What Are Personal Investors?

Your friends and family may be willing to lend you the cash to start a business, and you may be willing to take it. But think twice before heading in this direction.

Mixing business with family can be risky, bringing business disputes to family gatherings and other events. You risk hurting not only your finances but also a relative's or friend's if the business doesn't take off as well as you anticipate. There are stories about people successfully choosing this option, but before you do, make sure your family ties are strong enough to withstand the pressures of doing business. Have each party sign a promissory note that spells out the repayment terms or, if you are partnering with a friend or family member, sign a partnership agreement.