Wednesday, April 27, 2011

How Can We Pass On Entrepreneurial Spirit to Our Kids?

It is estimated that 80% of family businesses fail in the transition from the first generation to the second, not to mention the slim margin that actually makes it to the third generation and beyond. The reason many family businesses don’t transition well from the first generation to the second is often because entrepreneurs don’t pass on that same “spirit” to the next generation. If the kids have no desire or passion for running a business, they aren’t going to want to run yours. If the kids don’t have the financial sense to run a business, they aren’t going to run yours for long.

How does someone fix this? Can you pass on entrepreneurial spirit? Do we make every child spend the first ten summers of their lives running lemonade stands? I will first say that I don’t know what the answer is. I do, however, know a few things that I think might work, and some things that I know don’t work. After all, Lindsay Lohan claims she “was not raised to lie, cheat, or steal.” Right, we believe that.

It doesn’t work to ignore the issue. Try not to allow your kids to grow up in an environment completely different from the one that you—the entrepreneur—grew up in. If you have your creativity from performing dance routines in the backyard, your determination from trying out for the baseball team all four years of high school before you made it, your resourcefulness from running for student council, or if you learned to save when your parents made you pay for your first car, those experiences likely shaped your entrepreneurial spirit today. Likewise if your parents helped you build the bleachers in the backyard and sew the costumes so you could charge admission to the theater production for the neighborhood, helped you collect canned goods for your first food drive, and helped you clean up when your first invention didn’t go as planned, provide those experiences for your children. Not all experiences require money to fund them nor do they require you to withhold money or privileges to teach the lesson.

Also consider teaching your kids to take calculated risks. Every successful entrepreneur needs to experience calculated risks that sometimes pay off and sometimes fail. Give them a small account to pick stocks, and let them make the good and bad decisions with a little bit of real or fake money. Give them a weekly allowance with the option of spending it now or saving it for a month and you will double it at the end of the month if it is still there. Let them be creative, and try things that they might fail at. Let them create their own summer jobs. These experiences teach children that they won’t succeed at everything, but that they also won’t succeed at anything unless they try.

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