I’ve been starting, scaling, investing and selling businesses for over 30 years and I’ve noticed that there’s something that doesn’t get talked about enough in business circles; what it truly feels like to invest your own money into your own company.
Not just a little capital to get things going, or a calculated investment with a clear return, but the kind of personal financial commitment where you’re tying your own future to the fate of the business. Unlike passive investments or diversified portfolios, this isn’t about putting money into an asset that operates independently, it’s about directly connecting your personal financial well-being with the company’s success or failure. It’s the difference between betting on a horse and being the jockey, knowing that if the race is lost, you don’t just walk away, you carry the full weight of the consequences. The kind where your house, your savings, and your family’s security are woven into the business’s survival. That kind of commitment can keep you awake at night wondering if you’ve made the right call.
I’ve been there, and I’d like to share my thoughts, learnings and experiences with you, perhaps to reveal some of the things you should know and be aware of, and I wish I’d known at the start.
In the journey of founding and leading companies, I’ve had to make most of those decisions myself. My first four businesses were entirely self-funded at launch, every penny came from my own pocket. It’s only with my fifth and sixth businesses that external funding has played a role in the startup phase. That experience has given me a unique perspective on both sides of the equation, the intense personal weight of self-funding versus the different pressures that come with other people’s money.
It’s one thing to commit your time, your energy, and your ideas to a business, but it’s something entirely different to write a cheque from your own account or pledge personal guarantees against loans. No amount of spreadsheets or business planning can fully prepare you for how that feels.
It’s important to talk about this because I believe it’s one of the most profound, yet unspoken, experiences that many directors and founders go through. The truth is, when you invest your own money, everything changes, how you make decisions, how you see risk, and how you carry the responsibility of leadership.
In this blog, I’m going to explore the realities of directors putting their own money into their companies, not just the practical mechanics, but the emotional and psychological impact as well.
We’ll look at:
- Why directors choose to invest their own money, whether through passion, necessity, or sheer survival instinct.
- How personal investment changes the way directors make decisions, for better or worse.
- The unspoken power dynamics between directors who have invested and those who haven’t.
- The legal and financial exposure that many directors only discover when it’s too late.
- The ripple effects on relationships, mental health, and long-term resilience.
- And ultimately, whether it’s all worth it, and would I do it again.
This isn’t just about a technical perspective, it’s about the emotional journey that comes with putting your own skin in the game. My hope is that by sharing these insights, more directors and founders will better understand, be better prepared, and more informed about the weight of the decisions they’re making.
If you’ve ever faced the decision to invest your own money into your company, become a director through investment in someone else’s company, or if you’re contemplating it now, I hope these experiences will help.
Let’s talk about what it really means.
Why directors invest their own money
When you’re a director facing the decision to invest your own money into your company, the reasons rarely feel straightforward. From the outside, it can look like a bold vote of confidence, a sign of belief in your own vision. But from the inside, the reality is often far more complex.
I’ve invested my own money into businesses for different reasons at different times, and each decision came with its own set of emotions. In the early days, self-funding felt like an extension of the entrepreneurial spirit, a natural step in backing my own ideas. There was pride in it, even a sense of defiance. This was my business, and I was prepared to back it with everything I had.
But there have been other times, particularly when cash flow was tight, or a critical project needed funding, when the decision felt more like survival than strategy. Those moments bring a very different emotional charge. The pressure doesn’t just come from the numbers on the balance sheet, it comes from the knowledge that you’re putting your own financial future on the line to grow the business.
The reasons directors choose to invest their own money often fall into three broad categories:
- Passion and conviction: The deep belief in what you’re building, where putting your own money in feels like the ultimate expression of commitment.
- Necessity: When external funding isn’t an option, perhaps because you’re in startup mode with no financial track-record, or perhaps the business simply needs cash to survive.
- Control: The desire to maintain full ownership or avoid the complications that come with external investors.
Each of these motivations comes with its own emotional landscape. Passion can fuel bold decisions, but it can also cloud judgement. Necessity can drive resourcefulness, but it can also breed anxiety. Control can feel empowering until it becomes a lonely burden.
What I’ve learned is that the reason you invest your own money matters, not just for the business, but for how you experience the journey. When the investment is driven by passion or strategic intent, it feels very different than when it’s forced by circumstance.
