Is your child eager to put a business idea into action? If so, they aren't alone.
Our latest Youth Economy Report shows that over a third of children have a part-time job of some description, yet traditional earning methods such as babysitting and dog walking are falling out of favour as it becomes more lucrative to earn from home.
The entrepreneurial attitude of Generation Z means that 26% plan to be their own boss in the future, with one in five (21%) saying this is their career priority.
"It's inspiring to see the ambition of young people when it comes to earning their own money," says Louise Hill, COO and co-founder of GoHenry. "The future of work is rapidly changing now that kids are growing up surrounded by people just like them, who are starting businesses from their bedrooms and making money thanks to the explosion in digital opportunities."
If you want to inspire the entrepreneurial side of your child, here's how to help them launch their own business.
Related: How to make money as a kid
How old do you have to be to start a business?
A common question asked is, “If you`re under 18, can you start a business?" The short answer is yes. That said, anyone who starts a business under 18 will have challenges as they can’t enter into a formal contract and won’t be able to get credit or raise money towards a business.
What age can you get a business licence?
To obtain a business licence, you must be at least 18 years old and pass an identity check and a criminal record check carried out by the Disclosure and Barring Service (DBS). If your child is under 18, a parent can obtain this on their behalf.
It’s also important to consider the legal requirements even when a child runs a business. For example, you will need a licence for certain businesses, such as playing music, selling food, or trading in the street.
There are also rules you must follow if you:
Store personal information from customers
Also, in the UK, the age of contractual capacity for individuals is 18, so a child can’t sign a contract, but a parent can on their behalf.
You may also want to consider Public Liability Insurance for your child if they are working for members of the public in any type of property or outdoors in the garden. This insurance protects from the cost of any unexpected incidents that under 18s could be liable for.
11 steps to start a business under 18
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Decide what business to start
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Create a business plan
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Access materials and training
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Honest feedback and suggestions
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Money management
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Work on customer service and communication skills
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Manage the legal requirements
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Pay taxes (if needed)
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Set realistic business goals
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Create an online presence for marketing
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Figure out how to get paid
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Funding the business
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Determining pricing
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Setting up a legal business, e.g. name,
1. Decide what business to start
The key to helping your child launch a business is to make sure they are passionate about what they want to do. This means letting them develop a good idea so they will be motivated and more likely to stick to it when it feels hard.
Start by seeing if they have an idea and if it's viable. Don’t be afraid to give feedback with constructive criticism that will help them improve the idea. Perhaps there’s a gap in the market they have spotted, or they’re aware of something they know their friends are interested in doing (remember the loom band trend and fidget spinners craze).
If they are stuck on where to start, here are some ideas to mull over:
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Lawn mowing
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Pet sitting.
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Baking
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Car washing
If they need further inspiration, see our posts below, which can help them get started:
Also, encourage them to read books like Be A Young Entrepreneur and listen to business podcasts like How I Built This to learn as much about running a business.
2. Create a business plan
A business plan is a written account of your business idea. It allows your child to focus on what it takes to plan out a business idea.
A good business plan includes information about the core business idea, customers, how to reach your customers, startup costs, and pricing to ensure you'll make a profit.
The Princes Trust has free templates to adapt to your child's needs and age.
Related: How to make a business plan for kids
3. Access materials and training they’ll need
The aim of starting their own business is not just to make money but also to teach kids new skills, including financial ones. To help them discover more, show them how to access extra resources and training they might need to launch their idea.
A good place to start is Youth Employment, which has some great tutorials on communication and self-belief, plus free online skills courses. BBC Bitesize also has some great information and resources.
4. Give honest feedback and suggestions
As encouraging as you want to be, you need to be willing to give constructive feedback so your child can use their money and time effectively.
If they have an idea that you know won't work, tell them and try to adapt it together into a workable idea.
At the same time, the goal of launching their own business isn't to make millions but to help them learn business and life skills such as money management, good communication, and customer service (as well as a bit of profit.)
5. Talk about money management
Money management refers to how your child will handle the financial side of the business, from budgeting to incoming payments, outgoing costs, saving and investing their profit.
This is where GoHenry can help – the app allows your child to track incoming and outgoing money for their business easily.
Related: Ways to teach kids about money
6. Work on customer service and communication skills
If you have a very confident child, customer service and communication will likely come easy to them. However, many children find the communication aspect of running a business tricky.
You can help them by ensuring they are clear about what they are selling, the price of the item or service, what this entails (is delivery included, for example) and what they will do if the customer isn't happy.
Role-playing some scenarios with you can help them to know what to say and do in certain situations.
7. Manage the legal requirements
Kids don't need permission to run a part-time business from home, but they must know specific product sales rules.
