Patrick G. Mackaronis, co-founder and Director of Business Development at social media startup Brabble, waxes poetic on teaching business skills to child entrepreneurs.
Parents whose children have entrepreneurial leanings are likely to discover it early in the children’s lives. Before preschool is over, these children want to run lemonade stands or hold yard sales. By elementary school, their business plans expand to include pet sitting, dog walking, yard work and a variety of exotic and sometimes harebrained schemes flowing from the child entrepreneur’s vast imagination.
Not all unusual business schemes are doomed to failure, of course. One 8 year old child in our community convinced her parents to let her buy glow sticks for $1 at the dollar store and resell them for $2 on the town square. She made $200.
Children with entrepreneurial spirit are easily recognizable for their persistence. These children don’t give up when someone discourages their business plans. They may speak their ideas for running a business more emphatically in response to adult expressions of concern. They may even make some revisions to accommodate the concerns. But the one quality that is a hallmark of child entrepreneurs is that they will continue to show interest in pursuing their business ideas.
As the parent of a would-be child entrepreneur, your role is to support and guide the child so that he or she learns solid business skills. It does involve some work, but take heart: studies have shown that most successful business owners started their first business as a child.
Most children with a desire to run a business know exactly what sort of business they want to operate. Parents can help them establish a very basic business plan so that they understand the different facets of running a business.
For example, the parent and child can figure out what product or service the child will offer, what costs will be incurred in providing that product or service, where the start-up funding will come from, where the customers will be found, how to price the product or service, how to advertise the product or service, limitations on providing the product or service, and work quality.
Product or Service
Help the child organize his thoughts about exactly what product or service he or she will offer. Is this a product or service for which there is a genuine need in the community? Is this a product or service the child can realistically provide?
Whether for supplies or advertising, a child’s business may involve start-up costs. It is important for a child to understand that selling something or providing a service involves more than taking in money. Business investment is a risk. Is the child going to buy the lemonade ingredients for his lemonade stand with his allowance? Is he going to do some chores to earn that money? Are his parents willing to give him a start-up loan to be repaid from his profits? The child should understand that he will only make money if he is able to earn more than he invests.
No matter what service or product the child plans to offer, customers wanting that service or product are essential. A child who decides to write and sell a newspaper or make and sell homemade perfume or take on a task that to all appearances is beyond her years may have a hard time finding customers beyond those few friends and neighbors who hire or buy out of kindness.
Choosing the location or timing for a product or service based solely on the child’s schedule will also limit the customer base.
Encourage children to think logically. What kind of people want to buy lemonade? Thirsty soccer players? Why not set up the lemonade stand near the soccer field? Where do you find people who need dog walkers? Maybe a nearby vet or pet store will allow the child to advertise on their bulletin board.
Children also need to put their creative abilities to work. When my 7 year old wanted to start a leaf raking business, we expressed concern that people would be hesitant to hire a 7 year old and her 6 year old sister. Her solution? Hire her 11 year old brother to work with her at 3 times her “salary” so she could capture customers by promising the services of a 3-person team that included an 11 year old.
Children are often unrealistic about pricing. They tend to approach pricing from the perspective of the amount of money they want to earn. Encourage your child to view the pricing issue from the customer’s perspective as well as their own. Also encourage them to take costs and the price of competing products into account when pricing their product or service.
What does this product or service normally cost? What makes hiring or buying from a child more risky or beneficial for the customer? Is your child offering something extra? What is the cost of any supplies or advertising? Show the child how to calculate a profit by taking into account the payoff of any start-up costs and ongoing expense of supplies and/or advertising.
Sales/ Service Area
In choosing a sales/service area, parents will be concerned about the child’s safety as well as reasonableness of the child having access to the work. A job across the city is not feasible unless the child is old enough and permitted to ride a bike or bus there, or unless a parent will drive the child to and from the job.
Where and how does the child plan to advertise? Do local ordinances restrict neighborhood signs? Make sure the child understands that permission is required to post notices on private property including store bulletin boards. Will the child be advertising on the neighborhood listserve?
Parents are likely to limit a child’s business activities to accommodate safety concerns and to ensure that the child’s business is not interfering with school and other important activities. Spell out in advance what the rules are: does a parent have to meet a prospective customer? Is the child restricted to providing service only to persons known to the family? Is the business only able to operate on weekends? Does a child have to be able to perform all of the work himself without parental assistance? Is there a limit on how many customers the child may take on in a specific time frame?
Helping a child develop a sound work ethic is an important role for a parent. A child undertaking work for pay should understand her responsibility to perform all of the required work to the best of her ability. If she gets tired or bored, she cannot simply abandon the job. If she is babysitting, she may never leave a child in her care unattended and must know when to seek the help of an adult. If the child cannot do the work because of unanticipated skills issues, the child needs to be honest with the customer and not accept payment. If the child inadvertently breaks something of the customer’s, the child needs to know that it is her responsibility to offer payment, even if that means she potentially makes no profit or incurs a loss for the job. If the child wishes to do another activity when work is scheduled, it is her responsibility to either reschedule the work if possible, find a replacement acceptable to the customer, or sacrifice her own preferred activity to live up to her business commitment.
The child’s business commitment should also be viewed as a family commitment. If you have allowed your child to commit to taking care of someone’s pets or to babysit, forcing a cancellation for subsequently scheduled family activities of your own sets a very bad example for your child. It also affects your child’s credibility as a reliable service provider.
Teaching children the skills necessary to operate their own businesses can be trying, but the child who masters these skills has developed important tools for success in the adult business world. The responsibility and self-reliance that running a business engenders will aid the child entrepreneur in a vast array of future endeavors.