If you’re contemplating investing your own money, one of the most important questions to ask yourself is why? Not just at the surface level, but five layers deep. One way to do this is by applying the ‘five why’s’ method (from author and speaker Jim Rohn), where you continuously ask ‘why’ to uncover the core motivation behind your decision.
For example:
- Why am I investing my own money?
- Because I believe in the business’s potential.
- Why do I believe in its potential?
- Because I see strong demand for our product.
- Why do I see strong demand?
- Because customers keep asking for solutions like ours.
- Why are they asking for it?
- Because current market options don’t fully solve their problem.
- Why do I think we can solve it better?
- Because we have unique expertise and an innovative approach.
Breaking it down like this helps separate strategic conviction from emotional bias and ensures you’re making the decision with full clarity. Are you investing because you believe in the business’s potential? Because there’s no other option? Or because you feel you should?
Understanding your own motivation won’t make the decision easier, but it will help you carry the opportunities and consequences with more clarity. I remember one particular moment when I had to decide whether to inject more of my own money into a struggling project to keep it afloat. By breaking down my motivations using the ‘five why’s’ method, I realised that my fear of failure and delay was clouding my judgement more than my actual belief in the project’s potential. That realisation didn’t remove the risk, but it did allow me to move forward with a clearer, more rational perspective.
How personal investment changes decision-making
The moment you put your own money into your company, something shifts, not just in your bank account, but in your entire approach to decision-making.
I’ve experienced it myself. The same decision that might have felt logical and detached before, suddenly takes on an emotional charge when your own money is in the mix. Risk tolerance tightens, and every expenditure feels heavier. What once seemed like an exciting growth opportunity can feel like a potential threat.
Personal investment changes decision-making in three key ways:
- Short-term urgency vs long-term vision:When your own money is on the line, the pressure to protect cash flow can pull you into short-term survival mode, even when the best thing for the business is to hold your nerve and think long-term. Never make a long-term decision based on a short-term situation.
- Emotional attachment to outcomes:It becomes harder to walk away from projects, products, or strategies that you’ve funded personally, even when the objective data says it’s time to cut your losses.
- Heightened risk aversion:You become more cautious, more selective, but beware, sometimes caution can stifle innovation and slow down growth and turn your back on opportunities.
One of the hardest lessons I’ve learned is that the best decision for the business isn’t always the one that makes you feel safest as the person who’s funding it. I remember moments when I felt an almost visceral resistance to a necessary risk, purely because of the personal financial exposure involved. It’s one thing to weigh business risks intellectually, it’s another to feel them in your stomach when your own money is on the line.
If you’re self-funding your business, it’s vital to have someone around you, whether a co-director, advisor, or mentor, who can help separate financial logic from emotional instinct. Because when it’s your own money on the table, it’s incredibly difficult to see those lines clearly. Personal bias can creep in unnoticed, making it harder to weigh risks and opportunities objectively. One way to counteract this is by actively seeking external perspectives, whether through advisors, structured decision-making processes, or tools like financial stress testing to ensure that emotional attachment doesn’t cloud critical judgement.
The key is to recognise that your role as an investor and your role as a director aren’t always the same,and to build systems that help you make decisions as the director your business needs, not just the investor your bank balance wants to protect.
Power dynamics between directors who have invested and those who haven’t
When directors sit around the same boardroom table, there’s an unspoken truth that shapes every discussion: not everyone is carrying the same level of personal risk.
Money changes things. Specifically the dynamic between directors who’ve invested their own money and those who haven’t can be one of the most quietly influential forces in a business. It’s not always visible, but it’s always there, fuelling bias, shaping decisions, conversations, and even relationships.
I’ve sat on both sides of that table. When you’ve personally invested, there’s a weight you carry into every meeting, a silent undercurrent that colours every conversation. You’re not just discussing strategy or debating options, you’re protecting something deeply personal. Every pound you’re spending is a pound you once had in your own bank account.
It can create tension, whether spoken or unspoken. Those who haven’t invested can feel scrutinised or undervalued. Those who have invested can feel isolated, carrying burdens others don’t fully understand.
Three ways directors can work past this tension are:
- Understanding behavioural differences:Tools like DISC profiling can help directors understand how different personalities respond to pressure and conflict.
