How to Find Investment Capital – The Family Connection

There is one responsibility of all business entrepreneurs that is loathed more than any other. It’s asking for money. First off, you have to find financial resources and then you have to ask for money. This article is dedicated to finding money and how to ‘ask’ for the money from a family member. It is easier than you think.

There are generally five levels of investors. Each has positive attributes, but more importantly, each has a way to be approached for the ‘ask’. What are the five levels of investors?

1.  Family
2.  Business colleagues or competitors, vendors, suppliers, & other associates
3.  Angel investors
4.  Capital Investors
5.  Public Investors

I’m going to focus on the family level first. Levels two through five will be discussed in other articles. 

Getting money from family is probably the hardest to do. You have to go to someone with financial resources and ask them to risk this money on you. It is not easy to do. Worse yet, you place that family member in an awkward position. They don’t want to say no, but sometimes that have to say no because of some circumstances they can’t fully control. Furthermore, this is sensitive stuff and so there is a way to make the ‘ask’.

First off break the ice a few weeks beforehand. Let them know that you are researching or considering purchasing a business. Get their input on your concept. Let them guide you. If they are negative, then odds are they will say no at the end of the day. If they are indeed interested in your situation, let them give guidance, let them ask questions, ask if you can get back to them with answers. Provide them with the details, do your research:  see Business Principles – Start-up Issues  and read Research Your Plan- Part I and Part II. The key is to get them involved in the business situation and provide guidance to you. They will become invested in the business potential and will be more open to the ‘ask’.

Once you have satisfied them with information, it is time to set up the meeting. Ask if you can meet one on one with them to discuss it further. Of course they will want to help you, but if they prod for more of what the meeting is about, tell them that you are interested in seeking out money to make this work. The key here is that you are giving them many opportunities over time to push you away without having to make the direct ‘ask’.  Once the day comes, be point blank with them at the meeting. Tell them you are here to ask for capital to make this work. Let them know that you realize that this is not only a business affair but it’s a family affair. Tell them you know it is not completely fair to them but if they say ‘no’ you are not going to bring it up to them or to other family members in the future. This will give them comfort in making their decision; you are making sure they are comfortable with saying ‘no’. 

If they are willing to lend money, then they will be interested in the terms. Tell them that you would gladly allow their accountant to set the terms so as to be appropriate. Accountants are OK with helping in situations like this, we want folks to succeed. Don’t offer terms, let the family member offer terms through their accountant and or lawyer. This gives them more confidence in their decision that you are allowing an outside authoritative figure to provide the guidance and conditions to make this happen.

Remember, when dealing with family, communicate with them first without making the ‘ask’. Get answers to their questions, squelch their concerns with information via research and then once they are comfortable, make the ‘ask’. This whole process will take two to six weeks to complete. If you are in a rush, it will be obvious and you will make it more difficult on yourself. During this whole process, LISTEN for clues that they are not interested in this venture. I CAN’T EMPHASIZE THIS ENOUGH, LISTEN FOR CLUES! If you didn’t catch on to my thought here, I capitalized each letter and bolded the entire sentence, so take this seriously.  LISTEN FOR CLUES! The family member may indicate pending financial difficulties from medical care to selling an investment such as real estate etc. This takes money to get through these expensive issues. You don’t want to put them in a difficult situation of choosing between themselves and you. Listen for other types of clues, such as selling investments for a loss to generate cash, having to make some form of a large installment (life insurance, disability insurance, or long term care items), listen to clues that business isn’t going well or that they may want to retire early. All of these are hints to you to not ‘ask’ the question. Pay attention to these details. It is their polite way of telling you not to ‘ask’ for money.

By communicating and listening, you can win the confidence of a family member to make the investment into you. If you listen as I illustrated above and can see that the family isn’t going to invest in you, you will have to move onto step two which is your business colleagues. When you read the next article on this subject, you will have already been working on this group for investment even before asking family for money. Act on Knowledge.

Value Investing

Do you want to learn how to get returns like this?

Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.

There are four key principles used with value investing. Each is required. They are:

  1. Risk Reduction – Buy only high quality stocks;
  2. Intrinsic Value – The underlying assets and operations are of good quality and performance;
  3. Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
  4. Patience – Allow time to work for the investor.

If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above. 

Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:

  1. Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
  2. Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
  3. Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.

Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:

  • Lessons about value investing and the principles involved;
  • Free webinars from the author following up the lessons;
  • Charts, graphs, tutorials, templates and resources to use when you create your own pool;
  • Access to existing pools and their respective data models along with buy/sell triggers;
  • Follow along with the investment fund and its weekly updates;
  • White papers addressing financial principles and proper interpretation methods; AND
  • Some simple good advice.

Value Investment Club

Please Signup
Username can not be left blank.
Please enter valid data.
This username is already registered, please choose another one.
This username is invalid. Please enter a valid username.
First Name
First Name can not be left blank.
Please enter valid data.
This first name is invalid. Please enter a valid first name.
Last Name
Last Name can not be left blank.
Please enter valid data.
This last name is invalid. Please enter a valid last name.
Website (URL)
Website (URL) can not be left blank.
Invalid URL
Invalid URL
Email Address
Email Address can not be left blank.
Please enter valid email address.
Please enter valid email address.
This email is already registered, please choose another one.
Password can not be left blank.
Please enter valid data.
Please enter at least 6 characters.
    Strength: Very Weak
    Select Your Payment Gateway
    How you want to pay?
    Payment Summary

    Your currently selected plan : , Plan Amount :
    , Final Payable Amount:
    error: Content is protected !!