One of my core beliefs, based on all of my research and experience, is that people are going to be focusing on their careers earlier in life in order to compete later in life. We interviewed high school students last year and found that they are already volunteering, getting internships and building their professional identity. With the incredible wealth of knowledge, people and resources online, there's no doubt that you will see more young entrepreneurs surfacing in the future.
One of the best role models for children is Warren Buffett, who is the most successful investor of the 20th century and the CEO of Berkshire Hathaway. Forbes cites his net worth at $66.7 billion and he has given most of it away to charities such as the Bill and Melinda Gates Foundation, Nuclear Threat Initiative and the Glide Foundation. In order to continue to give back and inspire the next generation of entrepreneurs, he wrote the foreward for a new book called "How To Start Your Very First Business", as part of his Secret Millionaires Club. The book was authored by Sarah Parvis and Julie Merberg of Downtown Bookworks, a children's publishing company targeted at kids up to 12 years old. The book will provide children with the tools and strategies required to be successful in business even at a young age.
In the following interview, Mr. Buffett talks about how and why children should become entrepreneurs, why you should learn by doing, how starting a business can help you long term, and then shares his best advice. After speaking with Buffett, I talked to Sarah Parvis and Julie Merberg about why he's the perfect role model for children and his approach to connecting with the youth.
The $59 Billion Philanthropist, chronicling 50 years of Buffett's investment savvy and unprecedented giving, is available now for download.
Dan Schawbel: Why did you decide to be part of an entrepreneurship book for kids? Why should kids try and learn the habits required to start businesses before they even get to college?
Warren Buffett: I helped create the Secret Millionaires Club with Genius Brands because I think it is important for kids to have an understanding about how business works. They don’t need to know how to read a balance sheet or a stock report, but if they can learn the basics of business and pick up some good habits early on, it will serve them well into adulthood. This book is one great way to get across the mission and lessons of the Secret Millionaires Club, which encourages kids to learn good financial habits early on—habits that will serve them a lifetime.
Schawbel: What are some of your business ideas for kids who are inspired to start companies after reading this book?
Buffett: This book is meant to inspire kids to come up with their own original business ideas based on their interests and skills—and the needs in their community. The book details many kid-friendly business ideas to inspire kids to come up with their own ideas. We see through our annual competition, the Grow Your Own Business Challenge, how creative and enterprising these young kids can be when given the right tools and guidance.
Must Read: The Little Black Book of Billionaire Secrets
Schawbel: What mistakes do you anticipate children making because they have no business experience? What can parents do to help them overcome challenges/failure?
Buffett: The Secret Millionaires Club was created to help them develop an understanding of how businesses work. We encourage kids to take chances and not be afraid to make mistakes. Kids learn by doing. We want kids—and all people—to pursue their dreams, even if they don’t get it right the first time. This book includes lots of tips and tools to help kids make smart decisions in business, and in their own lives.
Schawbel: How can starting a business as a child impact the rest of your life, from getting into college, to future businesses to even getting a full-time job?
Buffett: Starting a business teaches you a lot. Being honest, energetic, generous, prompt, hardworking, and passionate about what you do is important in business, as well as in life. If you start early, these behaviors become habit. It is never too early to start to develop good habits.
Schawbel: What are your top three pieces of business advice for Millennials?
As we say in every episode of Secret Millionaires Club and highlight in the book:
1. The best investment you can make is an investment in yourself.
2. The more you learn, the more you’ll earn.
3. Find something you love to do in life, and you’ll never work a day in your life.
Schawbel: What do you think about Warren's background would appeal to children, knowing that it's usually the investing community that pays attention to his business moves?
Sarah Parvis: Warren Buffett started his first business when he was 6 years. He was just one of those kids who enjoyed selling things and earning a profit at a young age, so he has an understanding of other kids like that. His experience as a child entrepreneur plus his incredible success in business make him the perfect mentor for budding businesspeople. Warren Buffett also has a very approachable manner and a simple, clear way of expressing his business philosophy. That’s why we chose to use quotations from him throughout the book—he uses words that a kid can understand and be inspired by.
Julie Merberg: Parents know that Warren Buffett is a trustworthy expert with a genius for explaining things in a simple way, so for any parent looking to buy a book like this for their children, we felt that his Secret Millionaires Club brand would resonate.
Schawbel: What did you learn about Warren’s business acumen and connection to the youth?
Parvis: Probably the most important thing that I learned about Warren Buffett’s approach to business is that he looks at sound decision making in terms of embracing good habits. Saving money is not a thing to be done one day when you have plenty of cash, but a habit to be formed early in life, like saying thank you or brushing your teeth before bedtime. The lessons that Warren Buffett can share through the Secret Millionaire’s Club and HOW TO START YOUR VERY FIRST BUSINESS aren’t solely about finances. A child who learns early in life to make it a habit to read every day and seek to learn new things, to be honest and have integrity in his or her dealings with others, and to speak up for himself or herself will benefit from these habits in countless ways throughout an entire life.
