Current Events > Why would you NOT use your own money to open your own business?

(+) Yeah! (+)

I know this one guy whos parents are pretty loaded with money yet this dude chose to get a business loan to open his business?

Why the fuck would anyone do that if they had rich or well off parents? Wouldnt it make more sense to use your own money?
---

i wouldnt. not from family or friends anyway.
---

BuckVanHammer posted...

i wouldnt. not from family or friends anyway.

why not? the interest would be a lot lesser than a bank would charge you
---

May be completely wrong here, but if he goes under can't he just declare bankruptcy? If you use your families money then you're screwed, use someone else's and there's ways out.
---

AzNDarkSamurai posted...

BuckVanHammer posted...

i wouldnt. not from family or friends anyway.

why not? the interest would be a lot lesser than a bank would charge you

because i wouldnt want to put my family in that situation. rather do it on my own.
---

Absolutely not. 50% of all small businesses fail within the first 5 years. Why the fuck would you gamble with your own money (or the money of someone you love) when you could gamble with a banks money instead?

Never, EVER, start a business with your own money, if you have other options. This is very basic stuff.

---

Protection. Starting a business is very risky, the majority fail within the first two years.

If you lose the family money then it is simply gone. The business loan can be written off in bankruptcy and only a percentage of it, if anything, will end up needing to be paid back.

MrToothHasYou posted...

Never, EVER, start a business with your own money, if you have other options. This is very basic stuff.

This. Risk someone else's money first if possible and make profit off that.
---

ArchiePeck posted...

Protection. Starting a business is very risky, the majority fail within the first two years.

If you lose the family money then it is simply gone. The business loan can be written off in bankruptcy and only a percentage of it, if anything, will end up needing to be paid back.

Wow I didnt actually know that you only needed to pay a percentage of it back if the business fails
---

AzNDarkSamurai posted...

ArchiePeck posted...

Protection. Starting a business is very risky, the majority fail within the first two years.

If you lose the family money then it is simply gone. The business loan can be written off in bankruptcy and only a percentage of it, if anything, will end up needing to be paid back.

Wow I didnt actually know that you only needed to pay a percentage of it back if the business fails

Depends on the bankruptcy and you'll pay it all back if you acted fraudulently.

But yeah, it is best to get a loan from banks or outside investors instead of your own or family/friends. You should put some of your own resources into the business. It would be pretty tough to not, but don't 100% buy it. Like a house, or car. I think it's too risky to pay big ticket items at once.
---

Maybe his parents wouldn't give him any money.
---

the other thing is that if the business succeeds the family will always hold it over the person and act like without them the person wouldnt have made it.
---

Awesome posted...

the other thing is that if the business succeeds the family will always hold it over the person and act like without them the person wouldnt have made it.

Oh jeez I didnt think of this consequence
---

Why open a business at all if you've got all the money in the world?

21WIVES_CHILL posted...

Why open a business at all if you've got all the money in the world?

to get more money coming in....?
---

21WIVES_CHILL posted...

Why open a business at all if you've got all the money in the world?

For more money. For importance. Because you love the industry or truly believe in an idea? Lots of reasons.

But yeah, bankruptcy law means you don't have to pay everything back necessarily. Also it makes sense not to complicated personal relationships with financial debt. I never loan money to my friends or family. If I have money to spare I'd rather just give it to them with no obligation to return it.
---

MrToothHasYou posted...

Absolutely not. 50% of all small businesses fail within the first 5 years. Why the fuck would you gamble with your own money (or the money of someone you love) when you could gamble with a banks money instead?

because you'd be in debt too if it fails?
---

Some people have no interest in the administration of a business.
---

TheMikh posted...

because you'd be in debt too if it fails?

If it fails, the business will be declaring bankruptcy, and your liability will be limited to the assets of the business, unless you put up personal collateral to obtain the business loan in the first place (which is just as stupid as using your own money).

Even Donald Trump, dumbass that he is, knows this. Thats how he was able to declare bankruptcy 4 times and still be a billionaire*. He was playing with other peoples money.

---