Do You Have The Funds To Invest In Your Child’s Business?


Most people have heard of GoPro, Chipotle and Amazon. However, most do not know that each of these popular and very successful companies were started and launched because of the parents of the founders. If the founders of these companies didn’t get the help they needed from their parents, would they be in business today? That is a great question! While these companies were widely successful after being helped by their parents’ contributions, many other businesses that parents helped pay to start ended up being failures. In some cases, parents endangered their life savings and retirements over helping their kids. In the worst cases, relationships were destroyed.

Do Not Offer Kids Money You Cannot Afford

A sad case about a mom was told recently by a financial advisor. The lady had cashed out over $100,000 of her retirement savings to help her son start a business he was very excited about. Unfortunately, the business failed within a year and he has yet to pay back any of that money to his mom. Now, she is having trouble affording to live on a daily basis. This could be the start of a failed mother-son relationship.

It is important to help your kids when you are able to. However, you should never give more than you can afford to. Most parents are accustomed to doing whatever possible to try and help their children succeed in life. Most will sacrifice anything to help out. Financial advisers suggest that parents look at their retirement portfolios very closely in order to see if they can make a contribution without risking their future.

For parents who cannot safely offer money to help their kids start a business, they should look at other ways of helping them such as writing up a business plan or helping them plan the specifics. The United States Small Business Association has many centers throughout the country to help start-up businesses and entrepreneurs get started and can offer great advice on what to do in order to have a better chance of being successful.

Insist On Detailed Planning

Like mentioned earlier, a business plan is essential when deciding to start a business. If you do decide to help your child financially with their new business, ensure they have a detailed and solid business plan before you hand over any money. It should be agreed upon, even in writing, what is expected after giving them the loan. This can create a plan between both parties to save the relationship in the event the business fails.


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