More and more young adults’ career passions today are dying right in the middle of university classes. Where have the days gone where student inspiration grew radically while listening to professors? Why is it that decades ago, students were seeking intellect and wisdom more than a so-called powerful degree on a piece of paper? Regrettably, it’s because to both students and professors, college has become more about changing your status than changing your world. Peter Thiel, the initiator of paypal has caught on to these truths and come up with his own solutions. He is offering twenty-four scholarships each totaling $100,000 to college students who agree to drop out of college. What’s required of them? They must be younger than twenty and have a clever start-up company proposal in hand. Peter Thiel’s logic says that people like Bill Gates have proven that university is not the key to success but rather original ideas and business ambition. Thiel feel that as young people follow their dreams by starting companies that they’re passionate about, unemployment will plummet as a massive amount of new jobs are formed.
For those young business radicals who do not win one of Peter Thiel’s bursaries, they may have no other place to turn to for start-up finances other than their parents. If parents are able and eager to significantly contribute to their child’s start-up business, why shouldn’t they? They’ve given massive amounts of money for education over the years and practically dedicated their entire lives to raising their children, so it’s only natural they would want their child’s career to be worth every penny they’ve already invested. A desire to witness children succeeding and flourishing is innate in the heart of parents, and this is a healthy desire. However, parents would be wise to reflect on a few things before entering a business partnership with their child.
Sadly, the majority of new businesses have to shut their doors after a few short years of investing everything they have. If mothers and fathers do contribute financially to their children’s business endeavors, they are taking huge risks and would do best to not expect the money back. It’s not that parents shouldn’t have faith in their children but rather that statistics say they shouldn’t count on the business becoming successful. When a large sum of money is wasted on a business enterprise in this manner, it can ruin a parent-child relationship unless important things are agreed on by both parties.
A helpful way to begin a business partnership between you and your children is to be completely open and honest about your expectations. If the business venture costs him nothing, he’s not likely to persevere when challenges come his way. Secondly, as an investor, you have every right to see and understand completely your child’s business plan. It will be most helpful for you to each have a copy of the business blueprint for accountability’s sake. The more you understand the way the company is to be built, the more you can offer your expertise and encouragement as the business plan unfolds. Ask your child about any part of the plan which you are unsure about, so there is no confusion to complicate your relationship in the future.
Even though you may be investing money to your own flesh and blood, it’s vital for the partnership to look and feel like an authentic business relationship. The contract needs to specifically spell out exactly how much you’re investing and what type of investment it is. It needs to say when the money must be paid back and the interest rate if there is interest involved. The more specific you can make the contract, the less room there will be for misunderstandings and broken relationships if the business plan fails. Choose to assume nothing. If you as the investor will receive some of the revenue if and when the company reaches a certain level, this needs to be clearly stated in the agreement.
Last but not least, take a good look at the maturity of your child before you invest the big bucks into his professional vision. He may have an intelligent idea, skill of hand and a brilliant business blueprint, but if he’s lacking in character, your investment is not likely to be fruitful. As the parent and investor, you need to honestly see discipline, perseverance, humility and hard work present in his life for a few years before you risk with your children in this manner. It’s not only for your best interest but for theirs as well.
Author: Carl DrotskyThis author has published 3 articles so far. More info about the author is coming soon.