Many people who go into business want to do it with someone else’s money, even if they have plenty of their own. They may have that money set aside for the children’s education or tied up in a holiday property.
Whatever the reason they don’t feel sufficiently positive about the business to risk all of their own money.
The days of easy bank credit are long gone, so alternative methods of financing have become common place.
Seeking partners or investors (often family or friends) has become normal scenarios for getting a new business up and running. The big draw-back is, unlike banks, they usually want a say in how the business will be run.
Banks looked at the risk and guarantees before deciding what rate to charge and how long before the loan is repaid. On the other hand partners and investors want to get involved so they know how their money is being used and don’t always have an exit strategy.
In some cases partners or investors are needed because of their business skills or contacts and these ventures often work well because each of the parties understands their roles.
A family member who has put in money may feel he has a right to get involved when and where he sees fit.
Unless his skills or contacts bring actual value this may well be a loose-loose situation because interference will be distracting, stressful and a waste valuable time.
Of course there are exceptions where the partner is emotionally intelligent and can ask objective questions or give advice in a non-judgmental way thus causing you to think through situations and prepare proper plans since you are going to have to justify your actions.
Having ‘skin in the game’ is very important.
The average person will put in twice the effort to avoid pain (or loss) than they will for gain.
Therefore if it is all your own money you have more incentive to make it work, for example to get back the kids’ college fund.
That extra motivation can give you the edge to do what it takes and make the effort so the business really works.
Remember though that no-one can make it on their own and that you will stand a better chance of achieving your goals if you have an accountability partner (someone who cares for your success and will keep you firmly on track) and/or a mentor (someone who is has the skills and has done it before).
Having a supporting system will contribute greatly to your success but YOU and you alone can walk the steps of your journey, learn from your mistakes and be responsible for your success!
