From the March 2004 issue of Entrepreneur

At age 6, Rachel Shein went door-to-door selling her little sister's birthday party balloons-until her parents caught her. By the end of elementary school, she was hawking brownies at the local ball games because she figured they were higher margin than lemonade. That same year, she was keeping the sales and expense ledgers for her mom's needlepoint store and her dad's real estate office.

Today, Shein and her husband, Steve Pilarski (also the child of entrepreneurs), own a multimillion-dollar bakery business in San Marcos, California, supplying pastries to coffee shops from Los Angeles to the Mexican border. They love the excitement, the creativity and the challenge of running the company, and they want to pass on that entrepreneurial spirit to their three children.

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Nobody's sure if great entrepreneurs are born or made, but parents and schools around the United States have been embracing the value of teaching entrepreneurship to kids. From the venerable Junior Achievement Inc., an organization that reaches 4 million young people nationwide each year, to the mom and dad who bring their small-business problems to the dinner table each night, America's next generation is grabbing a ride on the entrepreneurial tidal wave. A recent Junior Achievement poll showed that nearly 75 percent of teens indicated they would like to start their own businesses someday.

So Much to Gain
The benefits of teaching kids how to run a business are endless, according to Doug Miller, director of Children and Youth Entrepreneurship Education at the Ewing Marion Kauffman Foundation, a nonprofit organization dedicated to fostering entrepreneurship. "Kids gain life skills like responsibility, follow-through and communication. They learn business skills, like how to manage scarce resources," he says. "But most important, kids gain tremendous self-esteem as they try to overcome obstacles or see their ideas start to work. It all sounds too good to be true, but we have 20-plus years of research that says it is [true]."

There are a variety of ways for kids to sample from the business buffet of life. In the Shein-Pilarski household, the kids come to the bakery from the time they're born. "I'd show up to a customer meeting with a plate of scones in one arm and Spencer in the other," remembers Shein. "We share our enthusiasm with the kids, our love for what we do every day." Shein and Pilarski also talk about the bakery's problems in front of the kids-but not always all the ramifications. "We may lose a big customer, and Steve and I are thinking to ourselves 'How are we going to pay the mortgage?' We may share the information, but not our fears."

For other business owners, like Dr. Chris Miller, 53, psychologist and founder of the brainstorming and product design firm Innovation Focus Inc., raising entrepreneurial kids means giving his children a significant role in the business. When each of his sons reached the ripe old age of 10, Chris let them tag along to client meetings to participate. Some companies were skeptical when the junior help walked in the door. But it made sense to include them in his line of work, explains Chris. "For example, teenagers get headaches, too, so it was important for the client team from Excedrin to hear young people's attitudes toward headaches, how they feel about taking medicine," he says.

And what do the kids say? Chris' son Noah, a twelfth-grader who plays on his school's lacrosse team, gets a huge kick out of the whole experience. "I love to travel. I've gone with my dad to Chicago, New York, Colorado. I help get the session ready, like laying out name cards, hanging up displays." But he's most proud of his ideas. "After a big idea session, my mind is empty. I'm exhausted, but it's a good exhaustion. Like I've done something valuable." The approach also seems to be working for Chris' business. Innovation Focus, based in Lancaster, Pennsylvania, won the 2002 Ernst & Young Entrepreneur of the Year Award for Services in Central Pennsylvania.

Testing Their Wings

If you're not ready to let your kids join your company, or think they'll get more out of starting their own venture, help them kick off a business. Kids make great entrepreneurs because they have a lot of time and energy, and they don't have to worry about paying the mortgage. Plus, kids naturally think outside the box because they haven't yet been inside the box.

The first step is to listen and find out what they're interested in. Do they love to bake? Take care of pets? Run errands? Fix things? Next, help them figure out who their potential customers are, how to reach them, and what the message or selling proposition is going to be. Brainstorm with them on who the competition is, their pricing, and how they can offer something with superior quality, price or service.

Once your child has decided on the type of business, who they are selling to and who they are competing with, plan out the resources they'll need to make, buy or borrow. It's also a good idea to create a little cash-flow model showing the inflow and outflow of money to see if the business is going to stay solvent.

Children's early businesses are not just moneymakers, they're adventures-a chance to have fun and learn. Businesses teach with real-life examples. And for the more laconic kids in the family (i.e., teenagers), a business venture can give parents and teens something to talk about.

Once kids have embarked on their new venture, parents play a critical role behind the scenes, according to Bonnie Drew, executive vice president of YoungBiz Inc., an Atlanta company that offers camps and classes in support of the nascent entrepreneur, and jointly produces TeenStartUps.com with Entrepreneur. "It's critical to support your child when they ask for advice like 'How do I soothe an unhappy customer?' or 'Do you think I should expand?' Sometimes they won't ask but may need real help staying focused or motivated when they run into an obstacle," says Drew.

However, she cautions, don't get too involved. There's a natural parental temptation to save your kids from any heartache, but you shouldn't try to prevent or fix every mistake. "Some of the best lessons come from failure," Drew says. "Why did you lose that customer? Why did you run out of money? Don't let those errors discourage your child. Talk about them. Learn from them. Overcome them. That's the best lesson a parent can teach."

Bright Ideas
Start-ups for small fry:
  • Brokering baby-sitting services (matching up sitters and families)
  • Buying goods at yard sales, cleaning/fixing them and reselling them
  • Washing cars
  • Tutoring in academic subjects or computers
  • Creating custom-made calendars of families, friends or pets using a digital camera
  • Designing and selling T-shirts or hats
  • Gardening: services such as lawn mowing, weeding and planting
  • Making and selling gift baskets
  • Making and selling personalized notecards
  • Personalizing children's gifts, such as books, puzzles and clothing
  • Offering pet care, dog walking, pet-sitting
  • Running a craft-making class
  • Running errands or doing chores for elderly neighbors
  • Selling treats or drinks at Little League, soccer or high school football games
  • Shoveling snow

Training Wheels

Resources abound for kids and teens who want to explore the world of business before starting their own. There are camps, school programs, and national and local organizations that can help launch your own little future Michael Dell. A plethora of books and Web sites are available with ideas on what kinds of businesses to start, how to get ideas and how to make them a reality.

