This is one of the most common ways of funding a business and if you have the money readily available can be beneficial. There is no waiting around and virtually no red tape involved. However, if something goes wrong and you have nothing to fall back, you could face a severe knock-on effect. Your business’ fate is in your own hands. More commonly known as founder, family, friends and foolhardies. If your own money is not quite enough you may choose to seek help and next stage funding from friends and family. Those involved may ask for something in exchange such as a stake in the company but this is up to your own discretion. Written guarantees and/or legal documentation may also have to be drawn up.
Whatever you do, make sure that you plan for every eventuality. Unfortunately most people don’t enter a business partnership thinking about what can go wrong, but just like a marriage – divorce can happen to anyone and at any time.