Small Business

How To Become A Young Entrepreneur

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 14 minute read

Famous astronomer Neil deGrasse Tyson has suggested that we should “get out of our children’s way” if we want them to pursue careers in science. As he points out, infants’ messes are actually their method of exploring the world and trying new things; adults’ involvement is what eventually leads to a loss of this naturally occurring curiosity.

A similar argument may be made for teaching young people to think creatively and independently. Our kids are always thinking of new methods to make money and gain autonomy, such as mowing lawns, starting a lemonade stand, or selling their own creations.

Raising budding entrepreneurs is a bit more hands-on than cultivating a spirit of scientific curiosity. This is trickier territory with more consequences for error. Think about the ways you can support your kid, tween, or adolescent as they test the waters of entrepreneurship.

Young Entrepreneurs’ Guide to Starting a Successful Business

  1. Examine the Small Business Laws in Your Area

Even if a second grader sets up a lemonade shop or a fifth grader mows the neighbors’ lawns, neither will encounter any trouble from the authorities. That’s not necessarily true of a kid entrepreneur who pulls in a few thousand bucks.

It’s not ideal to have your adolescent spend their hard-earned money on penalties and fines for breaking the law, even if many traditional company license requirements have been reduced in this age of internet commerce.

Research the local regulations that affect small enterprises, and consult a professional at the City Planning Office or Chamber of Commerce. Make sure everything is in order, and delegate as much as possible to your adolescent. Legal requirements are an inevitable element of running a business.

If your child’s business is doing well enough to generate five figures in revenue, you may want to investigate incorporating the firm. This may give you peace of mind, make sure you’re following any license or permission rules, and teach you a lot as you figure out the costs and rituals together.

  1. Don’t Let Business Overshadow Academics

Your kid may be tempted to neglect their studies in favor of running a small company because of the novelty and time commitment involved. In such a case, the individual should treat education as their primary occupation and the business as a secondary one. This holds true even if the startup is profitable enough to provide a viable path to financial security after graduation.

In case the firm fails, there would be few options for your youngster if they do not have a high school certificate. Although successful businesspeople who didn’t finish high school include Richard Branson and Quentin Tarantino, most dropouts are forced to choose low-skill, low-paying professions.

In order to achieve success in both school and work, it is helpful to have clear goals and timetables for each. In the event of academic lag, priorities should be shifted to accommodate for schoolwork. Young entrepreneurs can benefit from creating a business plan and an education plan in parallel, with the same framework to highlight the parallels between the two.

Having to juggle school work and running a business may provide adolescents with invaluable lessons in time management that cannot be learned in any other setting.

  1. Encourage them to hire workers.

Young entrepreneurs can learn a lot from being their own boss, but they can learn even more by managing other people, especially their peers. Your teen may want to recruit a younger sibling, cousin, or friend if their business is successful enough to pay them. This not only teaches kids the importance of having aid, but also helps them master the skills and difficulties of leadership.

You may help your kid discover the worth of their time and abilities by encouraging them to outsource the chores they dislike or aren’t excellent at from an early age. Their outlook on work and their ability to advance will be drastically altered. This is a key life skill that even some seasoned people have trouble developing, yet it may lead to endless opportunities.

Your child’s first pool of potential workers might be made up of younger relatives. By giving family members the opportunity to work together, you may strengthen your bonds with them while also taking advantage of legal loopholes in areas like worker’s compensation and other employment regulations. A surprising amount of money may be saved over the course of a business’s lifetime if you do this.

  1. Make yourself a Managing Partner.

Even the brightest teenager will struggle with some elementary aspects of managing a business due to a lack of experience, maturity, and life context. If your child decides to establish a business, it might be wise for you to become involved as a managing partner.

Your involvement may be as little as checking in once a week to ensure specific chores are being completed, depending on your teen’s skill level and business experience. Possible duties include accounting and monitoring key performance indicators. It’s possible that you’ll be asked to handle financial records and sales as well. While the specific benefits you get may differ, you can be sure that showing a genuine interest in their progress via active participation will increase both their likelihood of success and your own.

The potential commercial success of your child will increase, but that’s not the only benefit of going into business with them. Working together on a business project is a great way to cement bonds that will remain strong even after they’ve moved out. Whether the business fails miserably or makes everyone in the family wealthy, the time spent together will never be forgotten.

If you want to get your child get their firm off the ground but don’t want to provide them a formal loan, you might require them to create a management partnership as collateral. You provide initial funding, but like any good investor, you want a say in how the firm is run.

  1. Begin with Scalability.

Your youngster should prepare for how to gain a second and third customer before taking on their first one for any company venture. They should also have a strategy for handling increased demand in the event of quick success, as well as an estimation of the maximum number of customers they can service given the reality of their schedule and availability to transportation.

Even when starting a small firm, it’s crucial to have a plan for expansion. Your adolescent might not put any of it into action, but even if they make a little amount of money from a successful experiment, they will have been exposed to a key to success that many grownups never acquire.

