track with your company's goals and growth plans.

What's your business about? When you answer this question, test it. Talk to someone who doesn't know your business. Explain your business. Then ask the person if the explanation made sense. Too often, the answer to this question confuses rather than clarifies.

What separates you from the competition? This is your chance to show what makes you different. Why would clients choose you over your competitors and stick with you?

What do you plan to do with the working capital? Obviously, something is motivating you to request working capital. Write a response that details your growth plans. If you have market data, use it to back it up. The lender doesn't care that you want to add X product or service to grow your business. The lender wants to know if anyone will buy it, which brings us to the next question.

How far does that money get you? How do you know the new product or service will be as successful as your current products and services? Did your customers ask for the product or service? What prompted you to add the new product or service? What the money will do for the product or service? Add a new employee to provide the service? Buy equipment to produce the product?

What's your marketing strategy? How are you going to let customers and prospects know about your new product or service? Current customers using your company's product or service won't instantly know about or want the new one. You also need to ensure your channels are ready to handle the campaign. For example, a company running a marketing campaign that will send customers to its website has to ensure the website can handle the influx of visitors.

How will you handle scaling? Should the product or service be a hit (we hope!), how will you handle increased requests for the product or service? Do you have the resources? Or if you're using the working capital, how will it handle the load?

Who's on the team? What are their experiences and skills? Talk about the people behind the company and use this opportunity to show off your great staff. Don't just say how great they are. Prove it. John closed over half of his sales leads. Discuss the employees who will be involved with the new product or service and their qualifications to take on something new to help grow your business.

What successes have you had? Find the data to back up your success stories. It'd also be smart to have a story or two in handy that tells how your company solved a customer's problem.

What's your favorite customer success story?