Tuesday, January 25, 2011
Your Teen Can Own a Micro Business
How to Launch It in Ten Simple Steps
by Carol Topp, CPA
“I want to walk dogs; what do I need to do to get started?” asked a teen boy. I had inspired him to think about starting a micro business and he was ready to get going!
I encourage teenagers to start very small businesses—micro businesses. A micro business is a one-person business that can be started easily, usually without any up-front cash, using what a teenager already owns. Micro businesses are usually home-based and very flexible so a busy student can keep up with homework, sports and a social life.
Teenagers can use their skills to develop businesses such as teaching guitar lessons, doing web design or caring for children. Other teenagers have started micro businesses by offering services such as house cleaning, pet care, and lawn mowing. One easy-to-start micro business is tutoring. Some students tutor math, Spanish or computer programs such as Photoshop.
After your teenager has an idea, he or she can launch a micro business in a short amount of time with very little start up money. Share these starting steps with your teen:
- Conduct a mini market survey. Start by asking a few potential customers if they need your service and what price they are willing to pay.
- Decide on a price. From the mini-market survey, you should be able to set a fair price. You may get your first customers by undercharging the competition. One teenager charged half what other piano teachers charged and quickly had eight students.
- Volunteer a few jobs to practice your business skills and build a reputation. Use recommendations from these jobs in your future advertising. Sarah took senior pictures as a favor for a friend and received three other jobs from referrals.
- Launch your first advertising campaign. Try to use free advertising such as emails, Facebook posts and handing out fliers to friends and neighbors.
- Work your plan on a small scale. Start with one customer at first. Learn a lot from that experience and grow slowly.
- Evaluate, adjust and change. As you grow in experience, you may be able to charge more. You will probably need to create a payment policy. Sarah discovered that she needed to be paid up front and have a cancellation policy when she scheduled photo shoots.
- Pick a name and register it. Usually, you can use your own name, such as Cathy Smith's Babysitting Service, without needing a name registration. If you do want a business name, learn what your state or local government requires. This website is a good place to start: http://www.business.gov/register/business-name/dba.html
- Open a checking account. Accountants usually recommend a separate business checking account to keep from mixing personal and business expenses. A teenager can usually get by with one checking account, if you keep good records. Usually a parent must agree to be a co-signer on a checking account for minors.
- Read up on taxes. You’ll need to file your own tax return, may owe federal or state income tax, and may be subject to self-employment tax also. Self-employment tax is Social Security and Medicare taxes for self-employed people.
- Learn about customer service, marketing and record keeping. Become a student of business and seek to be continually learning more. Read books, take a business class, find a mentor and ask a lot of questions.
Carol Topp, CPA advises teenage business owners through her Micro Business for Teens book series. Carol’s day job is accountant to business owners, and she enjoys teaching teenagers to succeed beyond their dreams. Students appreciate how she shares what they need to know in clear and helpful lessons. Her website is MicroBusinessForTeens.com