Once again, be sure that your scalability plans accommodate students’ academic, athletic, and social requirements. It’s OK if this means the company’s expansion is intentionally slowed down at times like homecoming and baseball season. Young people with an entrepreneurial spirit might benefit from learning the importance of striking a work-life balance from an early age.

  1. Prepare for Taxes

In the same way that local business rules aren’t very concerned with a youngster making a little cash, neither the Internal Revenue Service nor your state Department of Revenue will be too concerned if your teen earns $400 or more through their own business. As a matter of fact, if they make enough money, it may affect their eligibility to be claimed as a dependent.

Discuss this with your accountant and make preparations for how to handle the financial aspects of your teen’s business venture. As lifelong small company owners, they will be constantly reminded of the need to pay taxes.

Online tax preparation services such as H&R Block’s and TurboTax’s are available to corporations, small businesses, and the self-employed; nevertheless, it is typically more cost-effective to retain a certified public accountant (CPA). Assuming you maintain your records in order, the cost of their service will almost always be less than the savings you’ll realize with their assistance.

  1. Keep in mind Community Resources.

Nearly every local government and state agency, as well as national and regional trade groups, offer assistance to entrepreneurs. In-person training, online courses, scholarships and loans, access to a mentor, and high-priced, specialized equipment in the workplace are all examples. They exist and are ready to be exploited, often at the expense of your tax money.

While not all internships or volunteer positions welcome adolescents, those that do often have staff members who are thrilled to have someone so young participate and eager to share advice for thriving in the position. If you carefully select the people your child interacts with on LinkedIn and at local meetings, they may be a great resource for mentorship and success advice. Solicit your teen’s interest in investigating these local options.

Remember that your child is still in school as you look for support services. Any student may often make use of available resources such business courses, workshops, technological resources, social media guidance, and on-campus specialists. If they ask for assistance, many of their lecturers and advisors will be happy to provide it, especially if they have expertise in a field related to business that students seldom get the chance to learn about.

  1. Start with the end goal in mind.

Steven Covey, a legendary figure in the field of corporate management, offered this timeless piece of guidance. Your child should have a clear picture of success in mind from the start, regardless of the type of business they chose to launch.

There is a certain set of conditions that must be met, an appropriate amount of time and money that must be invested, and a finite amount of time and money that must be invested for a new business to be started in order to make money for a car. Every one of those factors is altered if you launch the same new business that your kid might wish to turn into a profession.

There is no correct or incorrect objective, but setting out without one is typically unwise. Without a solid objective, even the most successful company will eventually fail.

Sit down with your aspiring business owner early on and get a sense of their goals. Aiming to “make a little cash” is commendable, but you could be more precise. That overarching purpose can guide their decision-making in ways they wouldn’t have been able to otherwise in terms of priority setting, resource allocation, and project scheduling.

  1. Teach them how to set goals and then put them into action.

The ability to create and achieve objectives is crucial for every endeavor, not just startups. It will aid your kid in achieving academic and professional success throughout their lives.
Begin with a manageable objective, one that can be accomplished in a few days’ time provided the youngster puts in the required work.

A reasonable starting point may be to save up for a $20 video game. They decided to work for a month at a wage of $1 per day, taking up to 11 days off. If they meet their daily goals, they will unlock the game. Aiming to win the lottery is a poor first step since there is no assurance of success, even if they manage to buy a ticket every week.

Introducing the idea of goal-setting and achievement by linking it to attainable financial targets is a great way to get them started. No matter the outcome of this venture, your young entrepreneur will benefit greatly from the experience of working toward a defined objective.

Instruct your budding entrepreneur in the importance of setting objectives and sticking to a schedule. Once their allotted time has passed, sit down with them and discuss how well they did. What could they do differently next time if they didn’t succeed? What might they do to achieve even greater or quicker success if they did? They should progress to increasingly difficult and uncertain objectives as their experience and knowledge grow.

  1. Showcase Intelligent Risk-Taking

Only when the people making crucial decisions inside an organization are ready to take chances, and when the majority of those risks pay off, will that organization be considered successful.

Taking chances as a youngster may seem inevitable, but when you include the need to get permission and pay off your parents, things become much more daunting.

Your youngster will learn the most from watching how you handle this difficulty. Show that you are willing to take chances, both big and little, in your daily life. In fact, it’s preferable to have a conversation about the dangers with your kid. Explain what made them hazardous, what you benefited from taking the gamble, and what precautions you took in case the risk didn’t pay off.

Once you and your kid have established a pattern of having this conversation, you can use it as a basis for evaluating potential threats to their business. This is beneficial to their business, but it also gives them a chance to hone a talent that will be useful for the rest of their lives.

  1. Encourage Creativity

One must practice in order to become creative. It’s like any other ability in that it improves with usage and deteriorates when neglected.

Success in business, and particularly in a small firm, also requires a healthy dose of creative thinking. It’s how your kid will figure out how to make money with their company concept, how to make it bigger and better, and how to overcome obstacles along the way. You may encourage your kid’s imaginative side in a variety of ways.

