Forbes has just released its list of the 400 Richest People in America. The combined net worth of these men and women clocks in at a staggering $1.7 trillion dollars. And here’s the truly amazing part: Some 70 percent of this year’s 400 built their fortunes from the ground up. If you’re a parent, this statistic may lead you to wonder: Will my kids ever have a shot at this kind of success?
Absolutely, but first they’ll have to learn to think and work like entrepreneurs.
The Forbes 400 list proves that you don’t have to be born wealthy. You just have to have the right skills and know how to leverage them. But here’s the thing: Your chances will dramatically improve if you can learn these skills, and the mindset to apply them, at an early age.
Of course, raising billionaires might not be your goal. Maybe you just want your kids to grow up to be financially stable, live comfortable lives, and maybe retire someday. Even if that’s the case, they must learn to think about working and building wealth in a new way. That’s because the world is undergoing a profound shift.
The old path—get good grades, go to college, get a good job, and save money—no longer leads anywhere you’d want your kids to go. Degrees are a dime a dozen. College grads are moving back home with six-figure debt. Gold-watch jobs are a relic of another era. We’ve entered the age of the entrepreneur, and those who blindly pursue the rules of an earlier time will be left behind.
A former car dealership manager who made the leap to entrepreneurship and motivational speaking, I am teaching my 16-year-old son the ropes of real estate investing. Greg Junior is on track to amass a net worth of a million dollars by the time he starts college.
Teaching kids the basics of entrepreneurship is not a radical notion. It’s a necessity. Even people who do end up working for someone else will be expected to think and work like entrepreneurs. The more we narrate the mindset and the skills of entrepreneurship to our kids—and even better, let them experience the reality for themselves (see attached tipsheet)—the more suited they’ll be for tomorrow’s workforce.
Teaching these foundational skills is not optional if we want our children to be able to maintain even a minimal standard of living.
There are certain fundamental truths parents need to teach their kids about being an entrepreneur. Here are some of the most important (keeping in mind that their appropriateness may depend on the ages of your kids):
Mindset matters. The old path to success—get good grades, go to college, get a good job, work hard for 40 years, and retire comfortably—no longer works in a flat global economy. Even if your children manage to find a “good job” (and there are fewer and fewer of them), the income it yields may not be enough to maintain a comfortable lifestyle. Multiple streams of income will be necessary—its’ important to have all three types: earned, passive, and portfolio—and kids need to get their minds around this reality now.
It’s critical that kids learn how to think about money in a new way. Teach them that the old paradigm of getting paid for your time is no longer adequate. What happens if the job ends or you can’t work anymore or the pay isn’t enough to cover the bills?
You might explain the benefits of, say, investing in a gumball machine. Say, ‘While you’re at school or some other part-time job, the machines are sitting there making money for you.’ Time is more valuable than money—this is the entire basis for the argument for passive income, and children can understand it.
Of course, the entrepreneurial mindset isn’t just about wealth building. It’s also about being able to find fresh solutions to problems no one has ever thought to solve, to figure out how what you offer can be applied to new markets, and to team up with other people in such a way that everyone wins.
Opportunity is everywhere. Develop a nose for finding it. As a parent, it’s up to you to point out opportunities as you see them. If you’re at a golf tournament in July you can say, “Wouldn’t this be a great place to sell ice water, sunscreen, and hats?” Or if your child is talking about how no one at afterschool daycare can ever seem to get their homework done, you might say, “Wouldn’t it be great to start a business where high school students come to afterschool daycares to tutor younger kids?” Ask them how they think such a business might work. Do this regularly and before you know it, kids will be thinking up ideas on their own.
Your brand will create the foundation for your business. Depending on their ages, your kids may or may not be familiar with the word “brand.” But explain to them that, basically, it comes down to what they want to be known for. Neatness? Friendliness? Trustworthiness? Then, start a dialogue on how to make that happen—and how to avoid doing things that might tear down that brand.
Let’s say your child is a babysitter and wants to be known for dependability. Talk through what that means: Always show up on time, for instance. Don’t chat on the phone while you’re supposed to be watching the kids. And don’t cancel unless it’s absolutely necessary—and wanting to go to a cool party you just heard about isn’t a good excuse. Let the customer down just once and all your hard work was for nothing.
You need a differentiator. Help your kids determine what makes their business different and explain how it will bring them more business. Maybe they offer an exceptional level of personal service. Maybe they cater to a certain group or meet a particular need. Maybe they’re eco-friendly. Help kids talk through what makes them different and better. Ask them how they might play up their differentiator and use it to get themselves seen in a crowded marketplace.
If your son is a dog walker, he might always wear a ‘uniform’ with his name on the pocket. It will make him seem more professional and trustworthy to people worried about turning their beloved pet over to a teenager. Or if your daughter is a babysitter, she might always bring a fresh batch of homemade cookies or a selection of fun DVDs to the house. The kids will specifically ask for her.
Know the value of marketing. Having a great business idea is one thing. Telling people about it is another. Help kids figure out ways to maximize their exposure without spending a ton of money (which they probably don’t have) or turning off potential customers with a hard sell approach. Teach them to introduce themselves and talk about their business when it’s appropriate: “I heard you mention your dog, Buster. I wanted to let you know I have a pet sitting business if you ever need that.”
Specifically, you might work with them to develop several “scripts” (elevator speeches) about their business to use in a variety of settings. Also, help them create some simple business cards to hand out.
Sometimes you have to give something away up-front. Explain that before people will be willing to pay for your product or service, they need a taste of how great it is just to get their attention. That might mean giving out a free sample of their homemade salsa or offering a free hour of math tutoring to new customers. Read More