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Work for yourself, kids
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May 11, 2000: 10:42 a.m. ET
Starting your own business can be the best cure for your summertime blues
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NEW YORK (CNNfn) - Hey kids, what's the best cure for the summertime blues? A cool job, of course! And what could be cooler than working for yourself?
Armed with a few simple business techniques, a dash of good old self-confidence, and a willingness to work, any kid can become an entrepreneur.
Being your own boss has plenty of advantages. You can work alone or with your friends, set your own hours, dress as you like and control the size, scope and services of your business. Plus, you'll be earning while you're learning how to run a business.
 And running a business may be the most valuable financial education you get during your school years, a lesson that will help you manage your money better when you leave classrooms behind.
Each year at this time, an additional 2.8 million 16- to 24-year-olds enter the work force, increasing the number of working youth to about 25 million, according to the Bureau of Labor Statistics of the U.S. Department of Labor. Last year, seven out of eight worked in the private sector, most in either retail (7.6 million) or service industries (6.1 million). Each summer, the youth unemployment rate hovers at about 10 percent.
If you're looking to hire on for a summer job, you might want to check out SummerJobs.com or any of the dozens of Internet sites aimed at summer jobseekers. They have great tips on everything from writing a resume to obtaining work permits.
More fun, more money
But many kids are finding there's more fun -- and money -- to be had by being their own boss right in their own neighborhood.
There's never been a better time to start your own summertime business. With the economy flourishing, busy two-income households on the rise, and unemployment low, the young entrepreneur has more potential customers needing more help than ever before and fewer competitors providing kid-type services.
"Kids starting businesses is not as uncommon as you might think," said Susan E.M. Davis, director of the Center for Women Entrepreneurs at Columbia College in Columbia, S.C. "There are lots of kids self-employed today. I have a student who does odd chores, sort of like a go-fer. The only limitation to a young person today is whether or not they can drive."
Look around you. What are the needs in your neighborhood? Are there a lot of dog owners that might benefit from a reasonably priced dog walking or yard pickup service? Do people in your neighborhood need help with computer skills (look for those cow-colored boxes at the curb)? Could you build a Web site for local residents or businesses? Do lawns need mowing, babies need sitting, cars need washing, houses need painting?
If you can drive, your options expand.
"Most adults are coming home kind of tired and there are certain things they just don't want to do," said Davis. "I know two teen-agers who are slowly building a concierge business, doing simple chores -- and because they drive, they can take the dog to the vet, run to the dry cleaner, go to the grocery store. It saves busy adults time, and time is money today."
If you can fill an existing need, you've got the start of a summer business. But make sure you research and recognize a need and don't just decide to do what you'd like -- you may get no takers.
Take good care of No. 1
Be sure to guard your most important asset -- that's you -- before barging ahead, said Adriane Berg, co-author (with her son, Arthur) of The Totally Awesome Business Book for Kids.
"Find out what you can do in the community that is safe," she advised. "Safety is an issue. Don't take it for granted. How are you going to be traveling? Are you going to be knocking on doors? Who are you going to be seeing without supervision? You need to be conscious of those things."
Either you or your parents need to talk with insurance representatives. Things can go wrong in a business, or you may be injured and unable to do what you promised.
Getting off the ground
Found a need in the 'hood? Good. But now what? How do you begin to turn your great ideas into money for summer movie tickets?
The Small Business Administration can help. This spring, just in time for budding entrepreneurs such as yourself, the SBA joined with the Center for Women Entrepreneurs to launch Discover Business! It offers an entertaining entrepreneurial game and crash course on business basics for guys and girls.
Here are a few essentials to get you started:
- Are you solo or a team? If you are teaming with friends, make sure you all agree how the work, and the money, will be divided.
- How do you plan to advertise your product or service? By knocking on doors? Telephone? Newspaper ad? "Study the classified ad section of your local paper and learn how to write one," Berg advised. Even if you don't take out an ad, the exercise will help you describe who you are and what you offer.
- What will you charge? "It's important that you charge properly, not undercharge or overcharge," said Berg. "You can do that by talking to other kids who are doing the same sorts of things."
- Develop a preliminary business budget. In one column, tally what you expect to make (income) based on what you plan to charge and the likely number of customers. In another, tally what you expect to spend on business supplies (expenses). If your income exceeds your expenses, you've got yourself a viable business. If not, perhaps you can charge more, add additional customers, or cut expenses to make it work.
- Print up business cards. "A business card makes your mind put together everything that you want to say. It makes you name the business, says where the business is going to be located, what hours you're going to be there, and how you can be reached," said Berg.
- Keep records. Detailed record keeping, "the paperwork," is what separates young go-getters from the rest of the pack. Use your fledgling business as a way to teach yourself computer accounting and database programs. They may not be as exciting as Nintendo, but they can pay better!
Then you spend it, right?
Once the money rolls in, the fun starts. If you've worked to earn money for a new stereo or computer software, a bike or a laptop, go ahead, spend it up.
But if you're making it faster than you can spend it, you might want to look into ways to keep those greenbacks working for you. You could open a savings account, but you'll earn just 1.95 percent interest on average.
A better bet might be a money market account. The average account earns about 2.45 percent, but you'll need $500 or more to open one and you'll be restricted on how you withdraw your money.
A third option is a short-term certificate of deposit, or CD. Unlike your Metallica CD, a three-month bank version can earn you around 4.45 percent if you have $350 to open it, but you'll have to leave it there for the term of the CD or pay a hefty penalty.
If you're saving those summer bucks to tuck away for college, a first home or even that distant retirement horizon, you may want to consider asking your parents to help you open a Roth Individual Retirement Account. It's one way to head down the road to millionairehood.
"You have to have earned money to put into any IRA," explained Susan Smith, private banking representative with Northern Trust Bank of Naples, Fla. "If you've earned the money, you have the right to put it in a Roth. We have parents who are putting baby-sitting money in Roth IRAs."
Thinking long-term pays
The advantages of a Roth IRA are numerous. Money is taxed going into a Roth IRA and accrues interest until you can withdraw it, completely tax-free, beginning at age 59-1/2. That's a long way off, but you can make certain withdrawals earlier, including a one-time maximum $10,000 for college expenses and $10,000 for a first home.
"If you can do it young, even if you don't put in the maximum amount every year, and let it sit, it would be phenomenal what you would have at retirement," said Smith.
And if you work to ensure your future by putting some of your hard-earned summer cash into a Roth IRA, maybe Mom and Dad will reward you for your foresight!
It's great to get help from your Mom and Dad, but part of the excitement and satisfaction of running your own business comes from being your own boss. Don't let the fear of failure prevent you from taking a chance on yourself.
"There is so much pressure today on being in the top 10 and getting all As and your SATs being close to 1,600 that kids are afraid to go outside of what they know is sure," said Davis. "Kids need to know it's OK to fail."
Besides, who's going to fail, right? Heck, if you've done your business planning well, your summer business will soon be growing faster than a July lawn! 
--by bankrate.com for CNNfn
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