Raising Entrepreneurs

Stephen DeAngelis

July 7, 2011

A generation ago, parents used to discuss openly their ambitions for their children. Many wanted their children to grow up to be doctors or lawyers (because that was where the money was). Some parents still harbor hopes that their children will follow in their footsteps (e.g., take over the family business or carry on a tradition of medicine or military service). Some pushy parents deliberately try to steer their children in a particular direction (e.g., into sports, music, or acting). But how many parents have you ever heard express the hope that their child grows up to be an entrepreneur? Not many I suspect.

 

At a time when job offers for graduates are increasingly difficult to find, more parents may wish their children were more entrepreneurial (especially if they’re still living at home). British entrepreneur Luke Johnson believes we need many more entrepreneurs. [“To escape the broken system, go it alone,” Financial Times, 5 July 2011] He writes:

“Technology and globalization are eroding traditional middle class living standards. Earnings have stagnated, inflation is taking its toll, and the traditional relationship between employee and employer is gone. The burden of high debts, high taxes, high welfare spending and demographic shifts means diminished expectations for future generations. Most of the jobs that were blown away by the recession are not coming back. So what is to be done to cope with this disruption? Entrepreneurship in all its forms is one of the possible answers. More of us must learn to rely less on others – the state, employers and so forth – and more on our own wits. Working for yourself, whether within a business, or simply as a freelancer, tends to make you more resilient and flexible about your livelihood. At least entrepreneurs have a degree of control over their destiny.”

If you are a young parent raising children and you feel the job situation isn’t going to improve, you may want help your children develop the skills needed to succeed as an entrepreneur. Helping develop your child’s skills is very different than pushing them in a particular direction. If you agree and want to equip your child with valuable life-skills, Barbara Haislip offers some “tips on putting your kids on the path to running their own businesses.” [“How to Raise an Entrepreneur,” The Wall Street Journal, 13 June 2011] She offers a list of attributes that she believes are required by all successful entrepreneurs. She believes an entrepreneur needs to be: adventurous; dependable and stable, observant; a team player; and a leader by example. Whether you agree or disagree with her list of attributes, at least she has provided us with some grist for discussion. Haislip writes:

“How do you get kids ready to become entrepreneurs? The classic answer, of course, is the lemonade stand: Encourage your kids to start a homespun business instead of just bugging you for money. But entrepreneurs and educators say the real solution goes much deeper than that. There are crucial psychological traits an entrepreneur needs to succeed, they say, and parents should help kids develop them at every opportunity.”

Before continuing with Haislip’s discussion of attributes that entrepreneurs need to develop, I’d like to take a little side-trip. I was surprised by how exercised some people became after watching a Verizon commercial about a little girl and a lemonade stand. They weren’t able to suspend their rationality long enough to enjoy the commercial as a bit of hype and entertainment. Instead, they were angered by how completely the commercial glossed over the governmental red tape that prevents people like little Susie from operating a lemonade stand in the first place. Dr. Byron Schlomach, director of the Goldwater Institute’s Center for Economic Prosperity, used the commercial to make a point. He wrote:

“A new Verizon commercial shows little Susie working her lemonade stand when her father hands her a smart phone with a calculator in it. Susie’s eyes light up. She immediately uses the technology to network friends into a lemonade empire, complete with an office building behind her house. That is American exceptionalism. With little burden from government, anyone with a good idea, a strong work ethic, and a willingness to serve others in a competitive environment has a chance to succeed. But not so much in Phoenix or Mesa. … In Phoenix, you can’t do business without some sort of permit, and since there is no permit befitting a kid’s lemonade stand, it’s technically illegal to operate one. In Mesa, zoning prevents doing business in a residential area, so lemonade stands are also illegal there. In both cities, kids run stands occasionally, but if a neighbor or street vendor complains, the cities will shut them down. Scottsdale allows some liberty, treating lemonade stands like garage sales. Phoenix is streamlining its construction permitting, an excellent move in the right direction, but Susie’s empire would nevertheless be still-born here. Permitting is not just a paperwork efficiency issue. Permitting itself can limit opportunity. While the economy recovers and permitting offices are slow, cities should scour their codes and ordinances for regulations and eliminate those that stop entrepreneurs before they can even get started.” [“Susie’s lemonade not welcome in Valley cities?East Valley Tribune, 20 May 2011]

Perhaps Haislip needs to add “dealing with government bureaucracy” to the list of attributes she believes a successful entrepreneur requires. Let’s look at her first attribute — Being Adventurous. She writes:

“Parents should urge kids to explore their environment—and don’t let them get too comfortable, advises Arthur Blank, co-founder of Home Depot Inc. and owner of the National Football League’s Atlanta Falcons. That means urging them to ask questions constantly and develop an inquiring mind. For instance, ‘get them the right kind of toys—in which kids must figure out for themselves what to do,’ he says. And ‘on vacation, try different restaurants outside their comfort level.’ Pierre Omidyar, founder of eBay Inc., agrees that exploration and inquiry are crucial lessons. ‘Our kids seem to thrive in situations that engage their curiosity and allow them to explore and discover the world around them on their own terms,’ Mr. Omidyar says.”

