What are some tips for success for young entrepreneurs?
The astrophysicist Neil DeGrasse Tyson famously said that the best way to encourage our children to become scientists is to get out of their way. He notes that the messes toddlers make are their way of experimenting with the world and exploring it, and only interference by adults starts to turn them away from that curious explorer mindset.
Much the same can be said of encouraging our children to develop an entrepreneurial spirit. Whether mowing lawns, opening a lemonade stand, or selling creative projects, our kids are consistently looking for ways to earn money, and with it increase their independence.
Unlike encouraging a spirit of scientific exploration, raising successful aspiring entrepreneurs requires a slightly more hands-on approach. This is more complicated ground with steeper penalties for failure. While your child, tween, or teen flexes their small-business muscles, keep in mind some important ways you can help them in their journey.
Tips for Young Entrepreneurs Who Want to Start a Successful Business
1. Check the Local Small Business Laws
No local authorities will take issue with a second grader’s lemonade stand, or a fifth grader mowing neighborhood loans. That can’t always be said of a teen earning a few thousand dollars with a small business. Although many business licensing requirements have relaxed in this age of online commerce, you don’t want your teen to lose their earnings to fines and fees.
Look into the laws surrounding small businesses in your area, and get an expert opinion from somebody in the City Planning Office or local Chamber of Commerce. Dot your i’s and cross your t’s here, and have your teen do most of the work. The necessities of law are part of being an entrepreneur.
If your child’s successful business venture approaches five figures of income, consider looking into formally structuring it as a corporation. This can provide various legal protections, help with compliance with any licensing or permit requirements, and be an important learning experience as you navigate the associated expenses and observances side by side.
2. Don’t Let the Business Eclipse Academics
Running a small business can be exciting and time-consuming to the point that it tempts your teen away from their schoolwork. If this happens, it’s important to view school as their full-time, regular job and their business venture as a side hustle. This is true even if the small business is making enough money to represent a real opportunity for post-graduation financial success.
Keep in mind, and remind your teen, that if the business fails they’ll have little to fall back on without at least a high school diploma. Yes, there are examples of famous entrepreneurs who didn’t graduate like Richard Branson and Quentin Tarantino, but there are far more dropouts working low-skill, low-wage jobs to make ends meet.
It can help to set formal goals for academics and the business, and to set those goals on timelines that allow for success in both. If academics falls behind, adjust the goals to prioritize the school work. For kids who are excited about their business, you can write up a business plan and an academics plan, using similar formatting to emphasize the similarities.
As a bonus, balancing academics with having their own company can teach time management skills at a level deeper and more meaningful than any other experience available to teens.
3. Encourage Them To Take on Employees
Being their own boss teaches young entrepreneurs a lot, but managing other people — especially peers — can teach lessons that no other experience in life can teach.
If your teen’s business is making money, encourage them to hire a friend, classmate, or younger family member to help with some of the work. This helps them learn about the skills and challenges of leadership while also teaching an important lesson about the value of having help.
By outsourcing tasks they don’t like or aren’t good at early, your teen starts to learn how to value their time and expertise. It fundamentally changes their relationship with work, and their potential for success. This is a skill many adults still struggle with, and can unlock many doors to success.
Start with younger siblings and cousins as options for your child’s initial labor pool. This not only fosters a stronger relationship between family members, but many states offer exemptions to worker’s compensation and some employment laws when hiring a family member. Check with the laws for your area first, but this can save a surprising amount of money over the run of a business.
4. Become a Managing Partner
The smartest teen in the world will fall down on some of the basic tasks of business management because they lack the perspective, contextual knowledge, and physical brain development to succeed in those areas. For that reason, it’s smart for you to fill a role as a managing partner when your child decides to start their own business.
Depending on your teen’s skill level and business experience, your role might just be to check in once every other week to make sure certain tasks are getting done. It might be to handle the books and business metrics. You might even take on the duties of the sales department or bookkeeping. Your mileage will vary, but getting involved helps them succeed while simultaneously demonstrating that you care about their success.
Partnering with your child in a business carries a second benefit beyond improving their potential business success. By working together on a business, you build a relationship that lasts long after they leave the house. Whether the enterprise fails catastrophically or makes the whole family rich, the shared experience is irreplaceable.
If your child needs some start-up cash, you can use a managing partnership as a condition of giving them an informal business loan. Like real investors in the business world, you grant them starting funds but require a hand on the business’s operations to protect your investment.
5. Start With Scalability
Before taking on their first client for any business idea, your teen should think about and develop a plan for how to build up to a second client, and a third. They should also have an idea of the maximum number of clients they can serve given the realities of their schedule and access to transportation, and a plan for going beyond that number if they’re experiencing rapid success.
