You have a great idea for a business? Now you need funding to take your idea to the next level. Reaching out to friends and family seems like a logical move. But think twice before considering this funding approach as opposed to utilizing professional investors. Importantly, professionals have the experience to objectively analyze your concept and business model in ways friends and family might not.
Friends and family may want more of a say in your business decisions than you are comfortable offering, and if things get bumpy crucial relationships can be put at risk. The friends-and-family investment approach is often called “Love Money” and in many cases love is blind. That ups the financial and personal risk for all involved. So learn as much as you can if you are considering this funding approach, and then proceed with caution.
Ready to learn more now? Read this summary of the pros and cons of family funding from the Small Business Administration.
Join the GlassCeiling.com conversation. Did you finance your business with money from friends and family? Would you recommend this route to others? Share your story here