When you invest in your budding entrepreneur's ideas, there will be all kinds of profits.
For years, my daughter Ella was happy to spend the family cash and leave the actual earning to me. But at age 7, on the hottest day in July, she asked, "Can I have a lemonade stand?" I agreed, expecting her enthusiasm to melt like everything else under the afternoon sun. To my surprise, though, she was a first-rate barista and lit up with every quarter that plunked into her cash jar.
It turns out that having a yen to start a company isn't unusual for grade-schoolers. According to a survey by the Kauffman Foundation, a nonprofit that promotes entrepreneurship, almost 40 percent of kids ages 8 to 12 want to open a business some day. In part, that's because kids this age finally grasp the concept of money and understand what it can buy them. But becoming their own boss isn't all about the cash. "It's about becoming more independent," says Neale Godfrey, coauthor of Money Doesn't Grow on Trees. Helping your child develop her own business not only makes her feel older, but it also teaches her about perseverance, self-reliance, creative thinking, problem-solving, and real-world math. Follow our step-by-step primer to turn any kiddie corporate venture into an excellent hands-on learning experience.
Decide What to Sell
The essence of kid entrepreneurship is making something with your own hands and selling it safely, says Jeff Sandefer, a teacher at Austin's Acton School of Business and cofounder of the Austin Children's Business Fair. So step one is finding an unfilled customer need and picking a product to satisfy it, whether it's cupcakes, chocolate-chip cookies, or cards. Don't rule out the classic lemonade stand, either. It may seem like a clich?, but it's a smart start-up choice because it requires just a handful of supplies and leads to a quick payday -- perfect for grade-schoolers who thrive on instant gratification.
Find a Venue
When your child's product is ready to hit the market, talk about where it would be best to sell it. If she does have a lemonade stand, the end of the driveway is probably easiest -- but if your street doesn't get much traffic, it can make for a long day. Consider moving the table to a busier corner or combining the stand with an event that would draw in more customers such as a neighborhood yard sale. She could also broaden her target audience: Some farmers' markets offer children's days where for a small fee, often $10 or less, your kid can rent a table and sell her wares to passersby.
Expand the Business
Lemonade stands and the like are a great intro to selling, but once your kid gets the hang of that, he can branch out. "Teach your child to pick a business he loves so much that he would do it for free, and then the money will come, says Sandefer. To help brainstorm ideas, fold a piece of paper in half. On one side, help him list what he loves to do when he has free time (play with the dog, read); on the other, write what he's good at (math, meeting new people). Then think of ways those interests and talents can earn money. For instance, a crafty kid can sell crocheted bookmarks or handmade friendship bracelets; a creative kid can draw pet portraits or paint faces at a birthday party; an outdoorsy child can harvest and sell homegrown bouquets. "It's more important for parents to encourage creativity than to come up with the business idea for their child," says Joline Godfrey, author of Raising a Financially Fit Kid.
Have Realistic Expectations
It hurts when a business bombs, and kids can see all those unsold chocolate cupcakes as a personal rejection. So focus on the positives: "You earned $20!" or "I love how you looked people in the eye when you talked about what you made." When your kid's ready, you can hash out what went wrong (the place? The product?) and what would work better next time -- and remind her that the best entrepreneurs keep on experimenting. "What I say to kids is, 'There's no such thing as failure, only delayed success,'" says Shonika Proctor, a youth entrepreneurship expert. "If one idea doesn't work, just try something else until it does."
Focus on Fun
When Joey Hudicka, then 7, asked if it was possible to turn a board game he had created into an iPhone app, his parents, both entrepreneurs, were happy to encourage his vision. Two years later, Puckz, Joey's hockey-centered game, and its sister game, Goalz, have been downloaded thousands of times. "Whether that app sold no copies or a million copies is so far away from the point," says Joey's dad, Joe, of Flemington, New Jersey. "For us, the true focus of creating the business was getting to do really cool, meaningful things together with our children. These are learning opportunities, but they're also creating tremendous family memories along the way."
Originally published in the June 2012 issue of Parents magazine.