I’ve launched four startups, and my kids are well aware of the investors my life spins around, and the startup that has good days when my employees are at the farm and work feels like a party, and bad days where I pretend I don’t even work at my own company because I’m so sick of the pressure. Sometimes the kids have a hard time grasping, though, how I make money. They watch Sky Does Minecraft’s YouTube channel with his ten million subscribers and my kids say, “How do you make money when you don’t even have a million subscribers?!?!”
I have found a few ideas that have been really effective in teaching my kids how to run their own company. Here’s what I’d recommend you try with your kids:
1. Treat the business like a science experiment.
Starting a business is really like running an experiment. For older kids, you can give them the book The Lean Startup by Eric Ries. This is the current Bible of Silicon Valley founders. The idea is that you launch a business, see what doesn’t work and what might work better and then you try again. And you just keep trying. Getting to success is a process of trial and error. Asking questions is the most difficult part of running an experiment. With each iteration of your kid’s company, remind them to ask, “What will we learn from trying this?” The best entrepreneurs have been asking great questions their whole lives.
2. Let your kid face failure.
Almost all entrepreneurs fail many times before they get it right. Which means the skill of bouncing back from failure is very important. It’s great for kids to experience the sick-to-your-stomach feeling that you’re failing again. But it’s hard for parents to watch that. So kids should practice where the stakes are lower. There is rarely $2 million in funding in the land of kid-led companies, but a lemonade stand that requires earning only $5 to get to break-even is a great kid-target. You might be tempted to get your friends to stop by for a ten-cent cup, but you’d helping more by consoling a failed business owner than by stacking the deck to ensure the $5 goal is met.
3. Start in the real world.
The most successful online businesses are services—like ADP.com—something that solves many problems at once for the customer, and saves tons of time. Another lucrative area online are information products—like the courses on Quistic—that are inexpensive to deliver and have zero inventory costs. The problem is that kids don’t think in terms of information products. Kids think in terms of video games and iPads. Kids live in the physical world of swords and skirts and soccer fields. So when you help your kid set up a business, think of more physical attributes of a business that are not expensive but are meaningful. Get business cards, get a big sign with the company name. These are things that are easy to order, don’t cost much, and go a long way to make a new businesses owner feel legit.
4. Don’t forget hard labor.
My son sold sweet corn this year, but only after he hand-weeded the field so we could try growing organic. When my son was figuring out the pricing of his corn, he took into account that he hated weeding. We gave him a way to figure out how to value his time based on his labor. So many grown-ups forget this part of the business model. What my son discovered is that the profit margin on sweet corn is slim. But remember, each business idea is an experiment and he’s looking at the profit margins for strawberries now instead.
5. Be a co-founder.
The best odds for succeeding in business come from having a co-founder. So teach your kid how to be a team player.
Find a business you can operate that is well-suited to adults who have kids and then involve the kid in running the business. A company like surveybee, for example, has tons of ways for parents to make money that might seem small at first, but if you involved your kid in the project as well, then the money earned feels much more significant.
I’ve spent many hours sitting with my kids waiting for a judge’s seal of approval or a waiting for a banker to get a kid’s bank account working. I’ve sat through pig shows, and egg collecting, and garage sales my son piled high with all the books I saved for my daughters before I knew I wasn’t having one. So much of launching a businesses is working hard and then waiting. It’s hard to wait. Especially when you’re excited. Do that with your kid to let him know he’s not alone.
And remember that entrepreneurship is ultimately about being your best self. Which is completely consistent with homeschooling, of course, but totally inconsistent with a parent living their startup dreams through their kids.
Like all good aspects of self-directed learning, launching a business is much more exciting if the kids take the lead. So let them.