How to Help Your Child Start a Small Business
Perhaps you’ve heard of Tony Hsieh? He’s the founder of Zappos.com, an online retailer that sells more than $1 billion in shoes a year. It isn’t Hsieh’s first venture. His entrepreneurial debut, as a 12-year-old boy, was offering photo-buttons by mail. The enterprise netted him $100 per month and, more importantly, taught him how to run a business.
Do you own a company that you hope your child will run someday? Or do you want to see your kids become successful entrepreneurs like you? Pique their interest by helping them start a business of their own while they’re still in school. Here’s how.
1. Keep things simple. You are an entrepreneur and thus tend to dream big, but this exercise is about teaching. Make sure your child’s endeavor is appropriate to his or her age. Choose something they can do themselves with you playing a supporting role. Tailor the business to their interests, and keep it small enough that they still have time to be a kid.
Businesses like these work well for children:
- Lemonade stand
- Sales of baked goods
- Babysitting or dog walking
- Cleaning or lawn mowing
- Purchasing and reselling used merchandise
- Gift wrapping
- Almost anything else that interests your child
2. Show kids how to plan. How do adult business owners prepare for the future? By writing a formal business plan. Although it’s unnecessary to draft a plan that’s suitable for VCs, it should cover basic topics — such as goals, budget, and marketing strategy — that kids can grasp. For older children, the plan may include market research including an analysis of the competition, a layout of the organizational structure, a more detailed budget, long-term goals (even if you don't envision the business lasting that long), and how to find additional funding. Your child’s business may be simple, but you want to instill the idea that big projects should always have a plan.
3. Fund it! Once you set a budget, give your kids the money they need to get started, and then ask them to work hard to generate additional capital to expand. Teach them about the different types of funding and how business owners solicit investors. Set up a meeting or act as the investor, and write up a contract when a funding agreement is made.
4. Follow the rules. Certain types of businesses may not legally operate without a permit, even if their owners are children. Food-service operations, for example, will require various permits and licenses as the business grows. Check with your state and municipality for laws regarding your child’s potential business.
The IRS requires children to pay income taxes. Penalties could be levied for non-payment. Act as your child’s accountant, but involve him or her in the process. Demonstrate that being an ethical business owner is the way to get ahead.
5. Help market the business. Asking children to network may not be appropriate, depending on their ages, but show them how to build relationships by introducing them to people you know. Teach them how to use the social media, make calls, and send texts to prospects. Help kids understand that successful business owners work hard to cultivate and maintain customer relationships.
6. Try not to interfere too much. Of course, you aren’t going to let your child fail miserably, but resist the urge to take over if things go awry. Teach rather than mandate. Offer to help, and then help when asked. Someday you won’t be there, so work with your young entrepreneur to solve problems instead of stepping in and “fixing” everything.