A few times when listening to business-related shows, I have heard a businessperson advise that aspiring entrepreneurs get funding for their good ideas from friends, family, and other personal associates.

I disagree with that advice. I recommend that you avoid taking investments from friends and family. And definitely avoid asking for them!

These businesspersons did also specify that you needed to have a good idea with full business plans and financial projections that showed that you would most likely make profits. However, if you have such a good business plan, you could gain investments from professional investors. If your business is such a good investment, you could gain investments from people other than your friends and family.

Your friends and family may invest in you even if it’s a bad financial investment because they trust you or simply because they feel obligated by your personal relationship to them. When the business and investment fails, it will hurt both you and your friendly investors. Additionally, it will strain and possibly ruin the relationship.

If you cannot get impersonal, professional investors (such as a bank or a venture capitalist) to invest in your business idea, then revise your business idea or give it up completely. Do not try to get funding for your bad business idea by taking advantage of your personal relationships with your friends and family.

What do you think?