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Business is booming and it might be time to level up by expanding, acquiring or merging with another company. If you’re at a point where bootstrapping isn’t enough, it could be time to seek some financing — a daunting process for many first-timers.

Here are five tips from a junior capital lender and an experienced business manager on how companies can get their operations ready for funding:

1. Get your finances in order, and your financial statements

In 2016, Enex Fuels underwent a major change: Its management team bought the company from Imperial Oil and went independent. It was a major departure for the wholesale fuel distributor in B.C. — and a costly one.

“We needed some goodwill capital,” says Todd Nicklin, president of Enex Fuels, “and chartered banks don’t typically finance goodwill.”

The company approached Vancouver-based First West Capital, attracted by its reputation as a growth-focused lender not afraid to take on a bit of risk.

“It was a huge learning experience,” Mr. Nicklin says. “This was our first foray into subordinate debt, and the due diligence First West Capital did on us was totally unfamiliar to what we’d previously experienced.”

The First West Capital team pored over Enex’s safety records and insurance policies, interviewed its management team and scrutinized its financials. Fortunately, Mr. Nicklin and his team were reasonably well-prepared with clear and complete financial reports.

“It sounds obvious,” says Steve Chen, head of First West Capital, “but many companies don’t keep great records, and they don’t have consistency in their use of performance metrics.”

2. Have a growth strategy — and be prepared to defend it

With Enex, First West Capital needed to know if it stood a reasonable chance of making good on its growth projections. It placed a lot of emphasis on Enex’s forecasting methodology, which needed some fine-tuning and both firms worked on it together.

“It’s ok for a business to still be investing in their growth, and that ongoing investment may mean that profitability will fluctuate from year to year,” Mr Chen says. “More importantly, we know that growth is not a straight line, and that’s why we exist – we are the patient capital that can be there to invest in the business alongside the management team and really help them achieve their growth objectives.”

That also means being aware of and communicating your competitive advantages — and being innovative in generating them.

To illustrate the latter point, Mr. Chen uses the example of a contractor he worked with whose company employed a fleet of maintenance workers. The workers often drove long distances for building-repair calls and were faced with two major problems; they often didn’t have the tools they needed after arriving at a job site and some employees, more than others, were regularly called back to fix faulty repairs.

The contractor developed a computerized estimating system, detailing notes on all customers and every truck in his fleet, including the call-back rate for different employees. That allowed him to route trucks more likely to have the right parts to the right locations and work with employees who had high call-backs rates to improve their performance.

“He can open up his laptop and see his entire fleet, the employees, the call-back rate, and he has the best efficiency I’ve ever seen and makes healthy margins,” Mr. Chen says. “That was really impressive to us.”

3. Be transparent about risk

Enex had to convince First West Capital that it was worth the risks inherent to the business in areas such as the environment, health and safety, credit (the company extends credit to customers) as well as inventory and supply.

“Entrepreneurs are inherently optimistic, and they tend to sweep risk under the carpet,” Mr. Nicklin says, “but every business has risk, and if you can talk about yours honestly and show how you’ll mitigate it; that’s huge.”

A junior capital lender like First West Capital will have a greater risk appetite for uncertainty than a major bank, Mr. Chen says. Still, both will want to see that clients understand risk and are strategizing around it. That may be especially important in the aftermath of COVID-19, with so many business models, from retail to hospitality, on shakier ground.

“But if you’ve found a way to thrive in this new environment,” Mr. Chen says, “that can be especially impressive.”

4. Demonstrate an effective marketing or communication plan

A marketing plan should answer a few vital questions such as: What is your market? How will it grow? What is the best way to reach it? Who are your competitors, and what are their advantages versus yours?

“I’m looking for an understanding of how clients measure their customer engagement,” Mr. Chen says. “What kind of customer insights can you share, so I can understand what motivates your customer to buy your product over another?”

It also means having an understanding of what channels work best to reach them. A business-to-business company like Enex doesn’t necessarily need to go hard on social media or consumer-focused advertising but a strong website and targeted outreach to potential clients is a must.

5. Build up your management team

Any financier will want to see a company’s bench strength, which is the collective talent and skill of its management team and its ability to step into positions of greater responsibility if needed.

“As a company scales, that needs to grow more and more,” Mr. Nicklin says. “The financing can’t be dependent on a single person, like a president, who might have run everything when the company was smaller. Your chief financial officer needs to demonstrate a closer relationship with the bank, sales managers with customers, and so on. It illustrates depth and continuity of management; risk goes way up if everything relies on one person to sustain it.”

After its 2016 buy out, Enex underwent several more rounds of expansion with financing from First West Capital. The subsequent rounds were far easier, thanks in part to the trust built up between the lender and Enex’s management team.

“Once we demonstrated that the first transaction was as successful as we predicted, they had a lot of confidence in our forecasts, our methodology and our team,” Mr. Nicklin says. “But we had to prove ourselves first.”

Advertising feature produced by Globe Content Studio with First West Capital. The Globe’s editorial department was not involved.