Opinions expressed by entrepreneurs’ colleagues are their very own.
Many entrepreneurs turned to friends and family when it comes to providing funds to start a company. In fact, “Friends and Family” happen in the entrepreneurship lexicon, along with “Bootstapped”, “Angel Investors” and “Venture Capital finance”.
Usually, acquiring from friends and family is common among young or emerging entrepreneurs. Serial entrepreneurs who have achieved great success often have bravado to imagine that they’ll finance their business or reaching angels or enterprise capital.
This is natural, especially for a young entrepreneur who simply begins his entrepreneurial journey to get closer to friends and family.
In this fashion I began as an entrepreneur. When I used to be six, my dad played Golf at Biltmore Country Club in Barrington Hills, Illinois. I have traveled with him many times. I remember how I looked vividly how golfers hit their balls on water threats. They didn’t want to enter and regain the ball. Rather, they pulled a latest ball out of the bag, dropped and had a good time.
This led to my first entrepreneurial idea. “Why can’t I follow the balls and sell them to the same Golfisk who hit the ball in the water?” So I ran home and got my cups, a thermos and dix cups and dragged a table on a golf course. Within a few hours I got an amazing sum of $ 50. My dad’s membership in Country Club and the possibility of using the equipment he bought, became my first unofficial investment in my company.
Resources, equipment and connections are great substitutes for real investments of a member of friends and family.
Compressed until this fall, when I read about the study developed by scientists from Indiana University, which suggested that entrepreneurs who “often do not have resources and funds needed a venture … to reach family and friends for preliminary support.” The study checked “how accepting funds from these people affects the preferences of the entrepreneur’s risk.” I do not agree with the assumption. But I also imagine that if you get involved in “right” friends and family, this can not affect the risk of the entrepreneur.
Do not choose a roommate
I know that this is contrary to what I did with my dad – but the final thing you would like as an entrepreneur is someone observing your every move. Maybe you are developing, watching a program on TV. You can feel the investor’s energy by asking if there is something you’ll be able to do to make the company more practical.
Choose someone who knows your industry
Let’s assume that you just are establishing a company relating to clients to legal corporations. It can be ideal to find an investor among friends and family who is a lawyer, it will be perfect. This investor wouldn’t only know and appreciate your vision, but can open the door for partners and initial customers. As we know, entrepreneurs, getting the first partner or clients may be the basis of future success. This qualification may apply to someone who is more familiar than a friend, depending on how the industry is aware of.
Get involved with someone who has a good loan
There are many reasons. First of all, someone with a good loan has resources. Their investment in your business is not going to leave them in an uncertain place, where if your business is struggling, they are struggling. Secondly, good loans mean that they have access to capital, which may support all emerging needs of working capital. They may also support all the possibilities you encounter to dramatically transform your business. More than ever, people with a good loan have unique access to alternative financing.
Find an investor with a complementary set of skills in your company
You cannot effectively launch a latest company without specialist knowledge in several essential areas, equivalent to technology and marketing. Why not look for skill sets among friends and family? They will probably enjoy the possibility of participating in the success of your undertaking. Maybe you can even sweeten the pot by offering a commission based on the company’s success. The most vital thing is that by eliminating such costs, you’ll increase your possibilities of being a successful entrepreneur.
What happened to the golf football industry/Lemonade? Well, the golf course didn’t take me too kindly, running a company focused on profit on the golf course and they closed me. But not earlier, before I earned six months of cash, which gave me capital to start the next company.