It’s that time of year when all red-blooded American teens turn their minds to making money. Sure, they might see it as the opportunity to buy the latest video game download, go to the mall or catch the latest summer blockbuster with their friends. Of course, there’s something else they can do that will give them more than they can imagine.
First, though, they need to find a job.
But not just any job.
Traditionally, teenagers look for jobs stocking shelves, checking out customers or cooking fast food. With higher minimum wage laws, these jobs are harder to come by. What’s an enterprising young teen in search of ready cash to do?
Why not explore the many opportunities of self-made wealth forever associated with the innocence of youth? These are the proverbial lemonade stands, baby sitting and lawnmowing services kid entrepreneurs have been doing since, well, since teenagers have discovered the twin joys of free market capitalism and open market consumerism. Overall, it’s been a win-win formula for teens, their parents and the nation as a whole.
Summertime jobs have become a serious business for families. Teens who earn their own bacon place less financial pressure on parents. With the new tax law creating a standard deduction of $12,000, most teen workers find they’ll pay no federal tax at all. (Here’s an idea on what to do with some of that cash: Start a Child IRA.)
For teens relying on their own wits rather than working the usual retail jobs, the benefits of summer gigs rise significantly. They teach so many invaluable life-long lessons. Running your own business shows teens how to be independent, self-confident and well-organized.
Just as important, working for yourself educates in a manner no book can. It’s hands-on learning. The teen entrepreneur quickly discovers everything from very practical financial know-how to critical decision-making skills.
How can parents encourage a child’s entrepreneurial fervor? It’s easy, but it’s hard. It’s easy in the sense you can simply rely on a child’s natural curiosity to act as the divining rod. It’s hard because many parents see this natural curiosity as “not practical” or “lacking in common sense.”
While this parental view might be true for someone of mature age (like a parent), parents need to remember most kids will need to explore. And exploration includes venturing down blind alleys and dead ends. What might be obvious to a parent is not obvious to a child. Allow the child to fail (within reasonable limits) to both satisfy the child’s curiosity and to cause the child to learn through experience.
To cultivate the child entrepreneur, it’s best for parents to take a multi-year approach. Younger children should be encouraged to probe their interests and begin to develop hobbies. In their tween years, parents can start to guide their children to take the hobbies they are most passionate about and begin developing those hobbies into potential businesses. Maybe these proto-businesses won’t make any money at first, but the summer provides a great opportunity to experiment because it offers more free time.
There’s another approach to creating a teenage business that has proven successful. Teens often find they have unique obstacles. Overcoming these obstacles requires creativity and skill. They’ll often find their friends have the same problem. Solving their own problem will also solve their friends’ (and other teens’) problem. This presents a potential profit-making opportunity.
Whatever the source, treat any new business idea as a continuing experiment. “The first step is to identify a need in their community that they could fill,” says Jamie Hammond, Executive Producer/Co-Creator of BizKid$ in Seattle. “Have teenagers dips their toes in the water by gauging the interest level of their potential market. Does their audience share the enthusiasm for the same hobby? Does the same problem bug them, too?”
Only when questions like these are answered can the teen test the willingness of the market to pay for the solution offered.
This might sound a lot more complicated than a simple lemonade stand, but the process is identical:
- Child enjoys making lemonade (a hobby)
- Child is thirsty (a personal problem)
- Child discovers other people are thirsty, too (potential audience)
- Child puts some empty cups and a pitcher of lemonade in a little red wagon, rolls the wagon to the roadside, and places a sign that says “Lemonade: $1” to see if people are willing to pay for it (starting small and testing the market).
Parents play a critical role in the development of their children. It’s no different for kids who want to create their own business. “Parents can help their kids to make their budgets,” says Hammond. “They can even loan their kids the first money to purchase materials to make their products or to buy the tools they might need for their service. However, paying their parents back must be part of their budget.”
Every child should have the chance to start a business, even if it’s really small. “Running their own business allows kids to learn that they have determination to stick to their commitment and how personally rewarding that is, no matter how much money they make,” says Hammond.
The lessons learned from the experience continue to pay dividends throughout one’s life. Teens may even find themselves on an easy road to becoming a millionaire before they graduate high school.