I’m in full agreement with Haislip on this first characteristic. Read any of the literature on creativity and you’ll find that asking questions is critical to being creative. The more questions you ask the better. Simply answering questions for your children, however, won’t foster their inquisitive nature. Help guide them to the answers they seek. When they discover the answers for themselves, their inquisitive nature is reinforced and their confidence in their own abilities is strengthened. Haislip’s next attribute is being dependable and stable. She writes:

“Pramodita Sharma, a visiting professor at Babson College and director of the school’s STEP Global Project for Family Enterprising, also advises parents to help their kids develop an inquiring mind. But she says a couple of other traits are just as important: conscientiousness and emotional stability. Parents should insist that kids deliver high-quality work at the promised time, whether it’s chores, homework or extracurricular activities. And parents should model good behavior, demonstrating control when emotions run high. They should also urge their children to take steps such as waiting to respond when they lose their temper.”

Haislip assumes that the reasons these attributes are important are so self-evident that she doesn’t discuss them. Let me give you one reason. Few entrepreneurs have sufficient resources to start a business on their own. That means they are going to require capital from others. No one is going to lend money to or invest in a company run by someone who is undependable and unstable. The next attribute discussed by Haislip is a complementary attribute to having an inquisitive mind. That attribute is being observant. Haislip writes:

“Parents should help kids recognize that their world is full of business opportunities, and finding them just takes some careful observation and creativity. Christine Poorman, executive director of the Chicago office of the Network for Teaching Entrepreneurship, which provides an entrepreneurship course for at-risk youths, says students are encouraged to walk around their communities and evaluate business needs. One student found her neighborhood’s bodegas and hardware stores didn’t have an online presence, so she created logos and websites for them. Real-estate magnate Sam Zell also puts a high value on teaching curiosity and observation. An entrepreneur, he says, is always ‘seeing problems and then seeing solutions.'”

Creative people, like comedians, artists, and successful entrepreneurs, see things in ways that others don’t. I think that it is a great idea to teach your children how to be more observant and to couple that with questions about how they would change things. Haislip’s next attribute involves being a team player. She writes:

“Sports can be a great classroom for entrepreneurial values. Mr. Blank says his six children, who have all played a variety of sports, have had to learn how to deal with setbacks and how to move past losses. ‘Sports teach how important teamwork is. The germ of the idea for Home Depot was with Bernie [Marcus] and me, but we also needed the ability to get other people excited about the idea—to get in the game, so to speak,’ he says. … Solitary pursuits can instill good values, too. Jim Koch, founder of Boston Beer Co., found climbing mountains a good building block in becoming an entrepreneur. ‘Climbers are a lot like entrepreneurs. They are willing to put themselves in a risky situation and then once there they become careful and cautious and try to reduce and eliminate the risk,’ says Mr. Koch, who taught mountaineering for Outward Bound in British Columbia in the 1970s.”

I confess to being a bit ambivalent about whether being a team player is a critical skill for an entrepreneur. Entrepreneurs need to be able to lead teams, but I’ve always felt that many so-called “team players” lacked the motivation to strike out on their own. Frankly, people often take sports metaphors too far. I’m much more attracted to Haislip’s next attribute — leading by example. She writes:

“In the end, many entrepreneurs say the most valuable thing you can do to teach your kids about entrepreneurship is to practice it yourself. For Mr. Blank, his parents were his biggest influence on his becoming an entrepreneur. ‘I saw living examples of entrepreneurs,’ he says. “‘ at 44 when I was 15. My mother, who was 37 at the time, had no business experience but was a risk taker in her own way. She grew the business and later sold it to a larger pharmaceutical firm.’ For Scottrade founder and chief executive Rodger Riney, the entrepreneurial model was his grandfather, who owned several small businesses in Hannibal, Mo., including a fertilizer plant, cemetery, grain elevator, insurance firm, alfalfa plant and trailer-rental business. His mother’s lessons in the Golden Rule were another big inspiration. ‘I paid attention to that and tried to treat people the way I wanted to be treated, and that later translated into how I wanted to treat my customers,’ Mr. Riney says.”

Although Haislip did talk about being adventurous, she didn’t specifically talk about being tolerant to risk. It seems to me that being risk tolerant is the most important attribute an entrepreneur needs to have. I’m sure there are other traits that can be developed that would also be good for budding entrepreneurs to learn. If you are raising children, you might want to give that topic a bit of thought.