Schawbel: Do you have any stories of children who have been able to start successful businesses?
Parvis: The book is full of great examples of young people who have taken an idea and turned it into a successful business. At eight years old, Katelyn Lohr invented Freetoes toeless socks when she wanted to wear socks with flip-flops. Her friends loved her invention and wanted them too, and her business was born. Jake and Lachlan Johnson devised a new kind of two-piece, mix-and-match bow tie for the young person today who is used to customizing everything. (And Jake went on to win the grand prize in the Secret Millionaire’s Club annual competition, the Grow Your Own Business Challenge). Gabrielle Jordan turned a love of making jewelry (she started when she was 7!) into the thriving company, Jewelz of Jordan. These are just of the few of the many kids whose great ideas and stories (of both struggle and success) are featured in HOW TO START YOUR VERY FIRST BUSINESS.
Merberg: One of my four sons is always coming up with creative business ideas, so I’ve gotten to see the work of a young entrepreneur up-close and share some of the strategies from the book with him. My 12-year old came up with a great business plan to create websites for little corner grocery stores near his middle school. He would first make sure he couldn’t find an existing website for a particular store, and then he would offer up his services—for $20 if the owner liked his work and $5 if s/he didn’t. I thought it was pretty brilliant that he made it risk-free for the client—but also covered his investment of time with a minor kill fee. (Everybody paid the $20.) My boys have sold apples that they picked from our trees upstate (startup cost: $0) by describing the apples as “heirloom organic” to explain away their not-so-pretty appearance. I see lots of kids in our neighborhood in New York City setting up stoop sales and bake sales. A little ingenuity goes a long way. And for the most part, grownups (customers) like to support that ingenuity.
Schawbel: How can you keep a child from being discouraged when he or she runs into difficulty with a business idea?
Parvis: One of the central tenets of Warren Buffett’s Secret Millionaire’s Club is: Don’t be afraid to try—and fail. Anyone who has ever tried to start a business has hit some snags along the way and, in the book, we explore some common issues. Are there not enough customers at your snack stand? Maybe there is a busier location for you. Try setting up at the local pool, outside the grocery store, or near some ball fields where teams are practicing. Do other dog walkers have more business than you? Think carefully about what your competition is doing differently. Also compare your prices to see if you are charging too much money for your service. I love the Warren Buffett quotation: “If you fail, try again. Failure is not falling down; it is staying down.” It reminds us all that everyone runs into difficulty and that we shouldn’t let it derail our dreams.
We also want to encourage kids to seek out mentors who can commiserate and also help a young entrepreneur look at a problem in a new light. Perhaps a mentor can steer a child through a rough patch in the business. Maybe together they can come up with a solution to a particular problem. Either way, it can be incredibly helpful for a kid to know that adult businesspeople run into problems too. You can never know what great advice there is or what valuable connections are out there until you ask for help.
And if the solution to a business problem isn’t coming to you, that’s okay too. Take a break, take a walk, play with a sibling, or think about something else. Be patient. Volunteer for a different company or a nonprofit and maybe you will learn something new that will help you.
Merberg: My kids will often set up impromptu book sales, usually near one of our local playgrounds. Some days business is really swift (one afternoon, my then 10-year-old made $300!), and other times are very quiet and they get discouraged. We always pack a sharpie and poster board so they can change their prices. Sometimes, it just takes a good deal to drum up interest. Other times, we’ll take a look around, pack up the cart, and move to a different location, like closer to the farmer’s market. I think it’s not a bad lesson for kids to learn that people won’t knock down your door to buy things from you—that you have to be endlessly resourceful and figure out what it’s going to take to close a sale.
Schawbel: What three tips can you offer the youth on starting a business?
Parvis:
1. Choose to make a product or perform a service that you enjoy. Your love of making beaded bracelets or decorating skateboards or growing flowers or hosting an afterschool game show will shine through and be obvious to your customers. And enthusiasm is infectious. It will attract and excite customers.
2. Make sure you can explain the product you make or the service you offer—and what makes it different or special—in a short, simple way.
3. It’s always okay to ask for help. You will most likely be pleasantly surprised by how many people (friends, siblings, neighbors, teachers, friends’ parents, parents’ friends) will be willing to lend a hand or share some pertinent knowledge. Plus, working together with others can be a lot of fun!
Merberg: As a mom with entrepreneurial sons, I would add two more tips for parents who want to support their kids, but not push them too hard or do the work for them:
1. Remember that it’s important for kids to know the difference between revenue and profit. If you buy all of the lemons, sugar, cups, pitchers, etc., make sure that they reimburse you for startup costs after the first lemonade sale so they understand that all of the money they earned is not actually profit. It’s a valuable lesson.
2. Remind your kids that running a business isn’t a one-day event. It requires a lot of patience and dedication. What might seem like a great idea can get exhausting quickly, especially for kids. Having a bake sale can be a lot of fun. But baking muffins all day Saturday and then waking up early every Sunday to set up by the ball field and sell all day might be too much. Help them to set realistic goals.
