I have to say that if I were to do things over again, I would not have put as much of my own net assets into my dream business, VocationVacations.  

Regrets?  No.  But would I do it the same way again?  No.  I would have reached out to prospective friends and family investors (looking to invest a total of <$1M) and/or angel investors (usually looking to invest a total of $1-3M) sooner.  

Should your fear of “losing it all” prevent you from starting your dream business?  NO WAY!  Here are a couple of really simple things to do as you embark upon your adventure.  They’re so simple that you’re going to want to say “DUH, Brian!” to me….but I’ll tell you what, a lot of entrepreneurs do not follow this advice and end up in one helluva position risking everything they have.  

1.  Establish an ABSOLUTE FINANCIAL THRESHOLD, a financial point you will not go beyond.  I recommend no more than 1/3 of your net worth.  You never need to be in a position to lose everything (and really try not to use your 401K whatsoever as the tax implication is high AND your 401K is also protected under any possible future bankruptcy).  Many factors can cause a job or business to fail, including some beyond your control (Hello, 2008!  Banking system, auto industry, mortgage industry, George Bush, etc), but there is NO reason for you to lose everything in the process.  Establish your threshold.

2.  A minimum of 9 months before you reach that threshold, find outside money.  Friends and family.  Angel investors.  Give them an equitable membership in your LLC or shares in your new corporation in exchange for their confidence in investing in you.

I’ve seen too many businesses fail because the owners had too much pride to ask for financial help.  You also can get financial investment without a ton of strings attached.  Get “grown up” investors (sage advice I received from my friend Loree Misch at the time) who understand what it means to invest in a high-risk venture.  Make sure they, too, are living up to their own absolute threshold.  They should be willing and able to lose every dime they’re investing in your business and still be a-OK financially.  If not, don’t take their money.  

I’ve been very blessed.  I have six friends and family investors in VocationVacations.  I have never once received a call from any one of them asking, “Where’s my return on investment?!”  They understand their ROI is in the works.  They understand that it’s a long-term investment.  That’s the type of investor you want.  PS to my friends and family investors:  Thanks Again!

Anyway, times are scary but you can mitigate your fears and still successfully start and grow your dream business, my friends.  Yes, even in this market.  Just be smart about it.  Don’t be too proud to ask for financial assistance in your endeavor if you start reaching your absolute threshold!

Brian Kurth

Career Strategist, Founder of VocationVacations and Author of Test-Drive Your Dream Job:  A Step-By-Step Guide To Finding And Creating The Work You Love  – Hachette 2008.