How to Raise a Millionaire – Developing Your Child’s Entrepreneurial Aptitude
If you are reading my efforts, you probably want to become a millionaire or you already are one.
If you want to become one, and if you have children, you probably are trying to instill your values in your children – the values that are driving you to want to be a millionaire.
If you already are a millionaire, and if you have children, you may be wondering how you need to raise your children (or maybe your grandchildren) differently than you were raised – because they are being influenced by wealth in ways you weren’t.
To address these questions, I will be writing a series of posts (interspersed with posts on other topics) with ideas on how to raise children to be millionaires.
What does developing your child’s entrepreneurial aptitude have to do with raising a millionaire?
Entrepreneurs and people with their own businesses are more likely to become millionaires.
Prince and Schiff in The Middle-Class Millionaire state that the millionaires go where the money is – meaning that they put themselves consciously in the path of money – stock options, commissions, their own business, etc. Frank, in Richistan, indicated that most of the Richistan inhabitants made their money by starting their own companies and then selling them. Stanley, in The Millionaire Next Door, relays that 2/3 of the millionaires interviewed were self-employed.
If your family already has money, and you want to beat the shirtsleeves to shirtsleeves in three generations syndrome – each generation must find ways to contribute to the family’s net worth – they must be entrepreneurial.
So how do you develop your child’s entrepreneurial aptitude?
Instead of supplying your child with every one of their heart’s desires, give them ‘the gift of want’ (as Troy Dunn says in Young Bucks).
Your goal as a parent is to set your child up for success, let her gain the experience and be in control while you weave lessons about the business world into your conversations with her.
Identify your child’s strengths and weaknesses
With her other caregiver, think through your child’s strengths and come up with some ideas for businesses that are appropriate for her age and which utilize her strengths.
Let your child know she will have to earn the money herself for that must have item she currently can’t live without.
Make sure the kid is hungry for money – wait until she is really wanting something and then make an appointment with her to meet, one on one, to discuss how she can earn what she wants.
When you meet, let your child know you won’t be contributing money for her desire and then have a conversation with her about ways she could earn the money. Depending on her age, you may need to slip in some of your preconceived suggestions – or if she is older – she may come up with her own.
Do your legwork before involving your child
When your child decides on a way to make money, first do some legwork by yourself – to figure out any technical, legal or other requirements that must be met and to make sure they can all be handled.
For example, if she wants to buy stuff at garage sales and sell it on eBay – do research on eBay to see what kinds of things sell the best, what prices are being paid, how packing and shipping/insurance are handled and how the money will change hands. Make sure your child has a digital camera, access to a PC with internet connectivity and etc (you will be supplying the business needs out of your cash so make sure you can afford the required start up supplies). Understand any legal requirements and make sure you and your child can meet them. Learn how to find the best garage sales by going to a few yourself.
Get your child started with business research
When you have figured out the things you will need to help your child, it is time for your kid to take over – with you on the sidelines helping and coaching, but not overwhelming your child with your experience. Entrepreneurship is a participation sport, your child will not learn without doing.
Point out stuff about:
Have her name her business, pick out a design for her eBay ad or store and let her identify what will make her business unique from the other eBay sellers.
Sit with her while you both look at how things are priced on eBay and speculate together about how much profit is made and whether it is made on the merchandise or the postage/handling. Teach her how to research prices for similar merchandise. Show her what fees she will be charged and talk to her about gross and net profit.
Discuss with her what kinds of stuff she will want to buy/sell, help her practice negotiating the price when buying (after all the profit is made when you buy, not when you sell), help her think through other ways to get free or inexpensive items to sell. Also help her figure out how she will track the cost of inventory and supplies and discuss why business owners need to keep records (hint: to see if you are making money).
Bring up the subject of whether there will be other outlets your kid wants to use to sell the items (another garage sale, consignment in a shop, other online sites and etc) discussing the pros/cons of each and talking about who her customers are and where they are most likely to look for the items to be sold.
Look at various eBay item descriptions and titles with your child to see how others list similar things, help your child practice writing up a good sales pitch for an item to be sold. Talk about the importance of being honest in describing the items defects (if any) and general condition.
Help your child start up the business
Take her to garage sales and let her choose the items, negotiate the price and buy her inventory. Help her get it home and get good pictures – but let her do it. Help her size the images to upload and get them into eBay. Walk her through the first item setup, explaining what is needed and why for each step of the sale setup process. Watch the first batch of items being sold with her, stressing the importance of good customer service in answering any questions and in getting the sold goods wrapped and shipped quickly and correctly.
Step back and let your child handle the rest of the items. Bring in ringers to bid on and buy some of the merchandise.
Take pictures of your child being an entrepreneur. Capture her negotiating for good inventory prices, snapping pictures of the item and packing it up to send to her buyer. Brag about her endeavors to your extended family, neighbors and friends. Cheer your child on and be ready to assist or answer questions if need be – but let her be the doer!
Add up the gross sales. Show your child how to figure out what the net profit was by subtracting the expenses from the gross sales.
Help her get her money into real money form and spread it out on a table so she can see and touch it.
See what she wants to do next and go along with it. Maybe she has enough and wants to quit, maybe she wants to go again or maybe she wants to try something else.
Other business ideas – from Young Bucks
Make and sell gift baskets; walk pets; wash RV’s inside; wash windows; mow grass; help at kids parties by running the games for a fee; sell candy on the honor system at businesses; sell cold waters or sodas at garage sales on hot summer days; teach other kids how to babysit; teach adults how to use social media or cell phones; or be senior companions.
The Middle:-Class Millionaire The Rise of the New Rich and How They Are Changing America by Russ Alan Prince and Lewis Schiff copyright 2008 published by Doubleday a division of Random House, Inc New York
Young Bucks How to Raise a Future Millionaire by Troy Dunn, copyright 2007, published by Thomas Nelson
The Millionaire Next Door The Surprising Secrets of America’s Wealthy by Thomas J. Stanley, Ph.D. And William D. Danko, Ph.D., copyright 1996, published by Pocket Books