You want your child to succeed. Since day one, you have done everything within your means to set them up for lifelong success, from providing them with nice clothes to seeing them through school. Now, your child has approached you with an idea for a business. The only thing missing is the money to launch the venture. Should you chip in?
Setting The Stage For A Successful Business Investment
Perhaps you are a business owner yourself, so you know exactly how challenging it is to get a business off the ground and make it a success. This requires much more than a good business idea. While you may be tempted simply to provide your child with the necessary help, according to an article from USA Today, there are some things that parents should consider before giving a child money to start a business.
First things first, it is important to be certain that the money you invest is money you can afford to lose if the business venture does not turn out to be a success. There is always some level of risk when investing in a new business.
Expect your child to create and present you with a solid business plan. You want to see that your child is thinking beyond the initial idea for the business and has a plan in place to move the business forward. You also have the right to expect an estimate of when you might see a return on your investment in the business.
Make it clear what your role is. Are you simply going to lend your child money for the business? Are you making an investment? Will you actually be involved in the business in any way? Depending on the nature of your role, you may want to look closely at the operating agreement before moving forward, as it should define your role.
You may also want to consider investing in a skilled business law attorney who can ensure that nothing is overlooked as your child moves into the complex world of business. With your support and careful preparation, your child may be in a great position for a long-lasting and successful business venture.