My 15 year old child wants 50k to start a business. Should I support him? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Let's ignore the potential loan for a moment.
I am approached all the time from people with an idea who are struggling to raise funds to finance having their product built. Maybe 90% of the people that approach me are in this situation.
They are all making the same fundamental mistakes:
- They all over-value their own idea. This is natural for all of us.
- They believe the only thing holding them back from having a successful business is a working product
- They believe they are unable to do anything to develop their business until the product is built
- They assume that they are 'right first time' and what they propose is actually what people want
- They believe the product will 'sell itself'
- They have little or no experience in the industry they plan to enter
- They have little or no evidence to show that they have the skills or experience to run a successful business
- They see 'success stories' and grossly over-estimate the likelihood of similar events happening for them
Unless your child has a natural flair for business, wheeler-dealing and hustling then he/she almost certainly has fallen into the trap of 'if you build it they will come'.
Your $50k will be misspent on a software development agency, maybe some facebook or PPC marketing, along with a branding agency. All the cash will get burned and you'll be left with a product that no-one wants, nothing remotely resembling a business, and a child who has learned little and paid no price for their bad decisions and poor judgement. They will be destined to make the same mistake again.
Your child should read 'The Lean Startup' and also understand. They should then do what they can to drum up interest in what they are trying to do and demonstrate a business case before even considering blowing a tonne of money on having a product built (I'm making some assumptions here, but I'd bet money on it being an idea for a mobile app).
To summarise, if you take this proposed route, the probable outcome will be:
- You lose your $50k
- In throwing good money after bad, you'll lose another $50k because your child will swear he/she knows where they went wrong, and with a further spend, that original $50k will not have been wasted
- You suffer the pain of your child's bad decisions
- Your child learns nothing from the experiment other than "money is cheap"
- Your child wrongly believes that they can gamble with other peoples' money, offloading any downside but keeping any upside (in the unlikely event there was an upside)
Sorry to be brutal, but I hope this information helps and can be used to put your child on the right course.
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