Do you need an investor or a loan?

I’m often asked this question by businesses that are ready to scale. My answer is always it depends. I’ve seen businesses thrive through investments and I’ve seen an equal number lose their edge because the investors did not have the culture, core values or drive that the founder/owner brought to the table. You see, bringing on an investor means that you are going to allow someone else to have a say, (or more than a say) depending on the equity given in how you run your business.  Are you prepared for that??

When you receive a business loan, the equity and stakes related to ownership are not affected.

Here’s a list of advantages and disadvantages of going the investor/investment route. I’m not advocating one over the other– just offering some things to consider…

Advantages of going with an investorAdvantages of going with an investor

  1. Money and support/expertise. An investor will provide guidance and expertise you need to take your business to the next level.  Think Shark Tank and what those investors always say:  “you’re getting my money and my contacts and my expertise”.
  2. Investors may be more flexible than a traditional bank loan officer. Is your company considered high risk?  The bank will be more conservative in their decision making than an investor might be.  You might be able to more readily convince an investor about the potential of your business.  A bank officer needs to see demonstrated success.
  3. You may not have to give a personal guarantee such as you would have to give for a bank loan. Be intentional about that in the negotiation process!
  4. Potential for additional funding.  Because the investor is involved in the business and has an ownership stake therein, they are more willing to further invest to make sure that their investment will pay off.

are you willing to give up ownership and how much ownership are you willing to give up in exchange for cash and expertise?


  1. Ownership– are you willing to give up ownership and how much ownership are you willing to give up in exchange for cash and expertise?
  2. Decision making goes hand in hand with ownership and can be the cause of great friction.  Be sure to spell out the decision making process and how decisions will be made (i.e. consensus, vote, veto powers).
  3. Look beyond the immediate to the future/end game.  Are you planning to sell the business?  Keep in mind that the equity share extends to the sale as well. Investors expect a return on their investment and your contract should clearly spell that out.

Application ApprovedIt is also very important to consider your business goals and your business culture. Go into an investment relationship with your eyes wide open and with the expectations clearly spelled out. Taking on investors has been likened to getting married. There should be a courtship where you get to know each other. Then there’s the inevitable period of adjustment (this is where the expectations kick in) and then hopefully mutual support and growth. And yes (!) you need a contract. Yes, you need to take the time to dot all the “i”s and cross all the “t”s, because after all, this will most likely be a long term and intimate relationship.

Have more questions? Please let us know.

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Nancy Allen


G. Nancy Allen is an international speaker, coach, consultant and expert on women’s business issues. Nancy has over 30 years of experience helping small business owners at all stages of growth. As President and CEO of WBDC Florida/Her Company Incorporated, Nancy manages and leads an incredible team of staff, sponsors, partners and women business leaders who are dedicated to certifying, connecting and championing women in business. Nancy has been recognized for her work on behalf of women in business through numerous prestigious awards: -Nancy was recently honored by the International Career and Business Alliance (ICABA) as one of South Florida’s 100 most accomplished Caribbean Americans. She is especially proud of this award because it highlights her heritage as well as her professional accomplishments. -Nancy is the recipient of the World Women Leadership Achievement Award from the World Women Leadership Congress -Nancy is also the proud recipient of the Association Marketing Award from Women in ECommerce. -Most recently Nancy was named Honorary Ambassador of Cascais, Portugal by the Ambassador’s Club of the Industry Sector of Cascais and the Estoril Coast. Nancy’s personal motto is Connections, Creativity and Courage in all endeavors. She holds a Master’s Degree from the Johns Hopkins School of Advanced International Studies (SAIS, 1982). She was born in Haiti and raised in South Florida. Nancy is bi-lingual in English and French and is fluent in Spanish and Creole.