I hate the idea of asking friends and family for money to use in a business. I hate it for three reasons:
- It changes the dynamics of the relationship. People always feel uncomfortable talking about money. People relate money to power and pride. Both of those things wreak havoc on friendships.
- The person who loans the money often wants to play an active role in their investment. This can be disastrous. everybody thinks they can run a restaurant and everybody has ideas about how they can strike it rich with a small business. The truth is that the friend/relative should allow you to keep your focus on the business so you can pay back the loan.
- You never truly get out of debt. If the business is successful your Uncle Joe will be able to throw his financial support into your face.
Photo by Irina / Riri.
Krystle Armstrong on July 3rd, 2006 at 5:28 pm
Isnt it wierd how people get uncomfortable talking about money? Everybody has money as some point in their life, whether they lose it or make more. Money makes the world go around as far as im concerned in todays time, and it is everywhere, being promoted, being given away, being stolen. Why feel so uncomfortable talking about a subject that everyone and pretty much everything revolves around?
joseph on July 4th, 2006 at 1:27 pm
Indeed, but love money can be useful in the seedstage. What is more dangerous though is to sell to friend and take it as “early market study”. Friends are not market, they can be useful but misleading too.