6 Easy Ways to Raise Entrepreneurial Kids
The last thing the world needs is more cold capitalists. However, capitalism is a powerful force for change. In a world that is increasingly in need of solutions to pressing challenges from global warming to water shortage, equipping our children to understand how to execute an idea and bring solutions to market is critical.
The Value of Finding Passion in Business
And, regardless of where you fall on the “college matters vs. college is so 2010” scale, you must admit the world of higher education is changing. A bachelor’s degree is no longer a ticket to a comfortable life, which is fine because it is no longer a requirement either. Case in point: The Thiel Fellowship, which awards $100,000 to kids who drop out or skip college to launch a business. It’d be unheard of even 20 years ago to see prominent entrepreneurs encouraging young people to skip school. Bill Gates dropped out of Harvard, but he didn’t create scholarships to encourage other kids to do the same thing. Now, there is a growing sentiment that learning about life by being in the trenches running a startup is a great way to learn self-reliance, grit and tenacity in an increasingly chaotic global economy.
So, whether you are hoping to light an entrepreneurial spark in your child for the first time or you have already seen a spark from some sort of business show, book or entrepreneurial story (think Shark Tank or Elon Musk), here are a few thoughts for how to encourage your child to learn, and perhaps one day become passionate, about business and entrepreneurship. These tips apply to kids age 8-18.
My Love for Business Started as a Teenager
Being an entrepreneur is part of who I am, and has been since I was a kid. When I was 13, I rearranged my room so it resembled an office, created a little ticker tape and then posted the closing Dow Jones Industrial Average every night. I was also that kid who would go around the neighborhood knocking on doors and selling greeting cards, vegetables—whatever. I was always fascinated with business.
My parents, brother and sister appreciated my childhood business ventures and innate interest in the subject matter. But, my brother and sister didn’t share my passion. Yes, they wanted to make extra money, although they didn’t want to spend afternoons reading Business Week (I can attest the magazine has gotten infinitely more readable in recent years!).
As far as I can remember, I was hard-wired to love business. It fit with my innate curiosity about how the world works and how you get things accomplished in it. But, how do you cultivate an interest in business or startups for your kids if they are not entrepreneurial-minded right away? This is something really close to my heart, as a new father who is thinking about the future of his children and the lessons I would like to impart to them.
Turning the Dream of Being an Entrepreneur into Reality
When I was 15, I wanted to start a business selling baseball cards. I asked my mom how to do that—how to actually start a business as a kid (heck, I wanted to understand how anyone started a business, teenager or adult). Do you need a license? Do I just ask permission of someone? She didn’t know. The public library didn’t have any good, practical books on the subject and I don’t think there were any entrepreneurial programs or business camps for kids. So, that baseball card business never got going.
The same could be said for hundreds of millions of business ideas generated every day all across the United States. Studies show that nearly 50% of Americans dream of running their own business, but the percentage of Americans that actually do it is less than 25% of the ones that want to – something closer to 12 percent. What explains the disconnect between entrepreneurial dreams and the realization of those dreams? Of course, money, time and other career prospects may delay any novel business idea. Many people are so invested in their corporate world careers or living on paycheck to paycheck that investing time or money in a new venture is simply out of the question. But, for many other people, they simply do not know where to get started. The whole process seems so daunting. They don’t know where to start or who to call first.
This guide offers six steps to help close that disconnect between idea and realization starting from an early age with children interested or who could be interested in becoming entrepreneurs, coming out of their comfort zones and developing critical leadership, business and finance skills. Studies show that young entrepreneurs tend to have more success later in life based on the skills learned at an early age.
Helping your children start a new business—whether it is a lemon stand or a simple video game app—can be an incredibly rewarding experience for you as the parent and for your children. Out of the many lessons the shared entrepreneurial experience will teach your children, two of the most important ones are that success comes from hard work and that they can approach life with an entrepreneurial mindset. Another important lesson is that ideas for businesses are easy; what’s hard is following through and executing that idea.