- Open conversations:Creating space for honest discussions about risk, exposure, and how each director’s position affects their perspective.
- Clear decision-making frameworks:Agreeing on principles that separate personal investment from collective business decisions. Decision that are in the directors’ interests from decisions that are in the company’s interests.
Let’s look at how DISC might inform and help directors to understand how their reactions to pressure could show up in a leadership team with different behavioural styles:
- Dominance (D):A director with a high-D profile may react to stress by pushing for aggressive action, cutting costs, demanding more sales, or pushing the team harder. They might struggle to acknowledge financial constraints in a way that builds collaboration.
- Influence (I):A high-I director might downplay concerns to keep morale high, potentially avoiding tough conversations or resisting cost-cutting measures that affect team culture.
- Steadiness (S):An S-style director could feel deeply anxious about pressure but may avoid confrontation, leading to silent stress rather than open dialogue.
- Conscientiousness (C):A high-C director may get lost in analysis, overcomplicating planning and delaying action to mitigate risk.
By recognising these tendencies, directors can adjust their communication styles, ensuring a D-style leader doesn’t bulldoze decisions, helping an I-style leader face financial realities, supporting an S-style leader to voice concerns, and guiding a C-style leader to make timely decisions.
The healthiest businesses are the ones that acknowledge this dynamic openly, not to create division, but to build mutual understanding. Because when both sides respect what the other is bringing to the table, the whole boardroom becomes stronger.
The hidden exposure: Legal and financial consequences
When you invest your own money into your company, the financial risk feels immediate and obvious. But what’s far less visible, and often far more dangerous, is the hidden exposure that comes with being a director. It’s overlooked because it doesn’t always show up in the day-to-day operations, and often, directors assume that legal protections or corporate structures will shield them. Yet, when a company faces financial distress, health and safety, or HR challenges, those layers of protection can disappear quickly, leaving directors personally exposed in ways they never anticipated. This hidden risk affects decision-making profoundly, making directors more cautious, sometimes even hesitant to embrace opportunities which may initially look like unnecessary risks, and it can create a sense of isolation when facing financial difficulties.
Many directors don’t fully understand the personal legal and financial consequences if the business is facing closure, whether by choice or forced upon them through litigation, often H&S, HR or tax related. If that happens, it’s often too late for the directors to protect themselves. The complexity of legal obligations, the fine print of personal guarantees, and the real-world implications of insolvency laws often remain hidden until directors find themselves personally entangled in them. The weight of this exposure can shape decision-making in ways that aren’t always rational, leading to either excessive caution or desperate risk-taking. Without a clear understanding of these hidden liabilities, directors may unknowingly put their personal finances, and even their future business prospects, at risk.
*Please note – I’m not a legal or financial advisor and none of what I’m sharing should be taken as advice, I’m simply sharing my own experiences and decision-making principles, sometimes learned the hard way, with you so you can make your own better informed decisions. If there is one piece of advice, it’s get professional advice!
Let’s explore three of the most common:
- Personal guarantees:What they really mean, and how they can follow you long after the company has folded, perhaps even after you have exited.
- Directors’ liabilities:The legal obligations directors hold, and the circumstances under which those obligations can become personal debts.
- Insolvency risks:How the timing of decisions and transactions can expose directors to personal financial claims.
Personal guarantees are legally binding commitments that directors often make to secure business loans, supplier agreements, or commercial leases. Unlike a company debt, which is limited to the business entity, a personal guarantee places the director’s personal assets, such as savings, property, or future earnings, on the line if the company fails to meet its obligations.
A key danger is that these guarantees don’t simply disappear if the business enters administration, liquidation, or you sell. Creditors can pursue directors personally for outstanding amounts, even years after the company has ceased trading or is sold. Many directors only realise the weight of this commitment when faced with aggressive debt recovery actions, personal bankruptcy risks, or the inability to secure future funding due to their financial history.
For example, a director who personally guarantees a £100,000 business loan may still be liable for repayment even if the company folds. If the lender enforces the guarantee, they could seize personal assets or initiate legal proceedings to recover the debt. Without careful financial planning or legal safeguards, this exposure can have long-lasting financial and emotional consequences, not just for you, but also for your family.
