Small Business Ideas & Small Business Marketing: Tips On Finding Start Up Capital

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April 9, 2007

Tips On Finding Start Up Capital - Approaching Friends And Family

The excerpt below is from a series of articles on raising start-up capital for your business idea ...

When raising money from those you know, you must decide whether their money buys equity in the company, or whether it will be a cash loan. Both options carry their own risks. No matter which option you choose, it is likely that the people who put up money will feel that they have a vested interest in the future of the company. Giving them equity means that they have a legal right to be involved in financial decision making. Yet those to whom you owe cash will often feel that your decisions affect your ability to repay. In either situation, you may begin to feel that your investors are studying and second-guessing your every move.

You must also consider the what-if factor. Some people are hopelessly generous and optimistic about investing, until something happens in their own lives that changes their financial picture. How will you handle it if Aunt Suzie suddenly needs that $10,000 to pay a medical bill, and you are unable to repay her? Be sure that your investors can take the financial loss in the event that the company fails and you are unable to repay the loan given to you as startup capital for your business idea.

Read the full article here: Start-Up Capital

Posted by David at April 9, 2007 11:05 PM