Young entrepreneurs are cashing in
Kids who can cash in on a bright idea learn skills that will help carry them through life
When your kids come up with an idea, be sure to listen carefully because you never know where it will lead. Take the American eightyear-old Abbey Fleck, who was cooking bacon in the microwave with her dad, Jon. They were running out of paper towels to soak up the fat and Abbey suggested that they drape the bacon over a plate – like washing on a stand. They made a T-shaped rack out of wooden dowels and bits of plastic coat hangers, attaching them to a plastic plate. It worked. The bacon cooked in the air rather than in fat. Jon thought it was a great idea and found a factory to make microwave-safe plastic dishes that they called Makin Bacon. They have sold 2.7 million Makin Bacons through Walmart.
This shows that your kids are never too young to become entrepreneurs.
There are plenty of other examples of how entrepreneurial children grow up with a head for business. For example, at the age of seven, Warren Buffett, now a renowned investor, borrowed a book, One Thousand Ways to
Make $1000, from the Omaha public library. It sparked many entrepreneurial ventures, such as selling chewing gum, cola bottles and weekly magazines door to door. He worked in his grandfather’s grocery store. In high school he delivered newspapers, sold golf balls and stamps, and cleaned cars. On his first income tax return in 1944, Buffett made a $35 deduction for the bicycle he used on his newspaper run. Perhaps his best early business was buying a used pinball in high school with a friend for $25 and setting it up in the local barber shop. Within months they owned several machines in three barber shops before they sold the business later in the year for $1200. Kids who earn money from their own business endeavours are learning valuable skills. For a start, they learn about budgeting, by tallying up the costs and the sales revenue and working out the profit and loss. It teaches them about saving and planning, not to mention the art of selling. There are tax file numbers to track down, business names to register and payment systems to master. While some go all the way and build sophisticated websites, in many cases their business venture has the added bonus of getting them away from screens, with many making their own products and spending time communicating with customers.
Motivations vary
For Melissa Nicholson, who spent most nights as a child counting up the cash takings from her father’s shop, understanding how a business works provided her with a multitude of life skills. It is one of the reasons she has set up a Kids Community Market on the Fleurieu Coast in South Australia, a market organised and hosted by kids. A mother of two children, aged seven and one, Nicholson runs compulsory financial literacy and business workshops for the kids who sign up as well as organising courses on food safety standards. “Kids learn by doing, not by being told,” she says. “They pick up life learning skills.”
The former baker, who now works as a mortgage broker, says she often sees young people struggling with “a whole lot of debt”.
Nicholson’s first community market attracted 30 stalls with kids selling products such as soaps, hair scrunchies, cupcakes, cards, macramé, tie dye T-shirts, dreamcatchers, potted succulents, toasted sandwiches, dukka, pedicures, waffles, honey crackles, using honey from the family’s bee hives, and much more. Nicholson spread the word about the market to a wide area and it attracted 800 visitors – not bad for a town of 4000. The local post office donated $200 and there were prizes. Nicholson has held three kids markets so far and is gearing up for more this year.
Motivation for starting a business varies from child for child. For Aiden Rayner, who runs an egg and chicken business, it was buying a barn to house more animals on his family farm. For Lilly Wenham, who sews scrunchies, it was to buy tickets for a Katy Perry concert. Paris Ramsay, who sells ethically sourced jewellery from Thailand, wanted to pay for a school trip to Cambodia to help in a small village by teaching English and building tables. For Kate Barry, also a maker a scrunchies, it was to buy tickets to the stage version of Harry Potter and the Cursed Child. Riley Armstrong, who sells customised necklaces, wanted a PlayStation, and now he has set his sights on a virtual reality headset. Rio and Bon Withyman want to spend the earnings from their egg business on experiences rather than things. They have been to the Coolum Aqua Park and the movies and are saving up for a GoPro camera to put on their boards to record their surfing adventures.
Parents play a big role in their kids’ entrepreneurial endeavours. There is a fine line between supporting them and taking over. While it is tempting to step in, you don’t want to stymie their enthusiasm. Give them the freedom to develop their idea but talk to them about it along the way.
Rather than handing over the money when they need to set up their business, it is best to draw up a loan on a spreadsheet setting out income, costs and expected profits. Help them draw up a budget that will stand them in good stead for the future.