Great question, but the answer may not be so simple. In a situation like this, it’s important for you to clearly differentiate your emotional feelings from the business concept and loan request. Unfortunately, this isn’t necessarily a simple task. It is natural to want to assist the one you love. However, just because you’re involved in a relationship with her doesn’t necessarily obligate you to make a loan to fund her business venture.
It would be in your best interest to evaluate a business loan to your girlfriend in the same way you would with another 3rd party. Be willing to sit down and ask the tough questions.
1. What is the concept of your business? It’s important that she have a solid concept that you actually believe will work. Otherwise, you are simply lending money as an act of good will.
2. What problem does your business solve? Business ideas need to solve a problem or need in order to increase the likelihood of success.
3. Who is your target audience? A great idea with no audience will lead to failure. Understanding the answer to this question is a key piece in how the business gets marketed in order to generate business.
4. Who are your competitors? Knowing the competition allows for greater awareness in how to beat them. All successful businesses have a working knowledge of their competition; it allows them to continue tweaking their products and services to gain a competitive advantage.
5. How does your concept differentiate you from your competitors? When going to market, you have to establish an advantage over your competition. Is it price? Is it service? Is it the overall experience?
6. What are your financial projections? All businesses need to make money in order to remain in existence. Does your girlfriend’s business idea forecast a solid financial picture? This is a key to whether you get a return on your investment.
7. Do you have an exit strategy in mind? The exit strategy question is a bonus to see how much the business idea has been thought out.
The above are a good set of questions to use while entertaining the conversation with your girlfriend. Not only do they allow you to obtain answers to key questions you should consider when evaluating a loan request, they may also force your girlfriend to see how solid her idea really is.
One last thing, be careful about evaluating business decisions with your heart. There have been countless disagreements where relationships and money have been lost due to mixing business and pleasure. As with all loans, there is a level of risk involved that you have to be willing to accept.
Kenny Pugh is a Life & Relationship Strategist, Author of ‘Can You Do It Standing Up?’, Speaker, HLN Contributor, Host of the Chat Kafe Radio Show (http://www.chatkafeonline.com), singles leader and sought-after speaker on singleness, relationships, finances and life. You can find more information about Kenny at http://www.kennypugh.com. You can follow him on Facebook at Kenny Pugh or on Twitter @mrkennypugh.