Cultivating an interest in startups, business and entrepreneurship sooner rather than later with you children is best. That’s where the following six tactics come into play. By following these steps, you can lay the groundwork that will help your children, tweens and teenagers foster an interest in entrepreneurship.
1 – Keep things concrete
Business concepts can get really abstract in a short amount of time, which can make them difficult to understand, not just for children but also adults. So, keep discussions about business concepts grounded in reality. When you are walking your kids through the grocery store, pick up a Pringles can and ask them how they think it gets to the store. A similar experience for Mike Piper, a CPA and author of the blog ObliviousInvestor.com, sparked his interest in investing at an early age.
On family vacations to Disney World, for example, explain how Disney makes it money and why it is so successful. In addition to buying your children their favorite toys for Christmas, consider also purchasing a share of stock in the company that manufactures or distributes the toy. Make sure that company pays dividends, though. Then, print out physical stock certificates and give them to your children. Let them see their dividends grow by the next Christmas. Underlying all these examples is the goal of demonstrating in a tangible, real world way how business works.
2 – Create a piggy bank or open a savings and checking account for your entrepreneur-in-training
One of the hardest things small business owners struggle with is managing finances. It is a shame public school does not offer tangible lessons on personal and business finances. You can help fill that gap for your children by creating a piggy bank or opening a checking and savings account for them and depositing their “wages” (i.e., their allowances—if that is something your family considers important) in their bank accounts. Note that allowances paid for completion of chores or high grades and not just freely given without being earned have shown to be of the greatest value for instilling a strong work ethic in children.
For younger children, a piggy bank or something similar might be more appropriate than a Bank of America checking and savings account, but feel free to start where you are comfortable. Give them a wallet and let them pay for smaller items they want—candy, toys or something similar—whenever you go to the store. The idea here is to make younger children aware of personal finances on a very rudimentary level.
For tweens and teenagers, once you have opened the bank accounts, consider giving them debit cards and complete access to the bank accounts. Then, allow them to use the money for certain investments. For example, they could spend it on snacks or movies with their friends, or they could invest in a project of their own or extracurricular activity of their choice. In sum, let your children earn allowances and have access to that money. They will learn from an early age the value of a dollar and how to spend wisely.
3 – Foster long-term thinking about finances by encouraging saving
Planning for the long term is something every business owner must do, yet very little about the lives of our children factors in the long term. It is not always clear to our kids how, for example, a positive grade in this class might lead to better performance in high school and on standardized tests. As parents, we’re always thinking about the long term, but we have to avoid the temptation to overburden our kids with such notions. Instead, encourage your children to save money for future goals like buying a new toy or investing in their business plan. In this way, your children learn from an earlier age that to achieve X goal, they have to have Y resources on hand, which can only be accomplished by investing in themselves. And, that’s really what saving is all about—investing in themselves. By encouraging goal-focused thinking and saving now for future endeavors, you can help your children—whether they are younger than 10 years old, in their tweens or teenagers—become better entrepreneurs.
4 – Encourage creative brainstorming and keep an open-mind
From my experience, ideas are a dime a dozen. What really matters is activating those ideas, so they are realized as successful businesses or entrepreneurial projects. However, you must start with the idea. So, encourage your kids to come up with business ideas. Talk to them about things their friends might like to own or buy—even if that is alternative snacks to whatever is offered at school. Have them write down their business ideas in an “idea journal”—a centralized repository of all their creative ideas and concepts. An idea doesn’t even have to be business-related to belong in the journal. Studies show that keeping an idea journal can help your children process and communicate complex concepts more effectively.
Don’t worry if the ideas aren’t clear money makers. Ideas for launching nonprofits or solving challenges in the world in some other manner should be fair game – encourage your children to look at the world and ask, “what if?”
