C. Family & Friends
If you can’t do it alone, the next natural source is people you know. Your friends and family may be willing to assist you financially through a gift, a loan, or an investment, and will want to see you succeed.
| Advantages: | Disadvantages: |
| Friends and family are easy to recruit and are likely to give you more favorable terms or lower interest rates than institutions or traditional investors. They’ll also help get the word out about your business. | Raising money from friends and family can take a toll on your relationships, especially if the terms of the arrangement are not clearly defined. Set realistic expectations about risks and rewards, put the agreement in writing, and involve a lawyer. Also, while friends and family may provide an easy source of money, they may not bring needed expertise to the business. |