Taking Care Of Business - Brief Article

Black Enterprise, April, 2001 by Carolyn M. Brown

Here are some tips to help your children create wealth by building enterprises

Owen Tonkins is cashing in on the seven vending machines he owns.

"THE JOY OF LIVING ... THE JOY OF FUN ... THE JOY OF Pepsi ... the joy of cola" is music to Owen Tonkins' ears. It's not simply because he is a Pepsi-Cola drinker, but because he is a Pepsi-Cola vendor. Tonkins owns six soft drink vending machines and one snack machine placed in businesses and factories throughout his hometown of Paterson, New Jersey. It was a family friend, an employee with a local Pepsi-Cola distributor, who helped Tonkins gain entry six years ago into the lucrative vending machine business, which grosses more than $35 billion annually, according to the U.S. Small Business Administration.

"He gave me a soda machine as a birthday gift, thinking that [getting money from the machine] would be better than getting an allowance," says Tonkins, who was 13 at the time, and was featured in Black Enterprise For Teens[TM] in the March/April 2000 issue. Within a four-year span, he was able to secure five more vending machines at no cost because they were older units that the [Pepsi-Cola] distributor planned to discard. Once a week, Tonkins collected coins from the machines and reloaded them--ordering 30 to 40 cases of soda a month. According to earlier published reports, one machine could net a refreshing $200 a month in revenues.

Instead of spending his profits, he began investing the money--at his father's urging. He currently owns shares in three mutual funds and 100 to 1,000 shares of seven stocks including Pepsi-GEMEX (NYSE: GM, a Pepsi distributor in Mexico), Wal-Mart (NYSE: WMT), Eisai Ltd. (OTC: ESSALY, a pharmaceutical firm), Lucent Technologies (NYSE: LU) and Sprint (NYSE: PCS). He invests $200 to $500 a month, using such resources as Quicken.com to decide which stocks to buy, hold, or sell.

Tonkins' start-up costs have been minimal: The businesses where his machines are installed don't charge rental fees. His only real expense is the money to buy snacks and beverages.

The 18-year-old Morgan State University freshman is currently studying electrical engineering. "Even though I see myself going to work for a major corporation, I still want to run my own business," says Tonkins, a distance track runner who is attending school on a partial athletic scholarship.

His father, Owen Tonkins Jr., director of human resources for the city of Paterson, is keeping a close eye on the machines while Tonkins is more than 100 miles away.

The Tonkinses are a prime example of what can happen when you employ DOFE principle No. 6: To teach business and financial principles to your children. There are advantages to starting and running a business as a child. Besides the prospect of making extra pocket money, running a business teaches young people sound money management skills.

You'll have to do more than encourage your children to explore entrepreneurship; you'll need to expose them to the right resources. Start here:

* Programs

BLACK ENTERPRISE (877-KID-PREN, www.blackenterprise.com) has two children's publications: For $10, readers receive KidpreneursNews[TM] for ages 8 to 12. For $12, readers receive B.E. For Teens for ages 13 to 18. Each edition features youth entrepreneurs and money management tips. BE also hosts the Kidpreneurs Conference every May for ages 4 to 18 (800-543-6786).

Junior Achievement (719-540-8000; www.ja.org): hosts educational workshops, and leadership training classes.

National Foundation for Teaching Entrepreneur ship (212-232-3333; www.nfte.com): A nonprofit organization that teaches the basics of starting a business.

* Funding

Youth Venture (703-527-4126; www.youthventure.org): Supports teams with local and national partners to invest in community-service organizations and businesses started by young people, ages 12 to 20.

Do Something (212-523-1175; www.dosomething.com): A national organization that provides grants and awards to teens that have community-building initiatives at their schools.

* Books/Magazines

Youth Investing for Life (NAIC, $19) edited by Jeffrey Fox, a self-study course for teens that covers saving, investing, consumer spending, and other issues on money management.

Young Money Matters (877-275-6242), a NAIC newsletter featuring real-life stories of young investors, education exercises, and money concept games. Five issues, $10.

Dollar Digest magazine, published by Stein Roe Young Investors Fund (www.steinroe.com; 800-403-kids), features interviews with corporate CEOs, financial performance of companies held in the fund, and historical facts. Custodial accounts can be started for as little as $100 with $50 monthly contributions.

The Lemonade Stand: How to Encourage the Entrepreneur in Your Child by Emmanuel Modu (Gateway Publishers, $19.95).

DECLARATION OF FINANCIAL EMPOWERMENT

From this day forward, I declare my vigilant and lifelong commitment to financial empowerment. I pledge the following:

1 To save and invest 10% to 15% of my after-tax income