Search for a high school, and it’s likely that you’ll find plenty that offer special emphases on art, theater, craft or sciences. Look for one that promises to wake your child’s inner entrepreneur though, and you could be looking for a long time.
While creative and technical types can be encouraged in a classroom, business-minded children are expected to learn their skills trading baseball cards – or more likely, pirated Playstation games – in the school playground.
That lack of support creates a problem for parents who would like to see their children gain an understanding of business before they head out into the big, wide world… and ideally without having to pay for the privilege of putting “MBA” after their name.
Mind your own Beeswax
It’s a gap that Franchild tries to fill by allowing parents the opportunity to set up their children in business, and for little more than $25. For that fee, they receive access to inventory at below wholesale prices, sales advice, business cards, a marketing system and even a Web page for an extra $2 per month.
The products themselves are not particularly revolutionary. Franchild helps children to sell, soap, beeswax candles, jewelry and clothes, with more products on the way. Some, such as the candles, require a little assembly, which forces the children to get involved in the production as well as marketing — or teaches them about outsourcing and employing assistants. But the products themselves are high quality and capable of selling even without the buyer knowing they’re increasing a child’s allowance.
According to Ralph Williams, Franchild’s founder, the system teaches children a bunch of useful entrepreneurial skills:
Children learn business principles like manufacturing, packaging, private label, sales and marketing – by doing them. In addition they learn about using their money to be good citizens in the communities by donating 10 percent of profits, and they gain concern for the environment by offering products that tend to be natural, like beeswax candles and organic soaps.
All of those are important traits to develop, and it would certainly be better to make your first marketing mistakes with an investment of $25 – especially when it’s donated by parents – rather than with your first business, financed by a bank which is less keen to write your debts off.
In fact, that was how Franchild was founded eighteen months ago. Ralph Williams helped start a small hand-rolled, beeswax candle business for his children, aged 8 and 6. In their first month, they made $500 in sales, mostly by offering the candles to retailers at wholesale prices. The $125 profit was equal to ten months of allowance from work that took the children between ten and fifteen minutes a day – all that Ralph and his wife would allow the children to do.
Where’s the Creativity?
It was the idea of Patrick, 8, to expand the business into a franchise that would let other children enjoy the benefits of building their own business. Although Ralph wouldn’t say how many people are now using Franchild, he did mention that it has spread around the world with new franchises in Ireland, Canada, Austria and Australia.
The easy replication though is perhaps the biggest problem with Franchild. Patrick’s idea of turning a simple business into a franchise was his own; the businesses that children grow with Franchild isn’t. While creating a franchise can teach children important techniques that are best learned in practice rather than in an evening business school, they can’t teach children those most important of skills: the creativity to spot a niche in the market; and the organization needed to start a business from scratch. Franchises are always for managers rather than for entrepreneurs – people who are ambitious enough to be the boss without having to take the risk of developing something new for themselves. Of course, all of that might be too much to expect from an eight-year-old but it does remove some of the most important fun of business-building, replacing it with an easy start-up and some more fundamental business skills.
The role of parents in the project is important too. Ralph and his wife help their children’s business by cutting the wicks and the wax themselves. They do it to be helpful, he said, and for the bonding time, although the question of letting a six-year old get friendly with a box-cutter might be a factor too. It’s a sensible decision and while it might not be strictly business-like, it could provide the basis of a lesson in the market-distorting effects of subsidies and tariffs.
Perhaps one of the most interesting lessons that children have learned by using Franchild though, isn’t how to make a cold call or knock down objections. It’s how to buy. According to Ralph, since his children started earning their own money instead of asking Dad for handout, they’ve become a lot more selective about what they do with the cash they earn.
“[I]f a product does not meet their expectation, they want to take it back,” he told us. “Prior to running their own business and generating their own profits, I would buy things for my kids (I still do) and after a few uses, it would end up on the floor, under the bed or in the garbage. By better understanding the value of money my kids have learned to make smarter purchasing decisions.”
That’s a lesson we could all do with learning.