Friday, May 27, 2011

3 Must-Dos When Investing in a Friend's Venture

A friend with a great business idea can be a blessing or a curse. Making an investment can yield great things for both sides, but, going into business with a friend can also be tricky territory. Here are three things you should do before you write the check:
1.Set clear boundaries. Don't skimp on up-front agreements because you trust each other. Remember this is a financial transaction, not a friend charity fund.
2.Establish rules of engagement. As the venture moves from idea to execution, make sure there is a sound business plan in place and you discuss plans for action.
3.Accurately assess your partners. Going in on a venture together is a lot like dating. Don't be fooled by love at first sight. Do a SWOT analysis on your partners so you understand what you are getting into before it's too late.

Source: "My First, Failed Foray into Venture Investing" by Whitney Johnson.

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