Q & A Table of Contents
Look Before You Leap
From: Celine, India
Question: I am a middle aged educated married lady. I was working and recently got a break from job. I am offered a partnership in transport business by a young (bachelor) Catholic person whom I got acquainted two months back. He says he will handle all the other things I have to only invest. He seems to be a nice person to talk to. I had asked him for guidance in some kind of business. Actually he is in mushroom training/business etc. and has many options in business opportunities.
This business offer I have to invest approx. $40,000/- He is also offering to jointly to do the mushroom farming which are meant for export and will arrange for the export.
So I want your advice on the same.
Hoping to hear from you soon.
Response: Dear Celine,
Is there a way you can do some sort of trial investment with the young man? Hearing that all he is asking from you is money makes me nervous. Has he offered you a business plan on paper? It might make sense to have an investment plan that is based on the achievement of a series of benchmarks -- so that an investment of $10,000 will yield specific accomplishments before the next $10,000 is to be paid in.
You should check his references; find out what his business experience has yielded for himself, his customers, and anyone who has lent him money or invested money with him at other times. When you invest with him, he has to give you full access to financial and other information about the business venture. He should show you in advance the kinds of reports he will give you, what sorts of information they will contain, how frequently the reports will be provided, etc. You and he should have a written agreement that includes a section that arranges in advance how disputes will be settled: mediation, arbitration, going to court or whatever else makes sense in the circumstances.
You may want to invest the money as a shareholder, but you can also invest as a lender. He may borrow the $40,000 and agree to pay a specified rate of interest -- or a specified portion of the profits at regular intervals.
It is your money. You should set the standards by which it is used. And you should make sure that you are not risking funds you cannot afford to lose.
Good luck with the venture; may it be a great success.
Steve
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