  • At some bedtimes, instead of reading bedtime stories, create them together.
  • From make-believe to more structured activities such as Dungeons & Dragons or theater sports, engage in imaginative play with your child.
  • Set aside painting and craft time during which your youngster can engage in creative play.
  • Instead of just answering questions or fixing issues, develop the practice of exploring answers together.
  • Play “what if” games with your kid, in which he or she explores the possibility of modest modifications to life or the environment.
  • Allow your youngster to become bored, then let them find other methods to pass the time.

Importantly, don’t rush in to save the day every time your kid is having trouble. If it’s safe to do so, encourage children to come up with their own answers. They won’t learn to think independently or come up with original solutions to problems if you’re always there to save them. They rely on others for assistance, which is a fatal flaw in any business venture.

  1. Show Them How to Request Assistance

The frequent need for independent work by students is one manner in which schools harm our children. It’s considered disruptive to ask a fellow student a question in class. It is possible to be accused of cheating if you use a tutorial to complete your assignment. A student may need to do this on occasion, but a company owner can always rely on others to assist them.

Show your children how you handle difficult situations by seeking advice from adults, whether that’s your parents or a spouse, a social media group, a professional in the field, or a how-to video on YouTube. Make it something you do all the time, something you promote, something you utilize to help you achieve your objectives just like any other resource. For any kind of business to thrive, the entrepreneur must learn who to turn to for assistance and how to ask for it.

Once your child is at ease with seeking assistance, model appropriate approaches. Check out the library, the Chamber of Commerce, and local small business authorities, as well as online courses and free training. While out doing errands or traveling, listen to audiobooks and podcasts together.

Teach your children early and often that there is a wide variety of resources available to them and that it is important to be able to distinguish between sound counsel and bad.

  1. Failure Should Be Rewarded Whenever Possible

When Rickson Gracie was competing in his first jiu-jitsu battle, his father told him, “Win and I will give you a present,” according to his autobiography. If we come in last place, I’ll give you two gifts.

While the essence is good, the tone is too commercial for most children. Children (and adults) who are overly concerned with what others will think of them are less likely to take the risks that are essential to their success. Allow your kids to learn from their mistakes and embrace defeat when they lose a game or fall short of a goal.

The truth is, most individuals fail the very first time they try something new, including your children. No one is endowed with a perfect set of skills from the get-go.

Tell them how happy you are of their efforts and how much you appreciate their efforts. Discuss what they could do differently the next time they attempt and how they could lessen the impact of the things they can’t alter or control.

Tell them that you respect their right to feel let down by the outcome, but that you will never share that emotion because of who they are as a person. Gaining mastery over a challenging task requires enduring the temporary discomfort of attempting and failing at first.

  1. Make Them Figure It Out

The author of “Rich Dad, Poor Dad,” Rob Kiyosaki, relates a tale about a job he had as a kid for which he was paid nothing. The father of his best buddy offered him the job and then dared him to figure out how to make money off of what he had learnt.

Tasks included tidying up a corner shop. Rob as a kid capitalized on a gap in the market for comic books by starting a rental business out of his parents’ basement.

It doesn’t follow that you have to go to such extremes to teach your kid how to think critically and spot profitable chances. When kids ask for help, you may encourage greater initiative and originality by stepping back a bit further than you’re used to. Challenge them to think critically about the issue and come up with creative answers; then acknowledge their efforts even if their proposed fixes fail.

As the saying goes, “necessity is the mother of innovation,” so put your kid in some sticky situations and watch what they come up with. The skills kids acquire are valuable whether or not the final output is used to support themselves as adults or as a supplement to their regular income.

  1. Don’t Allow Them to Cut Corners

Successful business owners have a number of characteristics, including a focus on detail and a willingness to put in long hours. Without interfering too much, keep an eye on how they go about their business’s tasks, and show them why it’s important to do it right from the start.

Sometimes this causes tension. These traits are not necessarily associated with children and teenagers. Not a problem. If you can get through it, you’ll have done double your original task. The first is encouraging your youngster to do their best work for their business and clients.

The importance of the second cannot be overstated. Once kids realize that their additional work is paying off, they will understand why it’s so crucial. They may use this knowledge outside the realm of business into their studies, their careers, and their personal relationships. It will prepare them well for whatever they choose to do with their life as adults.

Bottom Line

Your kid may learn valuable lessons by establishing a small business, whether he or she is destined to become a millionaire by the time they are 18 or is just going to remember that summer job forever.

Your job here is to strike a middle ground between doing the work for them and getting in their way. Give them the help they need to succeed, but get out of the way so they may claim credit for their greatest achievements. That’s not only the key to raising successful young entrepreneurs; it’s the key to raising happy, self-confident kids, period.

Keep things light and humorous at all times. The aim is not to produce a future CEO or have your child featured on Forbes’ cover before they are 16. With any luck, they’ll take away some useful information that they can put to use in their new venture, whether brick-and-mortar or virtual.

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