When I was in the 7th grade, my bestie at the time and I wanted to save up for a shopping spree. We put our middle-school brains together, and devised ways we could earn enough to buy whatever we pleased at the mall. Our goal? To save $500 each.
We posted flyers around the neighborhood advertising our lawn watering and pet-sitting services, held yard sales, and peddled candy in between classes. While we fell short of our goal, we had a lot of fun and learned what it took to make a buck.
Whether your child ends up being a creative freelancer or CEO of a startup, he or so doesn’t have to wait until college to learn how to start a business. Here are some pointers on teaching your kids entrepreneurial skills.
Start With One Business Idea
Whether it’s selling lemonade from a corner stand, art at a crafts fair, or home baked goodies at a school-sponsored sale, it’s always helpful to start with a single idea. If your kids are having trouble picking one business endeavor to start with, ask them what they enjoy doing or might be naturally good at.
Next, brainstorm ways they can turn these talents into profitable ventures. Check out platforms such as Etsy, Society6, and Shopify to see what kinds of goods are trending. What is it that people want to buy? How much will they sell their product for, and to whom will they sell?
For instance, when Brynne Conroy’s youngest child wanted to fill up her piggy bank as the family prepared to visit Disney World, Conroy hadn’t started issuing an allowance yet. She used it as an opportunity to talk about the different ways one can make money. They decided they wanted to sell a product, and that the product would be art.
They went to the Dollar Store to pick up a bunch of picture frames, which her child agreed to repay her for from their initial profits. When they got home, they identified a target audience. That audience turned out to grandma, because she loved her granddaughter’s art and would be more than willing to pay for it. “Minimal sales pitches required!” laughs Conroy.
Create a Shark Tank Challenge
A few years ago, I taught a “how-to” workshop on entrepreneurship to high schoolers. After I ran through the basics of how to start a business, we played a Shark Tank-esque game. The kids paired up and came up with a business concept that included their type of business, the basic costs of materials and operating expenses, and their target audience. Next, they presented their ideas in front of the group, and the kids had a chance to pick a few “winners.”
What the kids came up with was impressive. From starting a cupcake shop to an electronics resale platform to a print-on-demand service, they were able to devise a basic business plan in a short amount of time.
You and your child’s peers can provide useful feedback to help them shape their ideas. Let them know what you like about their business concept, and how they can be improved. Point to real-life businesses as reference.
Incorporate Money Lessons
While you can teach your kid money management basics by way of an app, game, or by enrolling them in a non-profit financial literacy program such as Junior Achievement, when teaching your kids to be little entrepreneurs, weave in some basic financial lessons to your young ones.
Besides basic math, such as addition and subtraction, you can help them get their head around business terms such as return on investment, inventory, goods, services, and the difference between revenue and profit.
If you like, you can teach them basics about financing. Use kid-friendly language to demonstrate how a loan works, and what their responsibilities are if they take out a form of financing. Going back to Conroy and her child’s art-selling enterprise, let’s say Conroy had issued a loan to her child to purchase frames. Besides having to “pay back” that money, either by doing extra chores around the house, they would’ve owe additional money, or “interest.” And interest is the cost of borrowing money.
Money lessons and business jargon 101 aside, an important part of being an entrepreneur is creativity. And that isn’t limited to creating paintings or writing songs. From finding out-of-the-box ideas to pitch a product to would-be customers, marketing tactics, and fusing two unlike things together to come up with something unique, kids can learn to apply their creative ideas to both conceptualizing ideas and problem-solving.
For example, a clever marketing tactic could be a referral program of sorts. Or maybe they want to combine their love of baked goods with sea creatures, and create sea-themed cookies and cupcakes.
Success Is Secondary
While it’s nice for your kids to make some money, it might be more important that they have a positive experience with their efforts and establish confidence, points out Conroy. The last thing you want to do is turn your children off from future entrepreneurial pursuits.
“While I’m proud my kid followed me through the steps necessary to generate profit, I’m even more satisfied that they felt good about their efforts at the end,” says Conroy. “Hopefully the next time they have a great, profit-generating idea, they’ll be able to draw upon this well of confidence as they initiate their efforts.”
Teaching your children how to be little entrepreneurs can help them learn lasting money management lessons, and give them the confidence to build something from the the ground up. By helping them learn the basic in-and-outs of enterprise when they’re young, they’ll be that much more equipped to tackle the challenges of entrepreneurship in their later years.
Jackie Lam is a personal finance writer. Her work has appeared in Investopedia, Magnify Money and The Bold Italic, and she’s been featured in Money, Kiplinger, Forbes and Woman’s Day. She runs Cheapsters.org, a blog to help freelancers and artists with their money, and to balance their passion projects and careers.