Any startup will need money to get it going and to get it up off the ground, and the vast majority of entrepreneurs do not have the capital on hand to really get the ball rolling and get it rolling fast. They need money to get their ideas out there and moving forward, and many entrepreneurs often do not know how to do this well. Asking for money is not exactly anyone’s favorite thing to do.
When people think of who to talk to about borrowing money for a startup, they often think of their family first. Any why wouldn’t they? I certainly have in the past. The idea is to ask the first person they think will be the kindest to them and have the best chance at giving them a loan, and for many that first person is in fact their family members or loved ones.
But how do you even go about approaching your family members for cash for your startup? A lot of entrepreneurs struggle at even thinking with this idea. But it has to be done and it must be done if the person is going to be successful with getting things going with their business idea.
I’ve certainly had my own fair share of experience with asking family members for money, so I like to think that I know a thing or two about it. Listed below are some of my ideas on how to ask family members and loved ones for money:
1. Ask for a specific amount to meet a specific milestone. If you can approach a family member with a specific dollar amount that you need for a specific goal project, you can be more successful. Think about it this way. Which request sounds better? “Hey Mom and Dad, I need some money for my startup.” Or, “Hey Mom and Dad, I need ten-thousand dollars to buy my entire inventory for my new pet supplies business.” Obviously, family members and friends will be more likely to help you out if they know something of what they are giving you their money for.
2. Offer a formal agreement. Have you ever lent anyone money with no promise to get it back but a handshake? You probably felt a little nervous for a time yeah? I know I’ve been in this position and I’ve definitely felt a little nervous as to whether or not I was going to get that money back. I was worried, and maybe I didn’t need to be worried but I was. The fact of the matter is, you can assuage a lot of people’s worries and fears by offering a formal, written contract and agreement that you will pay them back in a certain amount and in a certain period of time. You will have a much greater chance of them saying yes as a result.
3. Let people see what you are doing and how committed you are. People will be more likely to help you in this endeavor if they see how hard you yourself have been working on your project. Show them a demo or some examples of what you’re up to and what you’re all about and you will be more successful at getting their willingness to help you out.
I get that asking for money can be a little daunting. I get that. I’ve had to do it many times. I’ve loaned money to entrepreneurs many times too. It’s really not as scary as you might think it is. You can do it, you can make it go right, and you can achieve your dreams if you put your mind to it.