05 Pitching Family and Friends
One of the important aspects of running a business is raising funds. At times where bootstrapping isn’t possible, you’ll need a capital cash infusion to take care of numerous costs and other factors like location. In such cases, you need to start with the kitchen table pitch, i.e. selling your idea to friends and family members to secure their angel investments.
However, while this method seems easy and profitable due to its numerous advantages, there are some disadvantages which mandate that you think your decision over a few times, regardless of whether you’re planning to fund your business through equity investment or by borrowing money.
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Sue Vineyard, trainer and author of The Great Trainer’s Guide: How to Train (almost) Anyone to do (almost) Anything, wrote, “When we recognize that a better word for Fundraising is ‘friend raising’, we open limitless doors to creativity in support of our causes.”
In this episode, I tackle Sue’s concept of ‘friend raising’, which in the business world starts with the kitchen table pitch. By gathering close family members and friends, you can determine who may be interested in shouldering your business’ initial financial pains by lending you money or becoming an angel investor and a stakeholder in your budding company.
However, when it comes to blending relationships with business, you need to exercise caution or the first will be affected. How many times have you heard of siblings not speaking to one another just because the business they set up failed? To ensure that both your relationships and business thrive, you need to determine whether debt or providing shares per investment is the way to go.
After making up your mind, you can move on to sharing your business idea with your future lenders/investors. To ensure you’re taken seriously, I provide a few suggestions to approach your inner circle members and get them on your side.
Here’s how to avoid the pitfalls of pitching to people in your inner circle [TWEET THIS]
Through this Podcast, You’ll Learn Things Like:
- The importance of pitching to friends and family members
- The advantages and disadvantages of angel investments
- The benefits and drawbacks of borrowing money from friends and family
- How to avoid the pitfalls of pitching to people in your inner circle
- And much, much more
To really understand the lessons of this podcast, make sure to listen to my interview with Helena Fogarty, owner of Mi Ola bikinis for surfers. Helena explained the steps she took to raise capital the right way and establish her own business. Also stay tuned to my interview with Mitch Weiss, author of Life Happens – A Practical Guide to Personal Finance from College to Career.
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