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Fostering A Taste For Business

Rapper and entrepreneur William Leonard Roberts II, better known by his professional name Rick Ross, has long been vocal about entrepreneurship and the importance of generational wealth. He recently demonstrated that commitment with an unusual — and tasty — birthday gift.

In a September Instagram post, Ross announced that he was celebrating his older son’s 16th birthday by giving him his own Wingstop franchise. In the caption, Ross told his son he was “now officially a BOSS !!!” Ross’s son, William L. Roberts III, seems to be planning to try for a professional career in football, based on his public social media presence. The website 247Sports reported that the underclassman has already landed verbal scholarship offers from the University of Miami and Syracuse University.

If Ross is well-placed to teach his children anything, however, it’s the value of diversifying potential income streams.

According to Wingstop’s website, as reported in the Atlanta Black Star, Ross himself owns about 28 Wingstop franchises. Ross picked up his first location, near Memphis, Tennessee, back in 2011. By 2014, Forbes estimated his Wingstop profits alone had reached the low seven figures. Ross also owns a Checkers franchise in Miami Gardens, Florida. His restaurants supplement his income from his successful music career; he has released 11 studio albums since his 2006 breakout single, “Hustlin’,” with the newest dropping last week.

Ross didn’t stop with music and wings. He has also partnered with brands including Luc Belaire and Rap Snacks; invested in a Georgia property that he has rented out as a filming location for various projects, including “Coming 2 America”; started a hair care line; and written two best-selling books, “Hurricanes” and “The Perfect Day to Boss Up.”

This diversification helped Ross to weather a variety of setbacks. Like many musical artists, Ross earns the largest portion of his income from touring. The COVID-19 pandemic made that temporarily impossible. His restaurant businesses, endorsement deals and other professional interests meant that the loss of touring income was not an insurmountable financial blow.

Ross has four children, and it seems clear he wants to teach them how to be bosses. In a 2020 interview with Miami Living Magazine, Ross emphasized that he valued generational wealth over artistic legacy, “without a doubt.” In addition to giving his son a Wingstop franchise, Ross has said he allows his daughter to sit in on meetings and conference calls for his RICH by Rick Ross hair care line. While recognizing that his children have had very different experiences than his own, Ross still seems committed to teaching them how to build on the financial security he’s provided.

Lessons For Parents

Not every parent is Rick Ross, but the rapper’s approach can still serve as a template for those who value encouraging entrepreneurship and hard work.

Lesson #1: Involve Your Kids Early

A Wingstop franchise is an unconventional birthday gift, but it is a savvy one for a parent who hopes to teach his child to be a boss. Giving his son the reins will allow Ross to teach entrepreneurship, from marketing to human resources to customer service. Ross is evidently invested in ensuring that his children will be well-equipped to run the various businesses they could inherit one day. Responsibility is one of the best ways to help a young person to develop an entrepreneurial or managerial mindset.

While the right age will vary between kids based on interest, ability and temperament, consider talking to your kids about business earlier than you think. If you are passionate about what you do, your children are likely to be curious about it. Especially if you own your own business, encourage any interest they show. Family businesses, private foundations and other enterprises can often be ways that parents hope to pass a legacy to future generations. Involving children when they’re still young makes it more likely that they will feel a personal stake in the organization. It can also help you, and them, to evaluate the extent to which they will want to take on larger roles in the future.

Even if you don’t own your own business, you can help your kids by encouraging any self-generated entrepreneurial sparks. Whether they discover a drive to sell Girl Scout cookies, show curiosity about what it would be like to market their art on Etsy, or display a knack for babysitting, your support can turn that urge into a learning experience. You can also help to set age-appropriate boundaries to help balance their enterprises with their education and other commitments.

Beyond entrepreneurship, it is also wise to make sure your kids have a good grasp of financial fundamentals. In most of the United States, schools aren’t required to teach these skills. Even elementary schoolers can understand the basics of saving and spending. By 16, most kids are only a year or two away from making a major financial decision: where to go to college and how much debt to take on to do so. Teenagers should understand the basics of debt, compound interest and return on investment before they make that choice.

Lesson #2: Avoiding “Shirtsleeves To Shirtsleeves”

Ross’s commitment to generational wealth reflects the reality that Black Americans, as a group, have had fewer opportunities to build wealth from one generation to another. Practices such as redlining and the unequal application of GI benefits meant many Black families could not benefit from the economic highs of the mid-20th century, and those inequalities continue to hamper financial parity. Data from the Federal Reserve found that Black families’ median wealth was less than 15% that of white families in 2019. Given this history, many Black Americans are focused on passing on not only their resources, but their skills in managing and growing those resources to the next generation.

Even beyond particular historical roadblocks, families from various backgrounds have often found it challenging to create lasting wealth. A much-cited report from the Williams Group wealth consultancy found that 70% of wealthy families lost their wealth by the second generation, and 90% had lost it by the third generation. There are a variety of reasons for this trend.

In one relatively common scenario, a family’s second generation lacks the skill to maintain and grow their existing wealth. The second generation may simply have other interests. With the security of their parents’ wealth, they may feel free to pursue interests that are not especially lucrative. There is nothing inherently wrong with younger generations devoting themselves to less financially rewarding pursuits. In many cases, parents are happy that their children have more choices than they did. Yet without the know-how to protect and grow the first generation’s assets, the second generation may not be able to offer those same choices to the third.

On the other hand, the second generation may lack the necessary skills because they never had a chance to learn. Some parents have trouble trusting their adolescent or young adult children to make sound financial choices. Assuming from the start that children will not be able to manage their own financial affairs means never giving them a chance to learn. Parents who can give their children a wealthier upbringing than their own should beware of paternalism for practical, as well as interpersonal, reasons.

Ross illustrates the alternative. Giving children real financial responsibility can help them to develop their entrepreneurial and financial skills early, setting them up for success when they face managing bigger or more complex assets in the future.

Lesson #3: Time Gifts With Tax Planning In Mind

While his son would have turned 16 regardless of the state of the federal gift and estate tax, Ross’s gift allowed him to take advantage of the current, relatively high lifetime exemption. The proposed Build Back Better Act is still in flux as of this writing, but the original version of the bill proposed in the House of Representatives would have lowered the individual estate tax exemption from $11.7 million to around $5 million, adjusted for inflation. If the law had passed with this provision intact, the exemption would have been reduced effective Jan. 1, 2022, rather than after 2025 as scheduled under current law. These provisions were already gone before the bill moved to the Senate, but illustrate the ways in which estate tax law is never set in stone.

It is not clear from media coverage whether Ross gave his son a Wingstop franchise he already owned or bought him a new location outright. Regardless, a present gift allows Ross to take advantage of the current, higher lifetime exemption, assuming he hasn’t already made $11.7 million in taxable gifts. Similarly, if you plan to support your child by giving him or her major assets — a stake in your business, materials to jumpstart their own enterprise or a significant amount of cash as a launching pad — stay mindful of your potential gift tax obligations and take advantage of more favorable legal conditions to the extent you can.

A fast food franchise is an unusual Sweet 16 gift, but it is perfectly in line with the image of a musician and entrepreneur who has been “Hustlin’” since he arrived in the public eye. Parents could do worse than take a page out of Rick Ross’s parenting playbook.

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