What if your child wants to do something beyond babysitting for family friends or stocking the shelves at your family grocery store? Maybe your child is naturally a hustler, always coming up with plans to put more cash in their piggy banks. When I was young, my first business was leaf raking, followed by a paper route, lemonade stands, baseball card shows, candy sales, babysitting, and handyman work. I was barely out of college when I founded the publishing company I ran for seventeen years, but at that point I had more than a decade of experience! I was lucky that my parents, instead of laughing at my harebrained schemes, were always happy to provide financial advice. What can you do to nurture child entrepreneurs such as creative problem-solving skills—necessary for success in the economy of tomorrow?
So Should My Children Be Building an App?
When people think of child-run businesses, the first thought always seems to be lemonade stands. While there’s nothing wrong with a lemonade stand, feel free to get creative. Here are some resources to assist your child in finding their own business venture.
Children’s Books for Starting Businesses
Dallas Crilley, Kidpreneur
Arlene Erlbach, The Kids’ Business Book
Mark Victor Hansen, The Richest Kids in America
Jennifer Larson, Who’s Buying? Who’s Selling?
Adelia Cellini Linecker, What Color Is Your Piggy Bank?
Steve Mariotti, The Young Entrepreneur’s Guide to Starting and Running a Business
Adam Toren and Matthew Toren, Kidpreneur$: Young Entrepreneurs with Big Ideas!
Help your child to take ownership of her new venture—but do not miss opportunities for coaching. For example, walk her through putting together a simple business plan. If she wants to sell her Legos on eBay, make sure she factors in elements like the time it will take to create the listing, the listing fee, and the cost of shipping. (Not to mention the fact that now her Legos are gone for good—a cautionary tale in selling your possessions). If you are looking for some more easily accessible information, both Forbes and Entrepreneur provide helpful tips to identify/grow the businessman/woman in your child.
The Value of Failure
My daughters recently ran a Rainbow Loom booth at our church fair – to great success! But what if the Rainbow Loom experiment hadn’t gone well? Honestly, I believe it would have been just as valuable an experience. Part of giving your child the best early financial education possible is letting them experience failure in a safe and constructive way. This idea could not be more relevant than in a discussion about entrepreneurship. If your child has the inclination to be an entrepreneur, give him the freedom to practice those skills now. It is much better for him to learn how to take appropriate risks, find holes in markets, and hedge his bets when he is ten than when he’s forty and have other people depending on his income.
You can also help your child find role models in people with similar motivations who have started or run their own businesses; these individuals can attest to the value of learning from failure. If you do not personally know anyone, countless examples exist throughout corporate histories of inventors or founders facing great hardship. Whether or not you want to tell your child about Walt Disney or Steve Jobs, emphasize that great success is not an overnight accomplishment. The important lesson to learn is not to avoid failure, but how to react once you have failed.
Let’s say that instead of tanking, your child hits it big with her roadside raw-quinoa protein bar business. What is she going to do with that whopping profit of $11? Are you going to have rules for these earnings? The answer will likely depend on the age of the child and whether you have a budgeting system in place. It might make sense to deal with the earnings as you do with other windfalls (addressed in the previous chapter), but a clever child could make the argument that there is a distinction; namely, she’ll earned this money by doing more than just turning a year older. A friend of mine mandates that his children save 50 percent of their earnings. I think you could even expand on that, requiring them to save a percentage and then reinvest a percentage in their business. Ultimately, of course, it’s up to you.