Directors liabilities
When we talk about directors’ liabilities, we’re referring to the legal obligations and responsibilities that directors hold, particularly in relation to financial and corporate governance. In many cases, directors assume that their liability is limited to the company itself, but there are specific circumstances where those obligations can become personal debts, meaning the director’s own assets, such as their house, savings, or other personal finances, could be at risk.
For example, if a company becomes insolvent and a director is found to have continued trading while knowing the business could not meet its financial obligations, they may be held personally liable for those debts. This is known as wrongful trading in many countries. Similarly, if a director has signed personal guarantees for loans, leases, or supplier agreements, those guarantees can override the company’s limited liability status, making them directly responsible for repayment even if the business fails.
Imagine a director of a struggling company who, in an effort to keep operations going, takes out a business loan secured by a personal guarantee. If the company later goes into administration and cannot repay the loan, the lender can pursue the director personally for the outstanding amount. In extreme cases, this can lead to personal bankruptcy or forced asset sales.
The key lesson for all directors is that liability isn’t always as limited as it appears on paper. Understanding these risks and proactively managing exposure, through professional legal advice, careful financial oversight, and strategic decision-making, can prevent personal financial disaster down the road.
Insolvency risks
Are you aware of how the timing of certain financial decisions and transactions can leave directors personally liable if their company becomes insolvent?
For example, if a director approves a loan repayment to a friendly creditor while the company is already in financial distress, and the business later goes into administration, this transaction could be deemed as a preference payment. This could mean that the director may unfairly prioritise one creditor over others. If this is challenged, the director could be held personally responsible for repaying that money, even if they acted with good intentions.
Directors must be extremely careful about financial decisions when their company is struggling. Keeping thorough records, a clear paper trail, seeking legal advice, and regularly reviewing solvency indicators can help avoid personal liability.
To proactively safeguard themselves, here’s three key steps directors can take:
- Seek independent legal advice before signing personal guarantees.
- Regularly review the company’s cashflow position and ‘burn-rate’.
- Document decisions carefully to show sound judgement in times of stress.
Understanding these risks isn’t just about self-protection, it’s about making better decisions with full awareness of the stakes.
The ripple effect: Relationships, mental health, and long-term resilience
Investing your own money into your business doesn’t just affect your bank balance. It ripples out into every part of your life, your relationships, your mental well-being, and your ability to sustain resilience over the long haul.
I’ve seen it firsthand. The financial weight of self-investment is one thing, but the emotional toll it takes can be even greater. The pressure isn’t confined to board meetings or balance sheets, it follows you home, creeps into personal conversations, and can strain even the strongest relationships. The ability to handle this pressure isn’t just about financial literacy; it’s about emotional resilience, communication, and learning to manage the inevitable stress that comes with carrying so much responsibility.
The hidden strain on personal relationships
When you invest personal money into your company, the financial risk is yours, but the emotional burden is often shared by those closest to you. Partners, family members, and even close friends can feel the weight of your decisions, sometimes more than you realise.
The conversations can be tough:
- “Are you sure this is the right move?”
- “What happens if it doesn’t work?”
- “We’ve worked so hard for this security and lifestyle, why put it at risk?”
Even when others support your vision, they may still struggle to fully understand the stakes you’ve taken on. If difficulties arise, the strain can escalate, especially if it starts affecting shared assets or household stability. I’ve known founders who have faced resentment from their families when business struggles led to personal financial stress, and I’ve seen relationships buckle under the weight of uncertainty.
Here’s three things that could help:
- Transparency: Be honest with those closest to you about the risks, the strategy, and your contingency plans.
- Boundaries: Set clear times when you don’t talk about business to maintain personal connection beyond work.
- External support: Seek mentors or professional advisors to shoulder some of the emotional load rather than relying solely on family.
Mental health, the silent cost of self-funding.
There’s a reason why founder burnout is so common. When your own money is in the business, every problem feels personal. Every month-end payroll and every challenge feels like a test of your judgment. Every setback feels like a direct hit to your self-worth.
The psychological weight of this can manifest in different ways:
- Insomnia and constant overthinking, lying awake at night calculating worst-case scenarios.
- Anxiety and decision paralysis, fear of making the wrong move and missing opportunities because the financial stakes feel too high.
