Millennial Money: Should you invest in a friend’s business?

Roughly 20% of businesses close within the first year, according to data from the Bureau of Labor Statistics. And most startups never deliver a positive return.

“Ask yourself if you are OK if you lose all the money you invested in your friend’s startup,” Amanda Sanders, founder of Authentic CEO, said through email. Sanders has been on both sides of the equation — as an entrepreneur and an investor.

“If the honest answer is yes with no ill will toward your friend, then the relationship is likely to remain solid regardless of the business outcome,” she said. “If your answer is conditional, then the outcome of the friendship is likely to be conditional on the business investment.”

OFFER SUPPORT, EXPERTISE OVER CASH

Money isn’t the only way to support a friend’s business. You can offer time, expertise and connections.

Pitch in at pop-ups and events. Manage their social media accounts. Hand out flyers to get the word out. Be a sounding board for ideas and issues.

Or just show up with takeout from time to time, Sanders said.

“Having a friend interrupt your endless work schedule and bring in the food, the fun and the Fireball (the third part is optional) is very important for maintaining sanity.”