Since starting a business can be overwhelming both emotionally and financially, some people turn to outside investors to help with start-up costs. While this may seem like a good idea when you have a lean budget, make sure everyone understands their role before you take any money. Because those who invest in your business may want more of a say in the day to day operations, limiting their power through official documentation is the best way to start a business and maintain it on your terms.
Since your outside investors will probably be family or friends, you may feel more secure asking for their help than taking out a loan. While most people are willing to lend you the money without trying to take over your business, but others will want to have a say in how you spend it and even in how you structure your business. Before accepting any loans, even from family or friends, you need to make it clear that they will not have any say in how your business is run. Depending on the amount of the loan, you should set up a repayment schedule so you can quickly repay the loan. This shows that you are reliable and worth investing in.
If you are borrowing a large sum of money...
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