DON’T INVEST MONEY YOU CAN’T
AFFORD TO LOSE
“Don’t think you’re going to make a fortune if you
help a friend out,” Rao says. In fact, don’t expect to
make any money at all.
Roughly 20% of businesses close within the first
year, according to data from the Bureau of Labor
Statistics. And most startups never deliver a
positive return.
“Ask yourself if you are OK if you lose all the money
you invested in your friend’s startup,” Amanda
Sanders, founder of Authentic CEO, said through
email. Sanders has been on both sides of the
equation — as an entrepreneur and an investor.
“If the honest answer is yes with no ill will toward
your friend, then the relationship is likely to remain
solid regardless of the business outcome,” she said.
“If your answer is conditional, then the outcome
of the friendship is likely to be conditional on the
business investment.”
OFFER SUPPORT, EXPERTISE OVER CASH
Money isn’t the only way to support a friend’s
business. You can offer time, expertise and
connections.
Pitch in at pop-ups and events. Manage their
social media accounts. Hand out flyers to get
the word out. Be a sounding board for ideas
and issues.
Or just show up with takeout from time to time,
Sanders said.
“Having a friend interrupt your endless work
schedule and bring in the food, the fun and
the Fireball (the third part is optional) is very
important for maintaining sanity.”