The Kauffman Foundation offers entrepreneurial programs and partnerships across the country for kids ages 5 to 18. There are also internships, grants and plenty of business advice on its Web site. One of the most popular programs it offers at schools and camps, Mini-Society, immerses kids in a hands-on simulation of an economic environment. Over 10 to 20 weeks, kids develop business ideas and experience the resulting financial, consumer and social effects. "This isn't 'Eat your spinach, and someday you'll grow up strong,'" says Doug Miller. "This is relevant right here, right now. These kids are learning cash flow, record-keeping, scarcity-and they love it. I saw a fifth-grade class incredibly excited to write contracts and then find each other's loopholes." The Kauffman Foundation, in connection with YoungBiz Inc., also offers an online magazine, Y&E (Young and Entrepreneurial), which keeps up a steady stream of advice and profiles other young entrepreneurs.

Junior Achievement, founded in 1919 as an after-school business club, now features an "Entrepreneur Center" on its Web site with tips and strategies on starting a business, and connections to experts who will answer questions. In every state, Junior Achievement matches volunteer businesspeople with K-12 classrooms to offer real-world advice and experience. The businessperson and teacher work together to set up hands-on activities that teach kids how business works and how they can use their skills to be successful. Any classroom can get this program for free by calling their local Junior Achievement office.

"Engaging kids this way shows them why their schoolwork is important-for example, how math skills convert to business success," says David Moore, president of Junior Achievement of Greater Puget Sound in Washington state.

Rohan Singh, 15, the winner of Junior Achievement's 2003 Student Entrepreneur of the Year award, credits his success to his early training and his parents. "In seventh grade, I had no idea what the free enterprise system was, and I didn't care," says the teen. After taking a Junior Achievement class, he wanted to start a business right away. "My parents had me draft a business plan to show I was serious," Singh remembers. His Woodinville, Washington-based business, Fuzzel Fish, in its second year and grossing $3,000 annually, sells software (written by Singh) that helps people create Web sites. "It's very cool to say you own a business," says Singh, whose parents emigrated from India when he was 4. "It's part of the American Dream."

For high schoolers who might like to compete with other kids around the nation, Junior Achievement offers JA Titan, a Web-based simulation where kids get to set prices, R&D spending and other factors, and then play along as economic factors beyond their control change. The Kauffman Foundation has teamed up with Disney Online to offer Hot Shot Business, an online simulation game for tweens that lets kids start a pet spa, a skateboard factory or a comic book store and introduces the concepts of financing, customer demand and pricing-with lots of decisions to make.

Students for the Advancement of Global Entrepreneurship (SAGE) is a program where participants learn business acumen and ethics at the same time. Teams of high schoolers countrywide, mentored by college students and local businesspeople, compete tournament-style against other schools to come up with the best business idea. In the process, they learn they can become entrepreneurs and help their communities. One winning team created an on-campus lunch cart for their high school: It was a profitable business and helped reduce truancy by keeping teens on campus during lunch. Dr. Curtis DeBerg, founder of SAGE, says, "Our future community leaders should have a sense of social responsibility. If you don't teach it, it gets lost."

Kids get hooked on entrepreneurship because it's the ultimate form of self-expression, says Drew. "Kids take their talent, skills and interests and create something out of nothing," she says. "We teach them the skills to make their ideas into reality, and they can use those skills throughout their careers."

Will all this fuel their desire to sell the next big thing when they grow up? Chris Miller says it doesn't really matter, because either way, there are significant long-term benefits for the kids. "When young people see they can contribute to a real business, it gives them confidence that they can make an impact on their world," he says. "This self-belief is a fantastic gift to give a child. They'll have the confidence to change things. Whether or not they decide to run their own businesses, they will feel they have choices in life."

Entrepreneurship 101

These books and resources will help get your budding entrepreneur on the right path.

  • Camp Invention. Run by the Akron, Ohio-based National Inventors Hall of Fame, this day camp for elementary school children focuses on activities that develop creative problem solving, teamwork and inventive thinking.
  • Independent Means Inc. Based in Santa Barbara, California, Independent Means offers seminars, books, games and activities for teens, parents and mentors-all aimed at girls' entrepreneurship and financial independence.
  • Junior Achievement. This organization educates young people about business, economics and free enterprise using volunteers in class and after school. Junior Achievement offers plenty of advice online, too.
  • Students for the Advancement of Global Entrepreneurship (SAGE). SAGE is an international network that links teams of secondary school students to nearby university student mentors to advance global entrepreneurship in an ethical and socially responsible manner. To set up a tournament in your area, visit the SAGE Web site.
  • Y&E magazine. Especially for teen entrepreneurs, this magazine offers advice, stories of other young businesspeople, quizzes and links to other resources.
  • Youth Venture. Based in Arlington, Virginia, Youth Venture helps young people ages 12 to 20 to launch and lead their own ventures that give back to their community and enrich the lives of those less fortunate.
  • How to Be a Teenage Millionaire by Art Beroff and T.R. Adams. Real-life young entrepreneurs provide the examples as teens learn about record-keeping, cash flow, and other elements critical to starting their own businesses.

Julie Bick is the bestselling author of books including All I Really Need to Know in Business I Learned at Microsoft. Visit her Web site at www.juliebick.com.