6 minute read
It is never too early for your teen to be successful in business. Start by helping them create a sound business plan. While teens under the age of 18 cannot enter into a lawfully binding contract, introducing the importance of a business plan is an important step on the road to financial literacy. Even if your kids don’t actually create a business, they can become familiar with what is required and explore ideas.
- Brainstorm business ideas
- Match natural skills and interests to the business
- Identify goals and objectives
- Calculate costs versus potential income
Did you know that over two thirds of teens between the ages of 13 and 17 said they would seriously consider starting a business as an adult or sooner? A primary concern of teens is that they need an “investor” to start a business and (47%) said they would need support from parents and family. Jack E. Kosakowski, President, and CEO of Junior Achievement USA said “Despite the effects of the COVID-19 shutdown on the business community, it is encouraging to see the next generation still interested in considering entrepreneurship as a career path. We must encourage that interest going forward.” Perhaps you have a budding entrepreneur in your family. Has your child shown a special interest in creating their own business? A business plan is very helpful in outlining how the business will run. Be sure to include the costs of running the business so unexpected costs remain at a minimum. Having a plan helps keep the business on track. It is easy for kids to wander off, deviating from the original plan unless there is a business blueprint in place. Here are a few tips to help them flesh out their ideas and establish a foundation by helping them create a business plan.
To start any business plan, you need ideas. Encourage your children to write down all the possible ideas for their business. What really interests your teen? Are they a whiz on social media or like to build programs on the computer? Or would a seasonal business like snow shoveling snow or mowing grass be a better fit? Are they especially good at knitting or crafts? How much time do they have to spend growing their business, apart from school or extracurricular activities? Next, decide whether the idea is a product or a service. Could they sell some of their work made with their 3D printer? Or maybe they are building cute birdhouses that they could sell at a craft fair. Perhaps your teen could help a local business with their social media platform or assist neighbors to troubleshoot computer glitches? Maybe your teen loves animals and kids. Could they manage a dog walking business or create a mother’s helper start up? Let your child be the one to select the idea that resonates best with them. Parents can then follow up once an idea is decided upon and make sure no special license is required.
Goals and Objectives
Now it’s time to write down the goals and objectives of the business. Every business owner should understand every aspect of the business. Goals define the general intentions of the business and may not be easily measured. One example of a goal for a social media marketing company would be to provide simple, effective social media support for area businesses at a reasonable cost. An objective defines specific, measurable, actions. An example of an objective is to increase the number of businesses that sign up for your teens' social media marketing business by 10% in 12 months. Encourage your teen to be specific as possible and to hone in on their goals.
Add up the numbers
A very important part of any business plan is to calculate expenses in order to determine how much you need to charge to make a profit. For example, if your teen wants to start a grass mowing business some of the possible expenses may include:
- Cost of lawnmower/edger (borrowed)
- Potential repair costs $50
- Insurance for property damage $50
- Gasoline $20
- Maintenance $50.
- Bags to store lawn clippings $15
- Waste disposal $20
- Gas to worksite $5
- Advertisement/Marketing costs $50
So as you can see, what seems like a simple business contains hidden costs. How many lawns would need to be mowed in order to make a profit? Even if Mom and Dad lend their mower, the outlay of expenses can add up to almost $300 dollars. If the teen charges $50 to mow each lawn, they would have to mow 6 lawns to begin to make a profit! That’s a lot of mowing to do before the business ever begins to show a profit. Building compensation for oneself is an important part of any business plan. Many people don’t consider all the set up costs of a business and can’t understand why they are not rolling in dough. When parents help their young entrepreneurs with their business plans, there may be fewer surprises along the way. If a business has a high overhead, your teen may decide upon another business with lower costs. Whatever your motivated teen decides, be supportive, help them break down the costs, and perhaps even go a step further and consider floating them a small loan. It could be a good investment and teaches your teens the important lesson about the cost of borrowing money.
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