A plan to scale up is important even at the beginning stages to start a business. Even if your teen never implements any of it, and only makes some pocket change off a valuable experiment, the exercise will introduce them to a success concept many adults never learn about.
It bears repeating that you must make certain any plans for scalability take academic, athletic, and social needs into account. This might mean artificially slowing the company’s growth during homecoming or baseball season, but that’s all right. Entrepreneurially-minded kids need early and repeated lessons in work-life balance, which can start right here.
6. Be Ready for Taxes
Like with your local business regulations, the IRS and your state Department of Revenue won’t much care about a kid making a few bucks, but if your teen has self-employment income of at least $400 from their own business, they’re responsible to report it and potentially pay taxes. If they earn enough money, it can even interfere with their status as a claimable dependent.
Talk to your accountant about this, and set up a plan for dealing with that part of your teen’s entrepreneurial journey. If they become small-business owners for life, taxes will be their constant companion over the course of their career.
Although companies like H&R Block and TurboTax offer online corporate, small-business, and self-employment filing options, it’s often worth it to hire a CPA to do business taxes. If you keep your books organized, the amount they charge for the service is reliably lower than the deductions they help you find.
7. Remember Community Resources
Almost every city, county, state, and special interest organization has some sort of resources for small-business owners. These may include in-person education, online classes, grants and loans, mentorship access, or work spaces filled with expensive, specialized tools. They’re out there, often paid for with your tax dollars, waiting to be used.
Not all such opportunities are open to teens, but in many cases the staff will be excited about somebody getting involved so young and become even more enthusiastic about contributing success tips. LinkedIn and local meetups can be good sources for mentoring and success tips, as long as you monitor and curate the adults your child meets. Encourage your teen to check into these opportunities in the community.
When seeking resources and help, don’t forget your child is still in school. Many schools have business classes, workshops, technical equipment, social media advice, and experts on hand any student can access for help with projects. Many teachers and counselors will be eager to help, especially those with business knowledge or experience they rarely access on the average school day.
8. Begin With the Goal In Mind
This advice from business management legend Steven Covey is a classic for a reason. Whatever business model your teen decides to pursue, they should begin the journey thinking about how they want it to end, with clearly defined goals set from the beginning.
Starting a new business to earn money for a car requires one set of circumstances, warrants a certain amount of time and financial investment, and has a lifespan of a set number of weeks or months. Starting the same new business as something your teen might want to make into a career changes every one of those aspects.
There is no right or wrong goal here, but starting without one in mind is almost always a mistake. Even the best business in the world can falter and fail without a strong guiding goal.
Sit with your budding entrepreneur early in the process and ask what they hope to accomplish. “Making a few bucks” is a fine goal, but nail down specifics. That top-level goal can help them assign priorities, make wise purchases, and set up timelines for tasks in ways they would not otherwise.
9. Teach Them How to Set Goals — Then Apply Them
Knowing how to set goals isn’t just important for small-business success. It will help your child succeed in whatever endeavors they take on at school, in college, and beyond.
It’s easy to start with a smaller goal — something that will take multiple days of effort but which will absolutely happen if the child does their part.
For example, saving enough money for a $20 video game is a good initial goal. They set a goal of earning $1 per day for a month, with up to 11 days off. As long as they achieve their daily targets, they’ll be able to get the game. Winning the lottery is a bad initial goal because even if they succeed at buying a ticket every week, there’s no guarantee of winning.
Tying cash flow to realistic goal setting introduces them to the concept of setting goals and attaining them. Whether or not this small business works out, the experience of working toward a concrete goal and its inherent lesson will serve your young entrepreneur well for the rest of their life.
Teach your young entrepreneur to write down their goals and commit to a timeline for completion. When they reach the end of their timeline, assess with them how they did. If they didn’t reach their goal, what might they do differently next time? If they did, what might they do to succeed even more or faster? As they establish a track record of success and understanding, move to loftier, more complex, and less guaranteed goals.
10. Model Smart Risk-Taking
A business is only successful if its key decision-makers are willing to take risks, and if most of those risks work out. Taking risks may seem like a natural part of childhood, but when you add money and parental approval, suddenly those risks feel much more intimidating.
The best way to help your child overcome this challenge is to live by example. Demonstrate taking small and large risks in everyday life. Better yet, talk with your child about those risks. Discuss what made them risky, how you analyzed the dangers and benefits, what you gained from the gamble, and especially what you did to minimize the impact if the risk didn’t work out.
Once you’ve made a habit of having that talk with your child, you can use it as a framework for assessing the risks associated with their business. This doesn’t just help their business succeed, but helps them practice and master a vital life skill.
11. Foster Creativity
Creativity is a skill. Like all other skills, it gets better with practice and fades if not used.
Creativity is also essential to small-business success, and success in the business world overall. It’s how your child will come up with a working business model, how they will expand on their idea to help the business grow, and how they will devise solutions to the problems and challenges they encounter.
