Kids who start businesses learn the value of money along the way

Small-fry startups

April 02, 2013|Kit Waskom Pollard

From hot-chocolate stands to dog walking to helping people with computers, kids can start their own businesses — and learn about the value of money along the way.

On a chilly day last November, 5-year-old Sylvia Fordham caught the business bug.

“She wanted to have a lemonade stand to make money,” says her mother, Jennifer. “But it was freezing outside. I told her I didn’t think anyone would want a cold drink on a cold day, so I suggested she try something else.”

A few hours — and one trip to the grocery store — later, Sylvia’s stand was up and running, serving hot chocolate and homemade cookies to her Baltimore neighbors.

Sylvia’s entrepreneurial spirit is common. A 2007 Harris Interactive poll found that 40 percent of kids ages 8 to 21 are interested in starting their own businesses someday.

Many of those kids will get their starts in business even before they’re able to drive. Armed with the right tools, parents can help foster entrepreneurship at any age.

Pick a job

The first step in starting a business is to figure out what that enterprise will be.

If your child is interested in starting a business, explore the child’s skills and interests, then identify a business need that matches, suggests Harold Rappaport, chair of the Greater Baltimore chapter of SCORE, an organization dedicated to entrepreneur education.

“The most important thing is to find an outlet suitable for your kid,” he says. “Look at the capabilities of your child. Look for a need that can be fulfilled with their skills and ability. Use that as the basis to start your business.”

When Luke Abell, now 17, was 8, he set up “Luke’s Snack Shack” at his local pool. “The pool didn’t have a snack shack, so I thought I’d take advantage. I went to Sam’s Club and bought snacks in bulk. I learned a lot about money and profit.”

After a few years, Abell’s success bred competition. Eventually, the pool banned snack shacks altogether, but at that point Abell was already moving on to his next project: a technology consulting company called Luke Tech.

“When I was 10, I was pretty good at fixing computers,” he says. “I started with just friends and family, but then other people started hiring me.”

Over the next few years, the Baltimore teenager explored different interests within the field of technology. “Video production, websites, IT — even if the passion I’m interested in isn’t something I can make a business out of, it’s helpful,” he says. “The more I know, the more attractive I am to clients.”

Today, the Baltimore teenager runs the technology consulting and repair firm Abell Tech, with help from his older brother, Austin.

Smooth operations

With a business focus selected, the down-and-dirty work starts. Children, especially young ones, need guidance from their parents regarding how to actually run a business.

After Sylvia Fordham decided to start a hot-chocolate stand, her mother took her shopping for supplies. “I asked her what we would need, and she insisted on marshmallows. So I suggested we buy hot drink cups and asked her to decide how many to buy. I asked her what she thought would go with hot chocolate, and she said it had to be homemade chocolate-chip cookies.”

During their trip to the grocery store, Jennifer Fordham footed the bill for Sylvia’s supplies. Because of her young age, “I didn’t explain that the profit margin wasn’t that great,” says Jennifer.

Parents of young entrepreneurs are frequently called upon to invest in their kids’ ventures. “Parents have to decide how far they are willing to go to support their kids, time-wise and financially,” says Rappaport.

Sell it

With their products purchased, Sylvia and Jennifer’s next conversation focused on marketing. “I told her we needed to bring people to the stand, so we had to make a sign that would make people want to stop.” Sylvia suggested drawing a cup with steam and, with help from her mom, wrote “hot chocolate” and “cookies” on her sign.

Towson High School senior Madison Jacobson runs a busy baby-sitting business, thanks in part to her mother’s networking efforts. “My mom emailed the Stoneleigh community baby-sitting co-op,” says Jacobson. Next thing she knew, she had a few jobs, which led to even more work.

Navigating the legal landscape

Parents can also be invaluable when it comes to watching out for potential pitfalls. “In this day and age, there are always legal issues,” warns Rappaport, “especially when food is involved. Almost every retail business has licensing requirements, and there’s the issue of liability. People are probably reluctant to sue a kid, but there’s always some crazy person out there.”

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