How to make your kids more financially independent
Scratch the surface of an entrepreneur, and you’ll often find a history of entrepreneurial endeavour in the family.
Proudly South African CEO Eustace Mashimbye says his earliest business mentor was his own father, who owned spaza shops and aminibus taxis operation. “The tenacity my parents showed in the face of difficulties has rubbed off on me, and I appreciate having been exposed to both sides of the coin - success and hardship, which are often closer to each other than we imagine,” he says.
Simon Susman, recently retired chairman of the Woolworths Group, often credits his “powerful grandmother”, daughter of the founder of Marks & Spencer Michael Marks, for some of his savvy in business, as well as his parents, “who taught me very high standards, deep principles and values”.
How do parents encourage and nurture the entrepreneurial spirit in their children? The first rule of thumb is rule by example. The key traits of an entrepreneur are financial discipline, a passion for solving problems of others, and the ability to focus on a challenge and not give up. Children observing these traits in their parents will emulate them in their own lives.
Other traits are also important to pass down. The ability to source information about your business, confidence in talking about your business, inquisitiveness and constant learning from others about how to improve the business ... these are all in evidence daily in a home that nurtures the entrepreneurs of the future.
A good way for parents to encourage learning is to help their child test and navigate their idea in a competitive space. In the case of millennial barista Dayne Levinrad, whose #coffeeinacone is one of the most Instagrammed coffee in the world (sold at The Grind Coffee Company in Melrose Arch), his mother helped him develop it into a marketable product.
Product development aside, it’s critically important to insist on consistent book-keeping from the outset. The numbers tell the story of success or failure of any business. To instil the value of money, children should save and use their own money to start or fund their business. In some cases where their savings are not sufficient, the parent may support, but they are more careful if it comes from their savings.
In recognising the difference between a dream and an idea that has a chance of working in the marketplace, parents of a buddy entrepreneur should ask, ‘does the venture fulfil a certain need, in an innovative or creative way?’ A venture with potential will focus on solving a particular problem. A dream that doesn’t have legs in reality is devoid of these features, and might already be an overstretched line of business.
Last but not least, resilience in the face of disappointment is essential in the training of an entrepreneur. It is very important to teach children about the lessons of disappointment in business, to prepare them for unexpected business failures or down-times. Protecting them from these failures may eventually lead to the death of their dreams due to lack of preparedness. Disappointments are actually what gives them the impetus to want to succeed, despite the odds.
Tips for parents
Once their business is in place, it is important to allow young entrepreneurs to make their business decisions without interference, or with minimal interference.
Seek out incubation programmes for your young entrepreneur to join, in order to mitigate the failure factor. You can only teach so much. Mentors and training are important at every stage of business growth.
Never overlook or disregard business ethics, the moral principles that guide the way a business behaves. A solid business ethic will stand your child in good stead in the years of business ahead.
Jenny Retief is the CEO of Riversands Incubation Hub.