Get Your Business Funded: Creative Methods for Getting the Money You Need

How to Approach a Family Member

Before approaching any friend or family member, the first thing to do is to draft a plan. It need not be a formal business plan (although that is all the better), but it does need to be some sort of plan that explains what the business is, what the investment is, what your proposed terms of the deal are, and when it will be repaid. Not only will this give them comfort and more reason to say yes, but it will also give you the confidence to ask.

Once you have your (full or mini) business plan ready, the next step is to call the person in question. Let them know what you are considering and set up a meeting. Treat it as you would a meeting with any other investor: Be on time, professional, and prepared. Explain what the venture is, why it will be successful, and how you see it proceeding.

Consider the questions your friend may ask:

• How risky is this venture?
• Who else is investing in it?
• How much of your own money do you have invested?
• When should they expect to see their money back?

One word of caution: avoid making unrealistic promises. You will surely want to impress them, but you will have a better chance of doing that with honest assessments that in turn yield realistic expectations. Overinflating your offer can only lead to an overinflated outlook. Remember the old adage: underpromise and overdeliver.

The more you treat your loved one like a businessperson and less like a loved one, the more they will treat you that way too.