How to Start a Small Business as a Teen
The desire to succeed in life is what drives the most successful people in the world. For many young entrepreneurs, the best time to start was before high school. Billionaire Mark Cuban's first startup at 12 years old, was selling rubbish bags door-to-door. Richard Branson started his own business breeding budgies when he was just 11. Warren Buffett bought his first stock at just 11 years old after selling chewing gum to his neighbors.
It wasn’t having brilliant small business ideas at a young age that made these business owners successful, it was getting started. Starting entrepreneurship early means you’ll learn to make money as a teenager before you get to college age and adulthood.
Taking on the challenge of starting your own business or being your own boss earns you some well-deserved extra money in the bank and helps build skills you’ll need as you launch your career and adult life.
Related: Top 10 Credit Card Tips for Teens
There are two big questions to start with. The first and most important question is: What business venture should I start? And once you know that, the next one is: How do I begin?
Small Business Ideas for Teenagers
There are 2 big advantages you have as a teen entrepreneur. You have more free time available to you, and you have the freedom to experiment safely because your living costs are covered by your parents. So what type of business idea sounds exciting to you? Here are some business ventures to brainstorm.
1. Turn Your Chores Into a Side Hustle
You’re probably already doing this stuff, like babysitting, dog walking, mowing the lawn, or house-sitting. Doing it for people who don’t have the time or energy is a great side hustle.
They’re tried and tested methods, and the best part is they only cost you time, and you can sell extra services, like dog washes, for extra money. Easy to start, but your available time limits your earnings, and you can’t scale this business up.
Teaching is one of the best paths to entrepreneurship! If you’ve worked hard to understand a subject, like graphic design, or envision a career in a specific field, then helping others learn is not only a lucrative small business, but it looks great on a college application or a resume.
You can scale this type of business by making tutorials for commonly difficult aspects of the subject and starting a podcast!
Online clothing sales or thrifting is a great business if fashion or trends are your interest. Everyone wants to look good, and starting a collection of your Etsy or eBay finds on an established platform doesn't cost much.
One teen in Australia built a successful business renting out prom dresses! Scaling an online business is much easier with social media, especially if you’re a social media influencer or twitch streamer.
4. Event Planning
Event organizing is a great business if you love a good party. Not everyone has the time, or skills, to plan for every special event. If you have an organized mind and love to bring people together, this small business only requires an advertising budget and organizational skills. You can also scale this business up by creating pre-planned packages and selling them on social media!
Becoming an entrepreneur with a successful business is hard work but will teach you valuable skills for your adult life, like managing your free time, planning, communicating effectively, selling, and identifying issues and their solutions. These kinds of skills are invaluable after high school when joining the workforce full-time or as an entrepreneur.
How do you decide which business will make money? Talk to your parents about their work and find out what needs business owners have trouble attending to themselves. To get some direction, simply ask yourself, “What would make the lives of people I know easier?”.
The answers you get from people may surprise you, but once you’re armed with this knowledge, you have taken the first step of becoming a young entrepreneur, which is identifying a market.
Creating a Business Plan
Once you’ve identified your market, and if the need you’ve identified matches up with something you’d like to do, you then have to figure out whether your startup business model can fulfill the market's needs. You do this with a business plan.
If you want your business to be a genuine success, a business plan is vital, to make you think about and define your startup costs and how you will advertise, make sales and, importantly, make money.
You will likely need some startup money for your new business, and a business plan is a great tool for getting funding from outside sources. Do the math and see what it’ll cost you to start your business, including registration fees, banking costs, and how much your business needs to make before making a profit. It might be a good idea to fund your own business, but you’ll need financial assistance at some point to scale a small business.
Once you have a business plan, you may need to register your business. You and your parents should consult with an attorney to determine your state laws and what kind of business entity you need to register. Montana, South Dakota, Delaware, Nevada, and Wyoming all support small businesses and are pretty teen entrepreneur friendly, which makes these great places for young people to start a business.
A number of banks will provide debit cards so you can withdraw money or pay for materials you need. Speak with your parents about this and make a list of some teen debit cards to register for with them.
Depending on your state's laws, you may need to start your small business in partnership with a parent or someone over 18, and there may be restrictions on you signing legal documents and opening a bank account. Go with your parents and take your business plan to a bank manager to discuss how to start a business as a teenager, and discuss ways that your parents can open the account as business owners on your behalf but allow you access.
Growing and Scaling Your Business
The real difference between an extra cash hustle and a business is simply scaling. What is scale? Think of it like this: when you offer a service to someone you then carry out, you can’t perform the same service for another person simultaneously. A hustle can’t expand beyond you, but a business can expand regionally, nationally, or internationally! This is scale.
How do you know if your part-time business idea can go from being a service that you offer personally to a genuine business? Try this thought exercise:
Imagine your business idea is up and running, then ask yourself:
- Can this continue without my input?
- Could other people fulfill my role?
- If they could, what would I do then?
Write your answers to these questions in your business plan, then describe the process of how you plan to achieve each step.
With planning and some help from your parents, your journey as a teen entrepreneur will get off to a flying start, but remember, hardly anyone succeeds the first time!
All the people mentioned at the beginning of this article had failed businesses. The key is always to learn what you can for your next great startup!
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Ellie Lott is a personal finance blogger for youngandtheinvested.com. She is passionate about educating families on making smarter decisions with their money.