Anything they sell must be as described, of satisfactory quality, and fit for purpose. The buyer is entitled to a refund if the product fails to meet these criteria.
8. Pay taxes (if needed)
Children under 16 in the UK don't have to pay taxes as long as their earnings don't exceed the maximum amount of personal allowances, currently £12,570.
However, once they reach 16, they must start paying National Insurance (usually a flat rate of £3.15 a week). These are known as National Insurance contributions, and if you're over 16 years of age and have self-employed profits over £190 a week, you need to ensure this is paid.
9. Set realistic business goals
Ask your child to set some business goals with you. These could be financial goals (we'll make X profit in three months), achievement goals ( in 12 weeks, we will have sold X amount), and anything else they want to achieve.
Revisit these goals in three months and see whether your child has achieved them. This enables them to reassess where they have been going right and wrong with their business.
10. Create an online presence for marketing
Marketing is vital for business. How will your child's customers hear about your services or products without it?
You don't have to spend money setting up a website; social media is an excellent place to promote your business.
An Instagram account, for instance, allows customers to contact you, read reviews, see what services or products you offer and find out what offers you may be running.
11. How to get paid?
One of the most important aspects of launching a business is how people can pay for goods and services.
While some people pay in cash, there are multiple benefits to your child being paid via an online transfer to their GoHenry kids' debit card account.
The GoHenry app will allow them to track incoming money and set up a separate savings pot to place their earnings. You can also use the parental features to keep an eye on who has paid and who hasn't and help your child chase payments.
12. Funding the business
It’s difficult for kids and teens to fund their businesses, but parents can provide financial support, such as contributing startup funds or covering initial expenses. Kids can use their allowance or savings to fund a small business as this helps them understand using their money to invest in an idea.
13. Determining pricing
Determining the price of a product or service is an important aspect of running a business, and kids can learn valuable lessons in pricing. Help kids identify and understand the costs associated with their product or service, including time and effort. This includes materials, time, and any other expenses they might incur. Then, research similar products or services in the market to understand what other businesses charge. This can provide a benchmark for setting a competitive price. Finally, help kids understand their target audience and their purchasing power to set a price that works.
14. Setting up a legal business, e.g. name,
While children can run a business, there are legal limitations on contracts and other business activities. Parents can help by setting up a legal name for the business by checking the availability of the chosen name to ensure it's not already in use. You can use the Companies House online service to check the availability. Parents can then open a business bank account in the business's name if it's available.
Other essential points to remember when helping your child form their own business
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Ensure your child researches their business idea before they start – they should know who their customers are and how they will sell their products.
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Give your kid advice and help, but let them do the work.
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Teach your kids how to be savvy about their business decision-making.
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Make sure they get customer feedback to improve their offering.
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Emphasis the importance of tracking their daily or weekly incoming, outgoings and expenses.
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Let your kids learn from their business mistakes.
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Show them how to save the money they earn and re-invest it in their business to help it grow.
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Ensure they know who their competitors are – as this will affect their sales.
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Talk to them about how to make a business successful, i.e. motivation, hard work, attention to detail and customer service.
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Give them help with determining a price for their product or service.
Why start a business as a kid?
Starting a business as a kid can be an enriching experience. It offers valuable life skills and can provide numerous benefits:
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Problem-Solving: Teaches problem-solving skills as young entrepreneurs face various challenges in running their businesses.
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Decision Making: Provides opportunities to make decisions and learn from successes and failures.
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Financial Literacy: Helps in understanding basic financial concepts such as budgeting, revenue, expenses, and profits.
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Time Management: Teaches how to balance school, extracurricular activities, and business responsibilities, promoting practical time management skills.
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Accountability: Encourages a sense of responsibility for the business, customers, and financial management
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Work Ethic: Instils the value of hard work, commitment, and dedication to achieving goals.
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Confidence: Boosts self-confidence as young entrepreneurs achieve goals, handle challenges, and interact with customers and peers.
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Communication: Interactions with customers, suppliers, and potential investors enhance communication skills.
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Savings: Encourages saving and understanding the value of money, setting a foundation for future financial management.
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Entrepreneurial Mindset: Cultivates an entrepreneurial mindset, which can be valuable for future career endeavours, even if the child does not pursue entrepreneurship long-term.
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Learning from Failure: Helps in developing resilience and the ability to learn from failures, preparing kids to face challenges in the future.
How can GoHenry help
When your child starts making money, a GoHenry account can be invaluable. With a GoHenry kids debit card and teen debit card, your child can access their hard-earned money to make purchases online and in-store. You can also set up regular payments to top up their account, and there's the added peace of mind of parental controls as your child begins to understand the value of money and the power of savings.
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