Not to let my 11 yo DS to open his own 'business'?

[oreoxoreo]

My 11yo DS (soon to be 12) has been interested in dropshipping business for a while and he just asked me to open him a Shopify account so he can start trading. Without me knowing he created his very basic website to sell an item, and he wants to sign up for Shopify trial and start buying Facebook ads (for which he would pay) and is very keen for his 'business' kick off.

He did a lot of reading and a bit of effort and he things all will go smoothly and 'knows' all the risks and because I said no, you are too young, and I don't want to him to waste for nothing, he's now devastated that I won't let him and says I have ruined his life

What do I do? Should I give in? I congratulate him for his effort but do think he will not sell (is a very generic item) and too young too understand. Also afraid if I put in my card details somehow somewhere I will end up with a loss.

A very bad idea.

I am an online retailer- it is possible to lose money.

Firstly you have to be 18 to open a Shopify or Paypal account.
Theses accounts have to be backed up with a credit card.

So your credit card is on he line here, and if he opens accounts with these organisations he is acting fraudulently if he lies about his age ( he may be banned from openeing future accounts too).

Dropshipping is not so easy as it seems.
If someone in the UK orders an item from a UK site they want their goods fairly quickly- in days usually.
I order a lot of stock from SE Asia, but it can take 6-8 weeks to arrive.
So you have to be organised have good supply chains in place and be prepared fpr worst case scenario.
Someone may place an order that he is unablle to fulfull, yet has spent money from his supplier- meaning a refund while having spent money on stock.

Of course such businesses can work, and while I admire your son's enthusiams I dounbt he has the maturity to make this work.

You are very likely to be out of pocket OP.

How does an 11-year-old hear about the concept of drop-shipping in the first place?

I would help him.

I would loan him the money with interest since it's a business loan. I wouldnt give him your card details though, can you set up an account for him that has a debit card and no overdraft for him to use?

OoohTheStatsDontLie

He needs credit card details- for both shopify and paypal.

He did a lot of reading and a bit of effort and he things all will go smoothly and 'knows' all the risks and because I said no, you are too young, and I don't want to him to waste for nothing, he's now devastated that I won't let him and says I have ruined his life

This is why he can't do it. He acting like the child he is.

He thinks its something he can just do and does not have the maturity or capacity to understand the risks involved. And having a tantrum when it doesn't go to his plan and he doesn't get his own way.

He just dismissing the risk and that is enough of a reason for you to say no. Successful businesses are about acknowledging risk and managing risk not ignoring risk. In addition to that its not HIM taking the risk it will be YOU and whilst you might believe in him, you understand the legal issues and potential for fraud at his (your) expense.

If he's serious about doing this in future, he'd be better starting a venture where he learns about the practicalities of running a busines - best option is working towards some sort of work experience - possibly at a company which is involved in what he is interested in. As well as getting him to knuckle down on the basics of school (maths!)

Successful businesses are not set up overnight. Even if someone has an amazing idea, they usually have spent some considerable time getting experience (even if its merely life experience) and working out their dream for a plan of what they want to do. Aka as developing a proper business plan in order to get someone to invest in them (usually to get someone to lend them start up costs).

Ultimately he's 11. He's not 14 or 15. He should be a kid whilst he can be.

He can't enter into a contract. He's a child. I would be livid if I found out I was dealing with a child on the other side of a transaction. Don't let him do this, you would/should bear all responsibility if it goes wrong.

I would help him find some other way of using what are clearly good entrepreneurial skills. Not every person can recognize alternative money making propositions. My dd did babysitting and tutoring at that age. My ds wanted to "video himself playing computer games and monetize it on YouTube." This was 10 years ago, so he was at the very forefront of this field. I thought it was a ridiculous idea, but allowed him to explore putting the cheaper pieces in place. Signing up for a server, filming himself (which involved getting enough light in his bedroom to do so), etc. He soon lost interest, and went on to other things.

When my ds got sick, I had to find alternative ways to make a living that included staying at home caring for a sick child. I ended up making money on the stock market and doing bookkeeping and annoying on the phone tasks for family members. It's always good to have creative back up plans.

You only have to read the 'entrepreneur' or shopify boards on reddit to see this is a daft idea. There are ads everywhere these days about how easy it is to make $30,000 in just one month with dropshipping blah blah but it really isn't that easy. There are people losing 100s on facebook ads because no one is actually buying the stuff they are spending a fortune promoting.
I run an online store(not dropshipping) and have people complaining when they don't get their orders in a few days even when it is going across Europe. I can't imagine how cross people would get when they have to wait weeks and then discover it is tat from aliexpress.

He can't do this legally as he is under 18. He doesn't have his own credit card so he can't set up an account.
He is also too young to have a facebook account legally.

If you set up the accounts and end up with the debts or if there are any other legal issues you will be responsible. It could go pear-shaped quickly.

