Back in the days of pink bubblegum and hula hoops, a junior high school kid from a rural neighbourhood was contemplating ways in which to invest and earn money. In due course, he followed his yearning with a very shrewd action. With his entrepreneurial spirit intact, he bicycled down to the small, rural town’s local general store and bought up the town’s entire supply of pink bubblegum. In turn, he made continued attempts to resell the pink bubblegum to kids in the neighbourhood hiking the price to allow him to realize a profit.
Well, the other neighbourhood kids understood the concept of price gouging and were not receptive to purchasing pink bubblegum at inflated prices. Suffice it to say the idea went over like a lead balloon. Though the kids suffered a week-long withdrawal from chewing pink bubblegum, they effectively boycotted sales by the entrepreneur and in no time at all prices and supply returned to normal. In fact, the whole affair ended with the entrepreneur apprehensive to depart his parent’s home for weeks after being branded the town traitor who created the bubblegum famine in the first place.
What the young entrepreneur didn’t count on was the emotional response that resulted in the price hike, and his bubblegum venture quickly failed. The entrepreneur’s spirit was in the right place and he was just steps away from a viable idea. His only failure was the execution of his plan. Imagine how the story might have ended if this young entrepreneur had sought advice from his parents and his parents became involved in his venture. He may have benefited from that advice and made his purchase directly from another supplier selling his pink bubblegum for a few pennies less than the general store. If only the story had ended that way, the young entrepreneur very well may have been elected the town’s local hero rather than the lowly and sought after pink bubblegum bandit.
The morale of the story is should your child exhibit an entrepreneurial spirit such as that of the pink bubblegum bandit, be attentive to and support your child’s dreams by helping your child develop their ideas into a small business. Working with your child in a teacher/apprentice capacity affords you and your child many opportunities to learn together as your child builds character and self-confidence. Developing a business is very educational and your child will gain essential life skills in a fun and profitable format. Your child will practice setting goals, time management, communicating, organizing and will learn lessons in computer software, general accounting, money management, banking, sales, marketing, and more.
So, how do you and your child get started on such a venture? Listen to your child’s ideas and choose an idea that has potential; an idea which can be developed into a small business your child can operate. After agreeing on an idea, consult with your accountant. Minor children are required to file tax returns on earnings just like everyone else. In addition, your accountant may advise your child of financial benefits such as making contributions to their very own, tax-free educational savings fund and other planning strategies.
After consulting with your accountant on tax issues and how to set up your child’s business, apply for a business license if required so your child is legally operating the business. Next, you and your child can open personal and business bank accounts so your child has a safe place to store all that money they’re going to be earning. Shop around because there are a lot of checking and savings accounts that offer special perks to kids that you wouldn’t want to miss out on.
Once your child is squared away with creating a tax plan, obtaining a business license, and setting up banking accounts, help your child create a simple business plan. The exercise of developing a business plan will help you and your child focus on the guts of your business and teach your child to use problem-solving skills and creativity in devising a plan. Your child’s business plan serves as an outline of overall business objectives, describes the business, explains how the business will operate, and presents sales and marketing tactics to be executed to achieve plan success.
With your business plan in place, you and your child will enter the start-up phase of your small business where together you will create action items in a “to do” list format technically referred to as a start-up plan. Determine what inventory items to purchase to support your child’s small business and what items are critical to getting the small business up and running. Determine who comprises your target market and develop a message that reaches your market. Purchase marketing items for your business such as a website or blog and inexpensive marketing tools like business cards, bumper stickers, and flyers.
Finally, put your child’s ideas into action and begin working through your business and start-up plans. Prioritize tasks and check off items as you complete them. Help your child overcome obstacles as they arise, discuss ways in which to accomplish tasks, and problem-solve with your child. Finally, your child will be ready to hit the streets (or the Internet) with their product or service and will begin selling! Good places to start selling and marketing include friends and family, your local community, your local community newsletter, flyers posted at the local swim club, church, and social networking sites on the Internet to name a few.
We hope you and your child have fun together as you enjoy the thrills of success and overcome the disappointments of failure encountered along the way to developing your small business. Become involved with your child’s venture helping your child correct small errors that could result in bursting their bubble and their entrepreneurial spirit should they inadvertently become the pink bubblegum bandit of your neighbourhood.
Filed Your Tax Return? – What to do if you Forgot Something
Ways to get a Bigger Tax Refund
Do I Have to Report Foreign Income on my Canadian Tax Return?
Which Government Benefits do I Need to Report on my 2020 Tax Return?
Capital Gains and Your Taxes
Common Questions Asked about the CRA Principal Residence Exemption
Did you Move this Year? Can you Claim Moving Expenses?
Working from Home – How do the New Rules for Office Expenses Work?