By Brian Hindo

You know the tried and true rules of holiday dinner conversation: Don't talk about religion and politics -- especially this year. But what about hitting up your relatives for startup cash?

It's a tricky question, but one that the vast majority of entrepreneurs eventually ask. Experts conservatively estimate that 85% to 90% of all seed money for small businesses comes from friends and family. By comparison, the amount from the venture-capital industry is practically negligible: VCs kick in somewhere around $300 million in startup funds each year, with friends and family shelling out an astronomical $100 billion, according to research by Babson College entrepreneurship professor William D. Bygrave.

UNREALISTIC EXPECTATIONS.  So what's the best way to get a piece of that pie this holiday season? True, everyone will likely be in a good mood after a Thanksgiving turkey feast and perhaps a few glasses of wine. But experts say it's best not to spring your bright idea on unsuspecting family members at dessert. "It's not the kind of thing where you say, 'Get out your checkbooks, and pony up if you love me,'" warns William B. Gartner, a Clemson University entrepreneurship professor.

Money from family and friends can be a blessing. They're an easy and trusted source of investment for your burgeoning small business. But it can also be a curse, given the additional stress that the emotional and relational ties put on the transaction. Having a serious plan ahead of time can save you much acrimony later, whether the business is a success or bust.

Gartner urges entrepreneurs seeking cash from relatives to do it as part of a more serious conversation. It's no whimsical detail that most businesses don't succeed, and thus, most investors won't see their money again. Bygrave's research shows an apparent (and problematic) disconnect between optimistic investors and the realities of business -- 79% of family investors expect to get a return eventually, indicating that their entrepreneurial kin aren't necessarily as forthcoming about potential risks as they perhaps should. Placing the meeting in a more formal atmosphere girds both parties for what's really a serious undertaking -- and one that very likely may not go according to plan.

TAILORING YOUR APPROACH.  Though it's an awful cliché, you may want to start your quest for investment by asking your rich uncle. Indeed, Bygrave and his Babson colleague Paul D. Reynolds have researched almost 23,000 "informal investors" -- friends and family who gave money to entrepreneurs from 1999 to 2003. The research shows that older, male relatives who are entrepreneurs themselves and have high net worth are the most prolific providers of family-based capital.

Close family -- parents, siblings, aunts, and uncles -- account for 42% of giving. Friends and neighbors make up the next biggest group, contributing 29% of the "informal investment" tracked by Bygrave's study.

So what kind of sales pitch should you bring? Well, that depends on your relationship with Uncle Ted, your older sisters, or your next-door neighbor. Joseph H. Astrachan, director of the Cox Family Enterprise Center at Kennesaw State University, says interactions fall into three main categories, all of which can be beneficial if pursued appropriately.

GIVING WINGS.  In the first group, some family members will give you money simply because you're blood, out of a sense of loyalty. For them, "it could even open up roots of doubt" to delve into the details and question the business you want to start, Astrachan says. Though these types of family members are typically the easiest to approach, they may not necessarily be the best -- particularly if your business plan would benefit from having a more analytical investor.

A second type has your investor viewing your fledgling business as a developmental opportunity. For instance, a benevolent -- and well-off -- father may lend money as a sort of investment in his son or daughter so they can grow wings of their own. In that case, you may have to do some assuring that the business idea isn't completely hare-brained, but the medium- and long-term specifics, say, are not as consequential to the investment. In other words, they want to invest in you, but not at your detriment.

Finally, Astrachan says, there are those who would really like to see the business itself be a success. Here, you'll need to make the most convincing -- and thorough -- pitch. "Make them your partner," he says.

LAWYERS' GREAT IMAGINATION.  Whomever you end up asking to invest in your business, you should most certainly make the possible outcomes clear -- on the downside and on the upside. The former case is simple enough for most to understand: If the business fails, you won't get your money back. But Gartner stresses that even success stories can bring unexpected pain. Say you need to reinvest initial profits to keep a business growing. That's good, but mom and dad may not understand why you can't pay them back just yet. And say you grow into a $100 million business. "If friends and family put in 90% of the capital, do they get $90 million?" asks Gartner.

To make sure all of the potentialities of the family deal are worked through, Gartner further advises that you put any deal in writing, even if it's an informal contract, and that you involve a lawyer at an early stage. "You must have a document that talks about what will happen if things go wrong," Gartner says. "Lawyers have a great imagination for how things can go wrong."

For all of the added stress of mixing business with blood and the potential for damage to personal relationships, having family and friends as investors has some advantages. They'll likely be more patient with you than professionals. Plus, you know best how to manage their expectations in the event that they lose their money.

"Make sure they know they should regard it as play money," says Bygrave. "It can make for a really dysfunctional Christmas if you owe money to people at the table," says Bygrave. If that's the case, you could always try bringing up religion or politics.

Hindo is a staff editor at BusinessWeek in New York