- Isolation, the sense that no one else fully understands the pressure you’re under.
I’ve experienced moments where the stress became overwhelming, where the fear of failure clouded my ability to make clear decisions. What I’ve learned is that mental resilience isn’t just about “pushing through.” It’s about building a system that supports you when things get tough.
Here’s three things that could help:
- Routine self-care:Exercise, meditation, or anything that helps regulate stress levels.
- Peer networks:Surrounding yourself with other founders who understand the unique pressures.
- Perspective checks: Reminding yourself that setbacks are temporary and that financial investment, while significant, doesn’t define your worth as a leader.
Long-term resilience: Surviving and thriving beyond the investment
Many directors who invest their own money focus entirely on the present moment, getting through the next month, securing the next deal, making the numbers work. But personal financial investment isn’t just about survival, it’s about sustainability.
The real challenge is ensuring that your financial commitment doesn’t leave you depleted, bitter, or unable to take future risks. Some directors pour everything into a business, only to emerge years later financially and emotionally exhausted, unable to take on new opportunities.
How do you build resilience beyond the investment?
- Separate personal and business finances: No matter how deep your commitment, keep clear boundaries to protect your personal financial future.
- Plan for an exit strategy: Even if you’re all in now, have a vision for how you’ll eventually transition, whether that’s selling, scaling, or stepping back.
- Learn to detach emotionally: Care deeply about the business, but don’t let it define your entire identity. A failed venture doesn’t mean a failed founder.
Investing your own money is one of the biggest commitments you can make as a director. It’s a decision that will shape your leadership, challenge your resilience, and test your relationships. But the key to navigating it successfully isn’t just about financial strategy, it’s about managing the human side of the investment.
As directors, we talk a lot about financial risk. But we need to talk more about the emotional, relational, and psychological risk too. Because at the end of the day, it’s not just about protecting our money, it’s about protecting ourselves so we can continue to lead, build, and grow for the long term.
Was it worth it, and would I do it again?
So, after everything, was it worth it? The answer isn’t simple. On most days, and certainly more so now I have learned from my experiences, mistakes and successes, I look at what I’ve built, the people whose careers have grown through my businesses, and the freedom I’ve created, and I think: absolutely. But on other days, when I remember the sleepless nights, the stomach-wrenching moments of financial uncertainty, and the sheer personal and relationship costs, it’s hard not to wonder if there might have been another way.
If I could go back and give my younger self advice before investing my own money, here’s what I’d say:
- Understand the real risk.It’s easy to assume things will work out if you just work hard enough. But businesses fail for reasons beyond effort, market shifts, unforeseen crises, or just bad timing. A personal guarantee on a loan means the risk isn’t just professional; it’s personal.
- Have a plan B (and C).Hope is not a strategy. If things go wrong, how will you protect yourself and your family. The time to think about that is before you sign for any long-term commitment, not after.
- Separate emotion from financial logic.It’s easy to connect passion with rational decision-making, but just because you believe in your business, doesn’t mean you should bet everything on it.
- Negotiate harder.I wish I’d pushed back more, on loan terms, on supplier contracts, on equity deals. Just because something is “standard” doesn’t mean it’s in your best interest.
- Talk to people who’ve been there.There’s no substitute for learning from those who’ve walked this path before. I would have saved myself a lot of pain if I had sought more wisdom upfront.
At the end of the day, investing my own money shaped me in ways I could never have predicted. It made me a sharper decision-maker, a more resilient leader, and someone who truly understands the weight of responsibility. But would I do it all again? On balance yes. Despite all the setbacks, challenges, and life changing events, the fulfilment and joy brought by knowing that I’ve built organisations that serve others and will persist beyond me, is absolutely worth it.
If you’re about to invest your own money in your own company, or in someone else’s, pause. Think it through. Get advice. Get help. Ask better questions. And make sure that, whatever happens, you’re making a decision you can live with, not just financially, but emotionally, too.
Call me for a chat – happy to share more and help where I can.
Work with me:
I help owners, founders and leaders create a scalable business that works without them, build a world-class team, and 10x profitability. Book a call with me here to see if we could work together.
Remember, there are only three types of people – those who make things happen, those who wait for things to happen, and those who talk about why things don’t happen for them. Which one are you?
Recent Comments