A deal, whether in writing or orally, is not to be considered lightly, because you fully expect to keep your end of the bargain. Three things to consider before saying, "yes":
What happens now: Who owes who what? What, precisely, does each side promise to do, and what does each side get? It can't hurt to write this out in English and add it to the agreement, just to be sure you both agree.
What happens if things don't work out: If you don't do what you say you'll do, what happens? If the other person can't pay or can't deliver, or wants to walk away, then what? When you leave yourself (and the other person) an out, you're almost certainly investing in a better future, because you know in advance what the options are.
What happens if things do work out: If everyone's wildest dreams come true, then what? Does that person who gave you three days of advice end up owning half your gourmet foods business that you've worked on for twenty years? Describe the hypotheticals, and plan them out together, because today's hypothetical is tomorrow's unfair reality.
The fine print is there for a reason, and if you don't like it or can't live with it, cross it out or walk away. There's no better time than this very moment to be clear, to be honest and to have a difficult conversation.
When your small business is struggling, the thought of raising money feels like a life preserver.
That possible infusion of cash is a beacon of hope, the thing you can work on tirelessly. It's the one thing that appears as though it will make everything better.
Careful. It's often a detour, a distraction that won't pan out at the very same time it takes your eye off the real issues.
The problem starts with this: Few people will tell you to stop trying to raise money. They'll encourage you to polish your business plan, make more pitches, add more rigor, dream bigger.
Add to this that it's essentially impossible to build a 1000x company, but those are the ones that get all the hype and the ones that investors crave. So you're comparing yourself to something that's quite elusive.
And finally, as you get deeper and deeper into the quest, there are individuals and institutions that will happily take advantage of you, requiring you to personally guarantee debt, to give up control, to turn your dream project into something you never envisioned.
The reason for this money trap is that so many small-business owners confuse raising money for expenses with raising money to build an asset. This is worth understanding.
If you can say, "I will spend this money on X, and X will make Y happen, and Y will pay off handsomely," then a professional investor ought to be open to hearing that story.
But the things to spend money on are a significant real estate presence, machines, patents, a permanent, expensive brand. The entrepreneur who spends this money does it with enthusiasm, because she's buying things that are going to grow in value, fast.
This is the painting contractor who realizes that a high-powered industrial paint booth will make him the only guy in town who can do a certain kind of job. Or the fast food impresario who asserts that opening ten restaurants in one town in one year will give her the footprint to be more efficient and profitable.
But that's not the way most small business folks are wired.
We're wired to delight our customers, charge for what we do, and then spend some of that money to do it again.
If that sounds like you, pretend that it's not even possible to raise money from investors. Take the option off the table (where it isn't, really).
Instead, spend that energy and that passion and that focus to raise money from your customers. To delight more customers often enough that they happily pay you for what you can do for them. And then repeat. And again.
It's not a life preserver. Not at all. It's a stepwise path, a ramp from here to there, a process with no guru, no miracle, no signing bonus. It's merely the work.
The thing you signed up for in the first place.