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November 2025 Leadership Training/Mentoring Situation Results
THE LEADERSHIP TRAINING/MENTORING CORNER
In August of this year the Silver Fox Advisors introduced a new offering in its monthly newsletter which is called the Leadership Training/Mentoring Section in which we posed a thought-provoking situation for you to think about and put yourself into the situation detailed and ask yourself – “What are your next steps”. Below is the situation that was in the November 2025 Newsletter.
NOVEMBER LEADERSHIP SITUATION
You have the opportunity to expand your business to a new market about 200 miles away completed a business plan and loan request package, which you presented to several banks; all of them have declined your request.
Your brother-in-law has offered to provide you the money needed to expand your business, but he wants to take a security interest in your company’s fixed assets (land and building) and obtain a minority interest in your company, which converts to a controlling interest if you can’t pay the loan back.
WHAT SHOULD YOUR NEXT STEPS BE?
We polled some of the Silver Fox Advisors, and below are some recommendations on what your next steps should be:
- Doing business with a relative usually is risky not only just from a business standpoint but also from a personal relationship standpoint. When a tough
- The brother-in-law’s position of wanting to take a security interest in the business’ fixed assets seems reasonable in that most lenders would likely require the same thing. However, taking controlling interest if the debt is not paid, again, could be very problematic with the family dynamics in play.
- Not having the information of what industry this business is in our Advisor did comment if it is a restaurant, simply do not do the deal and maybe don’t even consider the expansion plan.
- All of our Advisors recommended having a lawyer involved in the transaction, one who is independent of all the parties and their respective other family members.
- One suggestion that seemed to make a lot of sense was seeing how the owner of the business put the business plan and loan request package together that was presented to the banks, which all the banks turned down, it would be a good idea to get a professional business advisor involved to review the business plan and loan request package to make sure all the key elements are included for a lender to make a favorable decision. Things like a set of well-thought-out financial projections with detailed assumptions that support the data are key. Also, the business owner’s business experience and expertise need to be included along with a listing and description of any outside consultants that the owner uses in making critical business decisions (many business failures are caused by a business owner’s lack of wssential business knowledge and experience). In addition, a detailed source and use of the funds needed for the project should be included, with at least 10.0% or 20.0% coming form the owner’s own capital and not borrowed funds.