Some ways to help build that creativity in your child include:
- Make up stories together instead of reading them at some bedtimes
- Play pretend games with your child, ranging from make-believe to more structured activities like Dungeons & Dragons or theater sports
- Set aside art time and craft time, where your child plays creatively
- Get out of the habit of simply answering questions or solving problems, but instead create the habit of exploring answers together
- Play “what if” games, where your child explores the possibilities of simple changes to life or the world around them
- Set up time for your child to get bored, then let them find new ways to fill that time
Most importantly, resist the temptation to come swiftly to the rescue when your child encounters a challenge. As long as it’s safe, let them find their own creative solutions. If you always swoop in to save the day, they never learn to develop their own creative problem-solving. Instead, they look to others for help — a habit that is absolutely lethal to entrepreneurial success.
12. Show Them How to Ask For Help
One of the ways schools often hurt our children is by how often they insist kids work on their own. Asking a classmate for clarification is punished as being disruptive in class. Looking up a tutorial to help with your homework can be considered cheating. Although this is sometimes necessary within the context of school, a small-business owner can always ask for help.
Model finding help so your kids can see you asking your parents or partner, polling social media groups, calling an expert with applicable know-how, or looking for an instructional video on YouTube. Make this normal and encouraged — a tool you use to succeed at your goals just like any other resource. Knowing who to ask for help and how is a key success factor in any form of entrepreneurship.
When your kid is comfortable asking for help, show them some of the best ways to do it. Explore online tutorials and free trainings, and look for resources at the library, Chamber of Commerce, and local small-business authorities. Share audiobooks and podcasts together while running errands or on road trips.
Teach your kids early and often how much help is out there, where to find it, and how to tell the good advice from the bad.
13. Reward Failure Whenever You Can
World-famous Brazilian jiujitsu competitor Rickson Gracie writes in his memoir that at his first jiujitsu match, his father said to him, “Win and I will give you a present. Lose and I will give you two presents.”
It’s a little transactional to be appropriate for most kids, but the spirit is solid.
Children — and adults — who are afraid of failure often can’t make the decisions necessary to succeed in business. So embrace failure when your children lose a game, make a mistake, or fall short of a goal.
Your children will probably fail the first time they try something, because most people do. Nobody is born with everything you need to succeed on the first attempt.
Congratulate them for having tried, and share honestly the ways they made you proud. Talk about what variables they controlled they could change the next time they try, and what they might do to minimize what they can’t control or change.
Most importantly, share that it’s okay to be disappointed in the outcome, but that you will never be disappointed in them as a person. The short-term pain of trying and failing leads to the long-term gain of succeeding at something hard.
14. Make Them Find a Way
Rob Kiyosaki, author of “Rich Dad, Poor Dad,” tells a story about how he was given a job as a child that paid nothing. His friend’s father, who gave him that job, instead challenged him to find a way to make money with what he learned from that work.
The work in question was cleaning up in a convenience store. Young Rob found a loophole in how comic books were distributed, and used it to create a comic book rental operation in his parents’ basement.
That’s not to say you should be that extreme in your approach to training your child to solve problems and find business opportunities. But you can foster more independence and creativity by backing off a little more than you’re comfortable with when they ask for help. Make them identify the problem decisively and find their own solutions, then reward them for the effort even if the solution they try doesn’t work.
Necessity is the mother of invention, so help your child experience necessity more often and see what they invent. Whether the finished product becomes a full-time adult income or just some after school pocket money, the lessons they learn will last.
15. Don’t Let Them Cut Corners
Attention to detail and a willingness to work hard are two of the most important traits of a successful entrepreneur. Without micromanaging, watch how they approach the work of their business and help them see the value in doing it right from the beginning.
This can sometimes lead to friction. Kids and teens are not always known for either of those characteristics. That’s okay. If you work through it well, you’ve accomplished two goals. The first is helping your child succeed with their business by pushing them to deliver quality for themselves and their customers.
The second is even more important. Once they see the results of the extra effort, they begin to internalize its importance. That lesson will carry past the business into their academics, athletics, and relationships. It will set them up for success no matter where they go in their adult lives.
Whether your child is destined to make $1 million by age 18 or to fondly remember a summer they spent working for themselves, they can benefit from what starting a small-business teaches.
Your role in this isn’t to do it for them, or to stand in their way, but to balance between the two. Lend enough support to allow them to flourish, but keep your hands off enough that they can truly say they accomplished the most important parts by themselves. That’s not just how you set up young entrepreneurs to succeed — it’s how you raise happy, empowered children.
Always remember: keep it light and fun. The goal here is not to raise the next Steve Jobs or see your kid on the cover of Forbes before they’re old enough to drive. It’s to teach them valuable life lessons they can apply to a new business, online business, or simply going to work.