When LaTisha Styles was a little girl, her parents took her and her sister to a local warehouse store where they learned a valuable and life-changing lesson in entrepreneurship.
“We purchased our first batch of ‘inventory,’” she explains. “It was a bag of candy that we started selling in our neighborhood. My father taught us how to calculate our profit as well as how to save enough to reinvest into more inventory for our business.”
Styles is now a successful blogger at YoungFinances.com and a millennial personal finance expert, no doubt in part due to those seeds planted at an early age.
In his new book “Smarter, Faster, Better,” Charles Duhigg says that “in 1980, more than 90 percent of the American workforce reported to a boss. Today more than a third of working Americans are freelancers, contractors or in otherwise transitory positions.”
Raising a New Generation of Entrepreneurs
Clearly, many young Americans will have to develop entrepreneurial skills to simply survive in the new economy. But since entrepreneurship is not part of most children’s formal educations today, the job of guiding the next generation of self-starters will largely fall to parents.
“Becoming a successful entrepreneur is not easy,” warns Tom Corley, author of “Rich Kids: How to Raise Our Children to be Happy and Successful in Life,” and who spent five years studying 177 self-made millionaires. “They are among the most courageous, fearless individuals I have ever met,” he says. “They put everything on the line.”
Corley, Styles, and other experts believe there are steps any parent can take to help their kids start businesses and become successful entrepreneurs. Here are five of them:
Invest in Their Startups
If your child wants to start a business, consider being their first lender or investor. “Give them some incentive and help,” says teen blogger Eva Baker, founder of The Teenpreneur Conference, an event for young aspiring business owners. “Maybe offer to help them get started with an in-house business grant or loan,” she suggests. “My mom gave me almost $200 to start my website. I couldn’t have done it without her help.”
Corley says youth can be an ideal time to learn about entrepreneurship. “The best time to make mistakes or fail is when you’re young and you have very few responsibilities such as a home mortgage to pay, children to raise, and bills to pay,” he observes. He offers a list of “kid startup” ideas:
• Open a neighborhood lemonade stand.
• Sell handmade friendship bracelets.
• Start a rock band.
• Have a garage sale and put your child in charge of selling and collecting money; give them a commission on each sale–20 percent, for example.
• Open a homemade ice cream stand.
• Sell floral arrangements.
• Sell personalized head bands, scrunchies, hats, or shirts.
• Sell knitted scarves, gloves, socks, etc.
Levi King, founder of Nav, and a serial entrepreneur who started his first business by himself at age 22, says he tries to instill entrepreneurial attitudes in his children. For example, he pays his daughters “like an entrepreneur.” They get one rate if they do the minimum required when babysitting (“everyone survived”), but they earn more if they go the extra mile, for example, by cleaning the house.
Give Experiences, Not Things
“My late dad was my hero,” says Sam Renick, an entrepreneur dedicated to helping kids develop great money habits. “He did not give us Disneyland experiences. He gave us work experiences. If we wanted Disneyland experiences we could work and pay for them ourselves. We washed aunts’ and uncles’ cars. We cut neighbors’ lawns. We built and operated lemonade stands. He participated in all the activities with us. He leveraged each experience to coach us up. He would plant and cultivate ‘you can do it dream big’ seeds in our heads and hearts.”
Those lessons are at the heart of Renick’s current project, the Dream Big campaign. “We want to educate, encourage, and empower kids to go beyond their circumstances. So, if kids want, they can go to college, own homes, and/or vacation at Disneyland. So, if kids want, they can become a media magnate like Oprah Winfrey, or run two businesses simultaneously and travel to Mars like Elon Musk,” he says.
Let Them Run the Show
Once they get started, it’s important not to take over. “My mom is my partner and financial supporter; however, I have always had the final say in business decisions,” says Baker. “I really appreciate the respect my mom has extended to me in this way and it has made our relationship stronger. After getting advice from my mentors and discussing things with her I know that she believes in me enough to allow me to make the decisions for my business that need to be made. Of course, as a teen, I made it a point to ask for her advice and hear her out before making any decisions. Mutual respect is critical for a teen business to be successful!”
Help Kids Embrace Failure
Don’t be afraid to let your child fail. “Making mistakes, and constantly stumbling is a way to improve,” says Jordan Agolli, teenage entrepreneur and founder of Force Media. “There’s this misconception in society that we have to strive for perfection, and perfection is the goal, when the reality is perfection does not exist.”
He also says it’s okay for kids to be afraid as they launch or grow their businesses. “The faster that kids can look fear in the face, the faster they will mature as businesspeople. You cannot be fearful in failing, you have to confront the fear.”
“Mistakes are beautiful things.” agrees Corley. “They not only teach you what not to do, they also help point you in the right direction. Mistakes are critical to the success of all entrepreneurs and parents who want to raise future successful entrepreneurs. They need to teach their children that mistakes are good things and not bad things.”
Corley encourages parents to help their kids celebrate their failures with something he calls “the Mistake Binder,” a running list of every mistake that a person makes in his or her in life. Each mistake is documented on one page and on each page four things are documented:
• WHAT went wrong
• WHY did it go wrong
• HOW to avoid repeating it in the future
• LESSON you learned
The goal is to have children get into the habit of filling out pages for each mistake that they make. Then every other week, they should spend a few minutes reviewing their binders. By doing this, their learning sticks and it puts their mistakes into their working memories, alerting them when they are about to repeat a mistake.
“The Mistake Binder takes the taboo out of making mistakes…and changes [children’s] negative perception regarding mistakes,” said Corley. “They’ll soon find themselves thinking like entrepreneurs, who embrace mistakes and the lessons they teach.”
Encourage Them to Find Mentors
Agolli says working alongside his father showed him firsthand what’s involved in running a business. “My father took me on business trips from when I was six years old and I did everything. He introduced me to the difficulties of business and in real life so that I can be prepared as I grow older.
“I would do anything from working in a booth to listening to speeches, handing out cards, washing buckets, carrying suitcases, all of the above. And I was around people that were smarter than me, that had more experience than me, so I had the opportunity to ask questions and they did not hold anything back. If it was a bad time in business, they told me the truth because that’s how you learn.”
In fact, Corley said that in his Rich Habits research he learned that those who found a mentor “cut their path to becoming rich down from 32 years to 12 years. And, even more important, they accumulated nearly two times the average wealth ($7.4 million vs. $3.4 million) of other self-made millionaires in my study who had no mentor in life.”
He encourages parents to teach their kids “the importance of seeking out those who can help them succeed.” He says, “Successful entrepreneurs, believe it or not, are only too happy to help others succeed. And that includes your child. Those who have made it in life, desire to share their knowledge with other success-minded people.” He recommends DECA, a business program for high school and college students, where students can meet mentors and “other like-minded students.”