The advice has been the same from generation to generation: study hard, do well in school, go to college and get a good job. That advice, unfortunately, is no longer the only advice that students in this increasingly competitive global economy need to hear and follow. Students need to learn how to build businesses and become more self-reliant; however, schools are inadequately equipped with role models who can teach these lessons.
Parents can proactively take the lead in teaching children how to start, set up, market and grow a business from a very young age. The steps to starting a business, regardless of age, is roughly the same for children as it is for adults, though children do not need to obtain various licenses in most cases.
As soon as a child begins to understand the concept of money, parents can start preparing the child for a lifetime of being self-employed by following these simple steps.
Choose a Business
Whether it's dog-walking, pet sitting, or a lemonade stand, selling homemade cookies, or putting up a lemonade stand, decide on a business.
Assess Overhead Costs and Materials
Every business has start-up costs. List the start-up costs associated with the business and assist the child with the strategy to raise the funds needed to cover these costs. Children often use birthday money or help around the house to capitalize their new businesses.
Start a Business Leger or Journal
Every business owner needs to understand the debits and credits and how balance the books. If this is a new concept for both parent and child, purchasing a book such as The Accounting Game, 2E: Basic Accounting Fresh From the Lemonade Stand by Judith Orloff and Darrel Mullis (Sourcebooks, Inc., 2008) or Accounting for Dummies by John A. Tracy (Wiley Publishing, Inc., 2008) is advised.
Create a Business and Marketing Plan
Determine who the businesses customers are, how to reach these customers, assess competitors in the neighborhood, and how the business will differentiate itself. Establish product or service prices, make projections, and develop a growth plan in the business and marketing plans.
Execute the Plan
Once the plan is in place, it's time to make it work. Assist children in making journal entries. Assess the businesses profitability and how closely the projections matched the plan. At the end of the first three months of business, determine if the plan is still relevant or revise it from the lessons learned over the past several months.
It is essential to remember that, at this age, the success or failure of the business is not the purpose of this exercise. Learning basic business building skills and the economics of running his or her own business will enable the child to apply these principles on a larger, grander scale later in life.
Robert Kiyosaki, the well-known author of Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money – That the Poor and Middle Class Do Not! (Grand Central Publishing, 2000), discusses in his books how his first business as a child taught him many important lessons that he was able to apply to subsequent businesses and that he learned more from his failures than his successes. Teaching children how to run a business while young and on a small-scale will benefit them greatly in their future endeavors.
Julie Warrenfeltz - A graduate of the University of Pittsburgh in 1995 with a self-designed major in Technical Writing, I launched my career with a contract ...
