The Best Bad Investment I'll Ever Make?
/Let me tell you about the worst (and best) investment I’ve made…so far (and why I might do it again).
Like many teenagers, my son mowed lawns in the summer as a way to make money. Towards the end of last summer (after a brief and disappointing career as a Jersey Mike's sandwich technician), he and 2 of his buddies decided to start an actual lawncare business. I received this news with a large amount of skepticism, but they sat down and developed an identity (which led to an LLC), a marketing strategy (which led to branding and a website), and a rough operating structure (including decision rights, comp/commission structures, etc.).
I love the entrepreneurial spirit and have launched/participated in a few startup companies, so I offered guidance when they asked for it (which was not nearly often enough), but otherwise stayed at arms' length. I also let them use my equipment (up to and including a tractor, which is a story for another post). I’ve only gotten involved when they ran into trouble (literally, figuratively, or sometimes both). Essentially, I'm an angel investor who negotiated the worst deal ever (no board seat, no advisor fee, and no equity participation but I provided most of the equipment rent-free).
If you've ever had partners in a business (or teenagers) you can probably imagine many of the partnership-related issues they've faced (just think more "Dazed and Confused" than "Suits").
The boys now have more than a year under their belts as entrepreneurs, and the company is still going strong. My son and I were driving to a college visit a few weeks ago and the conversation turned to "the business", as he and his buddies refer to it. As we talked through an issue he was dealing with, I realized just how valuable this experience has been for him.
If you have a teenager and the opportunity arises for her/him to start a business, encourage it! If she/he wants to go in business with like-minded friends, I encourage it even more strongly (which ironically is the opposite advice I would give to an adult: going into business with friends/family increases the risk - and consequences - of failure).
Here's my rationale - a business owner/partner faces new situations and challenges every day (especially in the early years). Sometimes those situations turn out well, but sometimes they don't. Now just imagine if you'd had the chance to "practice" real-world problem solving in a low-risk environment? These boys have already learned valuable lessons about:
Sales and marketing (including negotiating and how to ask for referrals)
Balancing business development vs. execution capacity
Customer service (including unhappy customers and deadbeat customers)
Pros/cons of fixed fee vs. T&M projects
Pros/cons of payment in advance vs. arrears
Cash management
Partnership dynamics (this really belongs higher on the list)
Importance of proper equipment maintenance (!!!)
Plus, they've learned firsthand the emotional (and financial) difference between employment vs. self-employment.
Most importantly for me, this experience provides occasional opportunities (however fleeting) for me to observe my son’s evolution and development as he becomes an adult - for which I will forever be thankful.
Truthfully, I will be shocked if this company survives as a partnership past their freshman year of college. But regardless of the financial outcome, this venture will be one of the best investments I ever make (equaled only if my daughter takes a similar path).