That 'Additional Loan' is not an act of 'Love', but an overture to 'Bankruptcy'
—The final ultimatum from a parent acting as a VC (Venture Capitalist) to ensure their child (subsidiary) does not become a 'zombie company'—
Well then, today let us make a final decision on an extremely delicate investment case. I am your hybrid advisor for love and economics. The topic is the issue of 'limitless additional loans to a subsidiary (your son or daughter) with no visible future.' I will thoroughly explain the cruel mechanism of how 'crony lending' in the name of parental love destroys the corporate value of both parent and child for all eternity.
“They are in trouble, so it is a parent's duty to help them”... No, thank you.
Please throw that way of thinking into the trash right now. It is the most malicious 'growth inhibitor' in the name of 'love'. Why your 'good intentions' lead to the worst results. You are likely doing this because you think it is for the best. However, from a business perspective, that act is the height of foolishness. It is a one-way street to 'mutual destruction' between parent and child.
1. It is not 'relief', but the complete exploitation of 'growth opportunities'
Financial difficulties, trouble, adversity... these are the most important practical training (OJT) sessions in life for an immature manager (your child) to acquire 'management skills' such as financial management and problem-solving abilities. Your easy provision of funds is nothing more than an act that uproots these valuable training opportunities and turns them into a third-rate manager who waits for instructions, learning that 'when things get tough, I can just blame others and beg for help.' A safety net? No, it is a 'shackle' that forever robs them of the opportunity to stand on their own.
2. You have degraded from a 'parent' into an 'infinitely dispensing ATM'
Originally, an excellent investor demands the submission of a rigorous business plan and only invests funds after verifying its growth potential. But what about you now? Are you not handing out loans without review or collateral just because they say they are 'in trouble'? That is no longer an investor. You are just an 'infinite ATM.' As a result, a 'moral hazard' occurs on the subsidiary (child) side. This is the moment a 'zombie company' is born—one that abandons management efforts, bleeds red ink, and merely devours the assets of the parent company (you).
3. The source of that loan is your 'capital of life'
Where exactly is the money you are providing coming from? It is your own 'business continuity capital' that you have worked for years to build up to protect your own old age. What happens if you keep pouring that into a subsidiary that lacks strength? Eventually, your own capital will run dry, and you will face the most tragic ending of all: a 'chain reaction bankruptcy' where both parent and child are forced to exit the market. Reckless pity does not help the child, and above all, it does not help you.
So, what should you do? A shift to 'stopping loans' and 'management consulting'
Please harden your heart. That is true love.
* Complete cessation of loans:
First, issue a final ultimatum that is as cold as it gets: 'I will not provide even one more yen of financial support.' Close the tap completely. Whether the subsidiary lives or dies depends on the subsidiary's management skills. That is what 'independence' is.
* Transitioning to a management consultant:
However, this does not mean you should completely abandon them. 'I will not give money, but I will provide wisdom.' Cooperate for free as a management consultant to help rebuild the company, such as by teaching specific cost-cutting techniques, accompanying them to the public employment office, or checking their household budget. Stop giving them fish and teach them how to fish. That is the final and most important role that a parent acting as an investor must fulfill.
[A word of advice]
True love is not about becoming a wallet that provides infinite aid to a child. It is about raising them into a strong enterprise (adult) that can raise funds on its own and survive in the market vigorously, even without you.
[Quote of the day]
“Ask not what your country can do for you—ask what you can do for your country.” (Tell your child to read this as follows: “Do not expect what your parent can do for you. Think about what you can do to stand on your own two feet.”) Source: From the inaugural address of John F. Kennedy (35th President of the United States)