Borrow money from friends, family, or people you've known for a long time. Don't be afraid to ask family and friends for money. Did you know that Sam Walton's father-in-law loaned him $20,000 so he could start Wal-Mart?
What about Fred Deluca? Fred got $1,000 from a family friend. He used the money to start Subway. There are now almost 22,000 Subway restaurants around the world. This method has been used by both big companies and small mom-and-pop shops. If you're shy, you'll miss out.
To borrow money from people you know, you need to make a good first impression. Make your first contact with the lender something that will surprise and please them. Be friendly and professional in your dealings. Be yourself, the person they already know.
Your First Attempt
Write down the names of people you think might be willing to lend you money. Look over all of your contact lists. Think of people you know very well. Then write down your long-lost relatives. You know, the ones you only talk to twice a year? Sure, Aunt Ethel.
You'll have more luck with the following types:
- You have to be able to trust the person you want to borrow from. This might be the last thing on the list, but it's not the least. It should be at the top of the list of important things.
- Have you ever fought with your rich Uncle Harold? Avoid going there! Go where everyone is friendly and cares about each other. Uncle Harold might look down on the way you do things. Then he'll tell his other relatives about you.
- People with money. More is always better.
- Business experience? Does the lender you want to use have any? This is not required, but it would be nice if they did. When there isn't much to eat, people who have been there know what you're going through.
When you've narrowed down your list of prospects to the top two or three, it's time to make contact. Pick a place that's good for both of you. Write down what you want to do. The lender who cares about business will ask for that. Write down the exact amount you want to borrow.
The closer you are to a potential lender, the less likely they are to lend you money. Their main worry is that giving you a loan will hurt your relationship. Sure, they always worry that they'll lose the money. But I think a relationship that has been hurt by money is the best.
When you borrow money from friends, you should think about how it might affect your relationship in the future. Take steps to make them feel better. Show them a good plan for the business as a whole. Convince them that you have cut the chance of failure by a lot because you care about your relationship with them.