Just say no, you're legally too young.
And then discuss some other possible ideas for him.

Couldn’t he do a smaller scale business with your help? Maybe reselling on eBay (although you’d have to open the account) he could source items online or in charity shops that fit into a niche he is knowledgable about.

You are absolutely right to stop him from doing this and "ruin his life". Even an adult would very quickly run out of money and steam doing what he is doing. He hasn't got the maturity to deal with an online retail business, and he's not old enough to sign up to Shopify, Facebook or any payment processor either. Not to mention a bank account where the money can go.
By all means encourage him to earn money, maybe he can just buy sweets at Costco and sell to his mates. This would be a very good starting point to learn the basics of money in/money out.

OP I was quite an entrepreneurial child too ( now run my own small business).
As a parent you may be better directing his enthusiam towards raising money for charity, helping in the local community etc.
He could get involved in school projects, helping PTA, or in the wider community, church, animal shelters, Scouts, helping at jumble sales, guerrilla gardening or litter picks, raising awareness for local concerns or issues.
Ther may be a local volunteer office in your town, contact them to find out what opportunities there are for children.

Being involved in projects to raise money for charity will give him experience in dealing with others, teach him organisational skills etc.

Steer him in these directions for a few years- if he has the determination to succeed it won't disappear.

Please explain to him that all those you tube videos he has watched saying he can "earn" $30,000 a month are talking about TAKINGS not PROFIT. And they only take that much in revenue because they spend $15,000 on advertising (facebook ads and google adwords). Add that to the cost of the product, the cost of shipping, paypal fees and other business expenses and guess what, many of them are barely breaking even, let alone making any profit. It is all vanity.

But yes anyway he needs to be 18.

Praise him and enrol him in a business course where he learns basic accounting skills and business plan skills. Either on a proper site like Udemy, or pay for one of the more decent You Tube / facebook business gurus toting their knowledge.

He sounds bloody awesome

I’m very impressed he built a website, even a basic one.

Explain that unfortunately it is not legal for a 11 year old to have a shop off account or to enter into contracts.

Find another way for him to make a bit of money / learn about business. You want to encourage the principle just not the specific plan.

Whicjh platform did he use to build the website? Many providers have a minimum age of 16 or 18. You need to be 18 to own a domain.

One thing that anyone starting up in business must do is make sure their activities are not fraudulant.

Something a previous poster touched on, unless you are selling in huge quantities you are going to get undercut on prices by other dropshippers.

Could a hugely effective FB marketing ads campaign make the difference on that - I don't know.

OP is it possible to do a paper exercise or a token gesture exercise?

Maybe reselling on eBay (although you’d have to open the account)

Do not do this. Selling on eBay is not for the unwary and it's also a pretty crowded marketplace.

This is my friend's son's website -
www.youngmighty.com/
Maybe your son will find some ideas here which will help him. Encourage him without handing over your credit card!

Wouldn't it be against the law for a 12 year old to run this business anyway?

Even when he's older, I wouldn't recommend it. Dropshippers offer stuff for sale which they don't have. When an order comes in, the dropshipper asks their supplier (manufacturer/distributor/wholesaler) to dispatch the product to the customer.

So far, so good, but here's the catch. If someone else (another dropshipper, or a shop) has already ordered the last one, the supplier is out of stock and cannot send the product to your DS' customer. Cue one angry customer who won't receive their order (for something your DS didn't have in the first place...)

This is a recipe for frequent complaints, disputes, bad feedback etc. You also have to deal with things like start-up costs, registering the business with HMRC, accounting, customer service, product descriptions and pictures, returns and exchanges, legal disputes, emails and phone calls, designing a website, tax returns, seasonal variations in customer demand.

All credit to your DS for his entrepeneurial spirit, but IMO this isn't the best route to take, at all.

How does an 11-year-old hear about the concept of drop-shipping in the first place

It must be YouTube. It’s littered with videos of young(ish) looking, very slick, persuasive men driving fast cars telling (shouting at) everyone how they made a shit-ton of money drop shipping shite from China. Most people lose money drop shipping.

I admire his attitude though!

I would help him but give him a spending limit, things like this have happened before and sometimes the child ends up really wealthy.

My 12 year old son has been selling his own stuff through redbubble, and coding scripts freelance. He started two years ago, and I manage the paypal side for him. Drop shipping is probably not for kids, but if he has creative talent then there is no harm in letting him commercially benefit from a hobby. It is a learning experience which is an important foundation for later life, and confidence building if handled right. Just make sure school work does not suffer due to big business ideas.

Has he got this idea from school? When do they start teaching business?

I'd be encouraging him but be setting a limit you can afford to lose. Put it down to experience as it will be a good learning curve.

Supervise him. Well done him for thinking suggesting and wanting to give it a go.