It is important for you as the parent to let your children come up with ideas without regard for whether they are “good” or “bad ideas.” In the ideation process, there is no such thing as a good or bad idea. The process is about generating ideas, discussing them and then determining which ones to pursue. Ask your child what business they would start as a kid. Ask your child why they’d start that business.
When your children have developed a cluster of business ideas, sit down with them to walk through the business ideas. Talk about which ideas interest your child the most. And, most importantly, keep an open mind. PayPal probably seemed like a crazy idea at one point, but you don’t want to stifle the creative expressions. Encourage creativity and exploration when exploring business ideas with your kids.
At the same time, be willing to steer when necessary. If your child comes up with an idea similar to an existing business you know about or that clearly has huge impediments to executing successfully, perhaps an internship or day spent shadowing someone working in that business might be helpful.
5 – Leverage technology
We live in an incredible era for business entrepreneurs with the latest startup idea. Never before have the steps from idea generation to deployment drawn so close together, and nowhere is that truer than in the digital space. If your child or teenager comes up with a fantastic product, app or other business idea in their idea journal, encourage them to pursue it. Their business idea may lead directly to them becoming the next big child or teen entrepreneur.
That sometimes means teaching them the skills they need to realize their dream. A great example of this is a then 9-year-old Moziah “Mo” Bridges, who wanted to create better bow ties for children. After learning how to sew from his grandmother, he began selling his bow ties on Etsy and before long became the CEO of Mo’s Bows, a Memphis-based, family-run business. Such success at such an early age is inspiring, although it started with a problem that Mo experienced and tried to solve. He learned the business skills to do so and then leveraged the existing technology—Etsy—to turn his solution into a profit-making entrepreneurial venture. Learn more about Mo’s incredible journey here.
6 – Prioritize learning the skills to success and avoid the temptation to work hourly jobs solely for the money
If your family has the resources, avoid letting your children constantly work hourly jobs just to make an extra buck here or there. Summers, weekends and breaks from school are valuable time for your young entrepreneurs to be investing in themselves and learning about business. While everyone agrees, it is important to learn to work hard—and working in retail or restaurants can be keys to teach that lesson—the opportunity cost for such minimum-wage jobs can be very high. Instead, consider letting your children intern with a startup in a field where they have demonstrated an interest. In this manner, they can pick up priceless lessons in a practical environment directly related to their interests.
A great example of this is Nick D’Aloisio, who received backing from Horizon Ventures at only 15 years old after he created an app that automatically summarized news articles. Yahoo acquired the company for $30 million in March 2013. Now, that’s an amazing entrepreneurial journey for a teenager!
When asked what advice he would give other young entrepreneurs, Nick told Kim Lachance Shandrow of Entrepreneur magazine, “There are so many resources available online that the primary goal of someone wanting to succeed should be to teach themselves all the necessary skills, e.g., programming, business development, design, marketing, etc. Be fearless and don’t be afraid of failure. There is no better way to learn than through trial-and-error.”
The lesson from Nick’s experience is this: encourage your children to learn the practical skills necessary for starting their own business. This lesson is at the core of raising entrepreneurs.
There are more steps you should take as a parent interested in cultivating an entrepreneurial mindset and spirit in your children, although it is important to incorporate these six basic steps into whatever plan you create. Creating an idea is easy, but following through and realizing that idea is the hard part.
I urge you, no matter how badly you want to raise entrepreneurs, to not push too hard. If you see a spark of entrepreneurial spirit in your son or daughter, provide some direction and encouragement. Pushing too hard early on will generally have the wrong result. Children are naturally bent to resist their parents a bit – they’re becoming mature individuals. That’s okay. Encourage and give plenty of support to your business and entrepreneurial-minded children, but don’t pressure them.
I hope you found these steps helpful. And, if you ever want any additional advice, check out the Resources & Articles page on this website or feel free to reach out to me, The Startup Shepherd. As a parent who wants to pass on his interest in startups to his children, I am here and happy to provide guidance.
For more about me and my entrepreneurial endeavors, check out this section of my website.