How to Raise a Young Mogul

The secrets -- and perils -- to nurturing a future Master of the Universe.

Michelle Bennett knew her daughter Olivia was a gifted artist when she was just in preschool. "Her coloring books were fancier than the other kids," says Bennett. "By kindergarten she stood out significantly."

Olivia Bennett, now 20 years old, grew up to be more than just the best finger painter in her South Lake, Texas, grammar school. Doubling as artist and entrepreneur, she now sells her paintings for as much as $30,000 apiece at the Olivia Bennett Gallery, which she opened at age 13.

"When we first started going to art fairs, people didn't believe I made the paintings," says Olivia, who sold her first water color painting for $50 when she was eight. "They thought my mom was the artist."

Every parent wants to believe her child is gifted. For sprouts with truly serious potential, the pangs to blaze a trail (and maybe make a few bucks) can come on early and strong. That can be both a blessing and a curse for the prodigy's parents: Push too hard, and the entrepreneurial flame might burn out; patronize or ignore, and it might engulf her.

"You can help with the books, and you can drive them to meet with clients," says Donna Fenn, author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success. "But the minute it stops being fun [for them], forget it."

Whatever you do, don't pull your budding mogul out of school. Interacting with peers in classrooms still goes a long way toward ensuring a child's healthy social and emotional development, according to Ann Helmus, a Newton, Mass.-based clinical neuropsychologist who works with children and adolescents. Olivia was home-schooled throughout much of high school so she could run the gallery and paint full time -- even though decent math and science curricula were hard to find. Olivia got her GED, but never went back to school save for one semester of community college. Admits Michelle Bennett: "If I could do it over, or advise other parents, I would suggest staying in school."

Here are some other tips for rearing a budding a tycoon:

Remind Them That Nothing Is Free

Say your daughter wants to start a candy bar retailer out of her school locker, and she needs the down stroke of a few hundred dollars to buy inventory. Make sure she understands that capital comes at a cost, and that she has to pay back the benefactor who put her in business. "You're doing your child entrepreneur a disservice if you don't teach them the difference between revenue and profit," says Fenn. The same goes for any labor you contribute. In Olivia Bennett's case, her grandmother worked in her gallery as a sales associate and was on the company's payroll.

Let Them Make Mistakes

Entrepreneurship is all about failing and getting back up. The best way to teach tenacity is to let your child make mistakes -- even if you saw them coming. "Parents have to remember it's their child's dream, not their own," says Fenn. One caveat: Don't let the money burn a hole in their pockets. Stress the importance of saving. "Olivia bought a lot of clothes when she first started making money, and I should have put a stop to it," says Michelle Bennett. "But she has since become much more conscientious of her spending."

Shake Hands With the Tax Man

Uncle Sam doesn't card at the door. If your munchkin generates enough income, she'll have to pay taxes on it. "There are no rules that exempt kids from tax laws," says Steven Gargiulo, a Nesconset, N.Y.-based accountant. "The law states that if you make more than $400 in a sole proprietorship, you have to file income taxes." Specifically: a long-form 1040 (not the short form 1040A), a Schedule C for self-employment income and a Schedule SE to account for self-employment tax.

Never Push Too Hard

Not all children are cut out for superstardom. "Olivia is very driven as an artist and entrepreneur and always has been, but her brother hasn't found his passion yet," says Michelle Bennett. "But we never pushed either one of them to be in business." The same approach applies when that passion ebbs. "Kids change so fast," says Fenn. "One week they're entrepreneurs, the next week they want to do the school play. You have to let them do that." In short: If their passion dies, so should the business.

Tips on Raising a Young Mogul

© Ernest Prim/iStockphoto.com

1. Look for Signs

So your kid's only 3 years old -- that doesn't mean it's too soon to spot talent, says Ann Helmus, a Newton, Mass.-based clinical neuropsychologist who works with children and adolescents. According to Dr. Helmus, "Kids who are particularly independent, creative and show a knack for problem-solving are the best candidates for young entrepreneurship." Bill Johnson, father of young mogul Cameron Johnson, who bagged his first million in high school, says he knew his son was business-minded at age 9, the year he opened a lemonade stand on the front lawn. "The following day, the girl next door opened one too," Johnson Sr. recalls. "The day after that, Cameron had cookies and lemonade at his stand. From then on, he was always one step ahead of the competition."

© Tomaz Levstek/iStockphoto.com

2. Stay in School

While the sense of responsibility and ownership children derive from working is very real, interacting in classrooms with their peers still goes a long way toward ensuring healthy social and emotional development, says Dr. Helmus. Michelle Bennett, mother of Olivia Bennett, a 20-year-old artist and gallery owner in South Lake, Texas, would agree. "I recognized her talent when she was in preschool," says Michelle. "Her coloring books were fancier than the other kids. By kindergarten, she stood out significantly." Olivia opened her first gallery while still in eighth grade. As for high school, she enrolled in a home-schooling program so she could run the gallery and paint full time -- even though decent math and science curricula were hard to find. Olivia got her GED, but never went back to school, save for one semester of community college. Says Michelle: "If I could do it over, or advise other parents, I would suggest staying in school."

© Comstock

3. Understand the Law

Legal agreements involving minors come with extra complications. Sometimes clients may be wary to trust a young person to follow through on an agreement, or may refuse to work with them at all. "When a minor turns the age of majority [18 in most states] and becomes a legal adult, he has the option to void any contracts he entered as a child," explains Neal Keesee, a Roanoke, Va.-based attorney who has represent minors, including Cameron Johnson. Often that loophole will lead clients to request that a parent co-sign contracts to ensure that both parent and child are committed to the agreement.

© Lisa F. Young/iStock.com

4. Identify a Mentor

Hockey prodigies have Sidney Crosby; budding vocalists have Beyonce. Young moguls need mentors too. There are numerous mentoring and networking groups to choose from including Junior Achievement, Future Business Leaders Of America and the National Mentoring Partnership. For more resources, check out the U.S. Small Business Administration's teen business site. With a little luck, you might even be able to get some help from a guy like Donald Trump. At age 9, Cameron Johnson wrote a letter to the real estate tycoon (his hero at the time) saying that he had seen Trump's cameo in the Home Alone 2 movie and would love to visit the suite in the New York Palace Hotel where it was filmed. Touched, Trump arranged for Johnson and his family to stay in the suite and even called to thank Johnson for his letter. Three years later, while Trump was flipping billion-dollar properties, Johnson paid his sister $100 for her collection of 30 Ty Beanie Babies and quickly flipped them on E-Bay for $1,000.

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