How do you convince these people?

[tsalazarma]

I'm a little frustrated. I have the perfect home based business, but I can't figure out a way to fund it. It is a sure way to make a six figure income(residual) with some good work. I am determined and not going to lose this battle. I have a friend that is the same age as I am but he inherited millions and his parents are multimillionaires. I want to get a $50,000 dollar investment from him. He is the type of guy that thinks he doesn't have enough money and that is what makes it hard. I want to make some type of legal arrangement where he would recieve the investment x2 back within 2 years. I can do this, I just need help with how to approach him. Any good advice will be greatly appreciated!

[Gene]

If your friend says no, maybe it's time to move on from asking him. After all, you want to keep him as a friend, right?

Here's my advice. No, I didn't come up with it. Someone else on this forum posted the idea, and I loved it, so I've been sharing it ever since.

If you can't find someone who can loan you the whole amount, break it down. Can you find 100 people willing to loan you $500?

[ZingerIntl]

Well shouldnt be too hard if he...
inherited liquid millions,
has no parent interference,
he can see that you have proven you can actually make the 2x returns.
You have done all the necessary steps to show you are serious
You have something to lose
You have been a friend that is a friend ( I want to get a $50,000 dollar investment from him.) Not just for your benefit.
If he is a friend that doesnt need money, has not earned his money himself, he might be a little hesitant of his first investments. Maybe even feel undeserving as many rich kids stated on the movie BORN RICH
You might want to go down the road that 'his millions can change your life w/o costing him anything in the long run. But you seriously need to know and prove you can do it or all you have is a debt, no friend, and broken spirit.
Try getting him to guarantee a loan from a bank, it will be super cheap for you compared to 200% and he pays nothing unless you lose it all. You then pay him a portion of your profits until he is off the loan.

[rogercbryan]

If you are asking a friend for money... they won't be your friend for long. Just because he has it doesn't mean that he should or would give it to you. Have you written a business plan? You may want to think about this a little more... if it was a killer investment then maybe your friend would be interested... if he's not... then maybe its not... take a step back and focus on your plan...

[EC44]

You're not being a good friend if you're putting him in this position. If I were you, put it out on the table what you are interested in doing, even go as far as explaining the business and how you plan on attaining revenue and basically, your entire business plan - you can do all of that via subtle hints. If he is interested, he will offer - do not outright ask him; it puts ANYONE in an awkward position, let alone a good friend. Shame on you for asking.

That's my suggestion.

[Peter.j.bea]

I am sorry I am going to have to disagree with everyone here this far. The circumstances for a business investment are QUITE different then simply asking for money to get food or pay bills. This is a "friends and family" investor and a good way of getting the capital you need to get going.

I have dealt with this scenario more than once. Here are the guidelines:

Be sure to test the procedure several times over and monitor them in charts and graphs.
Look for other companies or individuals doing emulated services or sales and take note of them.
Develop a business plan with a solid exit strategy.
Have the financial reviewed by someone involved in finance (Maybe even go to a credit union or a Community College).
Develop material for the business plan that make the company look alive and already functioning (Graphics, business cards, mailers. Be sure to keep them unique and have their own identity, this is a great way of getting a F & F investor excited).

When you approach him simply ask if you can meet him in regards to a "business proposition" Meet over breakfast and coffee. Be sure to reference your concepts and goals with emulation of everyday life and activity (This will help him see function of the business throughout the day).

Remember to remind him, that there are NO hard feelings, this is only business. Let him know that you are the first or one of many potential investors that you are looking to speak to about this concept. Tell him you have been working on the concept for sometime etc etc.

You will NOT lose friends from business if its really a solid idea. If he has THAT much money, I am sure he has an accountant of attorney that he can sit down with to discuss the growth potential or ROI of the project. Just be sure that your business is a full concept and has minimal risk.

Now developing the Business Plan, that is another animal all together. Anyone can write something on paper, but to be able to develop a business plan that can lead the thoughts and emotions of the reader is a skill not easily acquired. There is a great level of psychology, journalism and arithmetic to it all. Be sure you have taken care of this as well.

[EBITDA]

I agree with Peter - you need to go to your friend not as a friend, but as a prospective investor. In that context you should have a well-prepared pitch that speaks to:

• The terms of your offering (what kind of security are you offering - a loan or preferred stock with warrants, secured, interest or dividend rate, affirmative and negative covenants, etc);
• What the business is and how it makes money;
• The sources and uses of funds;
• Historical financials;
• Projected financials;
• Risks.

Don't wing it. You need to come across as professional. If he still says no, remember, it's just business, not personal.

A private placement memorandum will do all of that for you. For an easy fill-in-the-blank template, see TransCapital Pro.

Good luck,