Cinema trips, beach days and… starting a business? It might not sound like the most obvious activity for the summer holidays, but helping your teenager explore any business ideas they may have can be a great way to fill the time they’re at home.
Starting a business could allow them to make some money of their own, while setting them up for the rest of their lives. Not because they will be the next Richard Branson (you can only dream), but because of the skills and financial literacy it will teach them.
“Education is very much knowledge-focused,” says Russell Winnard, chief operating officer at UK charity Young Enterprise. “But how do you apply that knowledge? How do you use it in a real context? Whether we are talking about a seven-year-old, a 15-year-old or a 21-year-old, what they are learning from having a go at starting a mini-enterprise or a side hustle is to apply that knowledge in a practical way. And they are developing skills that future employers, or future educators, are going to value.”
So if your teen has what it takes to be a budding entrepreneur or you simply want to help them learn the right skills to manage their money, here are some tips on how to get started.
Where can parents and teens begin?
The idea of starting a business may sound a bit overwhelming. But there are a few easy ways parents and teens can approach it together.
Start small
One way to get the business juices flowing is by replicating the 10X Challenge created by Young Enterprise at home. This is where a young person is given a small investment, such as £10, and tasked with getting their business idea off the ground. If you haven’t got that money to spare, you could treat this as a hypothetical exercise.
This activity will get them thinking about what they want to do at a manageable scale and start to teach them the skills needed to run a business. For example, they can develop the confidence to approach someone and the resilience to deal with being turned down.
Young Enterprise, which helps young people develop their employability and financial literacy skills, has a number of free resources online if you want to plan your own 10X Challenge this summer.
Carry out research
Even if your teen is starting small, they should always do their research. Winnard suggests that teens try to find a niche or problem to solve. That could be as simple as looking at the local area and what opportunities exist.
For example, do any lawns look overgrown? Are there any dirty cars on your street? Do you know any parents desperate for a night out that they could help? If you or your teen can spot a local opportunity, the next step is to find out how much people are prepared to pay for these side hustles.
“It doesn’t need to be the full market research,” Winnard says. “It is just that common sense stuff.”
Get some work experience
One way for your teen to do research is to gain some work experience with an entrepreneur. That’s the advice of Emma Jones CBE, founder of small-business support platform Enterprise Nation. Jones grew up helping out at her family business, which allowed her to “see first-hand how rewarding running your own business can be”.
“I’d really recommend getting that kind of experience to any young person,” she says. “Seek out the experience of working with entrepreneurs, ask them questions and see where your skills might fit in – and which skills might need more work.”
This step could involve approaching someone you know who set up their own business and asking if your teen could shadow them for a few days to see what it’s like to run a company.
Money management as a teenage entrepreneur
Making money isn’t the only goal of setting up a business as a teenager. Learning how to manage that money is just as important. Yet while a teen can be a director of a business registered at Companies House from as young as 16, they can’t access the benefits of a business bank account until they’re 18 years old.
Without a business bank account, it’s harder to separate personal finances from any business expenses and earnings when calculating taxes. Once your teen makes over £1,000 per tax year from their business, they will need to submit a Self-Assessment Tax Return. Even if their earnings are under £1,000, they should still keep a record of their income and expenses. Doing so is recommended by HM Revenue & Customs (HMRC), and it’s good to get in the habit of maintaining records early on so they’re prepared if their business starts to grow.
Keeping a record of business transactions is much easier to do with a business bank account, so it’s unfortunate that it’s not an option for many teenagers.
Setting up their own business “may, for some young people, be the very first time they have been able to make their own choices around money,” Winnard says. “So not being able to access business bank accounts means that we are forcing some young people into bad habits from the outset around money and money management.”
What can parents and teens do then to develop the best financial habits they can? One solution is to set up a personal current account just for the business. While this workaround isn’t perfect, it can emulate the separation between personal and business finances provided by a business bank account.
11 business ideas for teens
The best way to help your teen come up with a business idea is to ask what excites them, what is needed and what suits their skill set. But if nothing springs to mind, there are several classic businesses that teens could try over the summer break as a jumping-off point:
- academic tutor
- music teacher
- technology tutor
- graphic designer
- dog walker
- pet sitter
- car washer/valet
- gardener
- errand runner
- craft maker
- childcare worker/babysitter.
Image source: Getty Images
About the Author
Dive even deeper
How to Choose a Company Structure and Register a Business
by George Harrison
What is Accounts Payable?
by Henry Williams