Taking Investment From Friends Or Family

Your very first port of call for investment is your family and friends to help you fund your start-up.  If you like the majority of entrepreneurs, you probably have bad credit and can’t get a loan, and this option is much easier for you.

The problem with this method is that in the event that the business goes bust or things don’t go according to plan, it can cause major strain on these relationships, and often lead to major confrontations.

Always have integrity, and always ensure that you can pay back your friends or family in some way or form, specifically when it is a loan.

If it’s a straight forward equity investment, make sure that your friends or family members know (before you take their money) that it’s a risk and that they could lose all their money if the business goes bust.  Be straight up and honest, as these people have trusted you and invested in you.  That way if your company ever goes bust, they can accept those losses.

Yes, businesses fail and life happens, but then do not run away from any promises you made, face up to it, and make amends in the best way possible for you at that stage.

I have been in that situation, I could have easily thrown contracts in their faces and told them that sadly that’s how the cookie crumbles or avoided them.  But instead of running away or being embarrassed I spoke to these friends and family members.  I didn’t have cash, but I made amends.

Owing money can destroy relationships, so act with integrity and maintain those relationships.

Integrity in business is important if you every want to be successful and stay successful.  Do not let the allure of money make you compromise your integrity.

Remember your friends and family are your first port of call for funding, but also the people who will be there with you to the end.

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