Small Business

From Sandbox to Startup


As a symbol of youthful entrepreneurship, the summertime lemonade stand is alive and well. In practice, though, today's teenage entrepreneurs are likely to be a bit more creative in their moneymaking ventures. Consider a few examples, all launched by teens in recent years: a butterfly-breeding business, a construction-debris clean-up crew, and a picture-hanging service.

The teens who started those businesses were participating in programs sponsored by the Kansas City-based Kauffman Center for Entrepreneurial Leadership. And studies show they're not alone. Indeed, as many as 6 in 10 teens say they're interested in founding a company, according to several Gallup polls taken during the 1990s.

Yet the U.S. education system often fails to give teens the skills they need to do that, says Marilyn Kourilsky, a UCLA professor who also serves as the Kauffman Center's chief education adviser. In a book she co-authored last year with William Walstad, The E Generation: Prepared for the Entrepreneurial Economy?, Kourilsky details how high schools and colleges often emphasize concepts of business management rather than entrepreneurship. The problem with that, she says, is that even mid-level corporate managers are increasingly being asked to think as entrepreneurs -- to recognize opportunities, develop ideas, and evaluate risks.

Recently, Kourilsky spoke with BusinessWeek Online writer Julie Fields about ways that teachers and parents can inspire young entrepreneurs. What follows are edited excerpts from their conversation:

Q: How do you teach entrepreneurship to children or teens?

A: One of the ways is that as early as five years old, you teach children how to frame problems as opportunities. In other words, a problem can be a disguised opportunity. For example, they can complain about all the leaves on the steps, or they can say, "There's an opportunity for somebody to take a broom and get them off. I think I'm going to offer to do this, and I will do it for X dollars an hour."

The other thing that you teach them is that you may recognize an opportunity, but you may not have a good idea. So the one part of entrepreneurship is to be able to recognize the opportunity. The other is to have the idea that matches the opportunity.

Q: How do schools fail to prepare teens to start businesses of their own?

A: The biggest way they fail is by teaching them from a very early age that they're going to work for somebody else, and somebody else is going to identify the problem and they're going to solve it. When they have career days in most schools, it always involves who you're going to work for. So they teach them to take a job, rather than the kind of attitudes and the entrepreneurial process which would help to make a job.

Q: What about risk? How do you teach teens to evaluate that in business?

A: Balanced risk-taking is not gambling. It's not buying the lottery ticket. It's really having almost a cost-benefit analysis approach to risk-taking. In other words, if the rewards are big, then you take a bigger risk. If the rewards are small, then you don't take as big a risk. But risk-taking is O.K.

The schools don't necessarily establish that view because, from the beginning, the teacher is in the position of the planner, and the students are trying to guess what the teacher wants the answer to be. They're trying to second-guess what the authority figure wants from them. So they tend to reduce their risk-taking proclivity as they move from kindergarten through their senior year in high school.

Q: Why do teens want to become entrepreneurs?

A: In focus groups, we found there were [a few] reasons they gave the most often: They want to be their own boss. And they want to give back to the community, or they want to be able to help out their family. The [other] reason was to make money.

Every one of them could point to somebody who had been laid off -- somebody who thought they had made it and was in a corporate job for 20 or 25 years. And suddenly, there's a layoff. So in their words, they said, "We don't want to take a job. We want to make a job."

Q: If schools are doing such a poor job of fostering entrepreneurial skills, why do so many teens say they want to start their own companies?

A: I think there's a certain autonomy in youngsters. They grow up in a society in which their parents are telling them what to do, and after their parents tell them what to do, they go into a classroom and their teachers are telling them what to do.

But I think they hit a stage -- and they're hitting it earlier and earlier -- where they want to decide what's good for them and what they want to do. And that easily translates into, "I am so tired of having other people be my boss, I want to be my own boss."

Q: Has the dot-com bust discouraged them at all?

A: No, it's not discouraging them. It's just making them more convinced that they've got to do their homework, that they've got to go through the process that any good entrepreneur has to go through to see whether there's an opportunity.

An example [of a failure] is Pets.com. They had one of the best marketing strategies that you would ever want to see. But nobody bothered to find out that maybe, just maybe, people like going to pet stores.

Q: Are you concerned that the next generation of entrepreneurs, having witnessed the Internet boom, will take venture capital for granted? Or think that every business needs VC money to survive?

A: I think most of them have learned that they need to work first to get the income, and that most capital comes from parents, friends, borrowing off credit cards, and bootstrapping. I think that's a lesson they learn just from their summer businesses.

Q: What are some of the biggest misconceptions teens have about starting a business?

A: The time it's going to take. The amount of hours that they have to devote, and what those hours mean.

Q: They're turned off by that?

A: They're not turned off, but there's a little bit of complaining that goes on. We're finding that some of the best things start in middle school, and then they get into high school and a lot of other things take over. Unless the business is really, really going well, they'll often let it slip a little or they'll get brothers and sisters to do it.


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