Rob Yeung said in his book The Rules of Entrepreneurship “Family and friends may mean well, but how much do they really know about your business?” This issue is very debatable, for some people it was money borrowed from families that got them started, some a friend handing over to them a soft loan which at some point paid off and others had this soft loan reinvested again just because they succeeded but on the other side some have been tagged dishonest because they had a challenge that broke their business and till date are struggling to even make ends meet.
Like it or not there are still two people you should really scrutinized before borrowing money for your business, best put don’t borrow from them. In actual fact banks and investors can be hard taskmasters Rob Yeung mentioned if you are really on the lookout for a successful funding with pressure mostly when turned around well with can be good, the best is to consider bank or investor funding for your business if you haven’t created a fund for that.
Family may know you inside out so can be the first agents of handing money to you for a business startup, yet it is quite frustrating to see your family frustrated because you are not breaking through as you should in their own assumptive period, where probably you should be the talk of town they can have a boast of. This source of income to business startup has personally been a drain when I remember starting my own business after graduating tertiary education in the field of marketing somewhere 2015. For the first six months, I was doing so well and could pay back my first soft loan in less than a year, it was surprising to my mum who gave the money for the startup, and I then worked three jobs at that time. I personally enjoyed it because I could then make time for something I loved so much, and that is music.
Later on as my parents realized I needed job security which I know their intentions were good but I was reluctant in working with a governmental agency. I used to have internship at reputable governmental agencies I realized I would like to be a government worker for personal reason I will share in the future. Then I protested telling them I was content and happier doing a business of my own which had plans for expansion. I could make one thousand cedis monthly and could save at least two to three hundred cedis monthly and investing back into the business fifty percent what I made.
I recall those moments my booming period until the show was then over for me, by being asked to take a governmental job because friends of my parents who had their children work government jobs were compared to me, some were in the Police, Immigration, Soldier because I was tall oops, and finally I got saddened by the situation I explained all I could but none could sink in t my parents. The situation hit me psychologically, I had to plan of relocating and that was the genesis of my business failure for the first. I was more than heart broken, I cried for days, looking disappointed and marred with hopelessness. In all I didn’t give up working for myself, till date in 2019.
I still work for myself but now it’s more challenging than ever because I financially broke down to the extent I couldn’t pay the next soft Ioan I took for expansion, this has stirred up disappointment for my parents as well though they all hoped the best, yet along the line there was a change factor and that is comparing me to others. If I could change the hands of time I wouldn’t borrow from my parents, reason is it opens up your business to the core to them and they begin to make unrealistic projection that has less to do with the business you get yourself involved in.
The second people you should not dare to borrow money from for business are your friends, you could mention a friend in need is a friend indeed, I believe there are good friends out there but hold on, when your friend walks up to you and look you in the eye as if he or she knew you not because you have a business turbulence it looks so disdain, and heart breaking to see the friend you thought was your best tell you in the eye you are good for nothing, but they shall pass says a friend of mine, for some friends whom you might ask for monetary support for business and even with the intention to pay back you are tossed around like a die in a casino.
I wouldn’t discourage you trying to borrow from your family and friends but when you face the challenge of business failure it means you stand the chance of losing your cordial relationship, you will have to answer the question whether you are ready for a terminal embarrassment plus having those family and friends shun or avoid you for life, because your business failed at some point and you seek to revamp?
I am glad I went through that situation but I don’t ever think I could have bought that experience with money though, and that’s what Robert Kiyosakyi will encourage you to do, is that make the mistakes now not when you are so grown but have money without business experience, for lack of business experience could dwindle your money away in a flash, if you tried something in your early years of starting a business you have rich information no one can steal away or dilute from you. For now I strongly know how money works and how to “print my own money” not through counterfeiting but legal means. I am glad I made mistakes that can’t be paid for.
My suggestions on this subject is that create an early investment culture with a reliable financial institution even when schooling before graduating and if a graduate start now, by purchasing treasury bills, or mutual funds or any investment making sense in the long-term for the budget you need for start of your business plus your welfare during those period the rest will take care of itself, if you are fortunate you could find investors come your way if you have a ready to go convincing realistic business proposal.