Kids have been running lemonade stands for decades. You can help them by buying the goods, making it for them and having a hand in all facets of their business, or you can use this as a teaching moment. This is a great way to teach them entrepreneurship — the ins and outs of running their own business. Here are some more tips on teaching kids wise money management.
Here are some tips on getting the most out of the experience:
There are a number of ways to handle this. You can have them use their own savings, if they have any. You can have them earn money by doing chores to earn startup capital. They can save their allowance until they have enough. Or, if they are old enough to understand, you can advance them the money with a simple contract on how to pay it back with a small interest fee. Set up a payment schedule for them so that they learn about loans, interest rates and keeping up with creditors.
Give them a ledger — an actual ledger — from your local store or spreadsheets you have devised on Excel. Even a simple notebook set up with columns to record what they spend and what they take in will work fine. This is critical so that they learn whether or not they are making money, how much are they making and adjust the business accordingly. Have them break down the cost to produce each cup.
This is also a great way to teach them quality control. Research to find the best recipe. Making it the same way, stringently following the recipe each time, an allowance for waste and portion control.
Teach your children how to speak to customers, make sure of their satisfaction and always be courteous. Make them aware of what information to share and what not to share. Teach them that sometimes it costs to keep your customers happy and to build that loss into the cost of their goods.
Safe and sanitary conditions
Help children to understand the importance of always maintaining sanitary conditions when they are both producing and serving their product. Show them how to clean prior to production and to clean after. Teach them about touching their hair, nose and mouth while they are open for business.
Though they probably won't need a permit to sell, go ahead and teach them about what they would have to obtain to produce and serve food if they ran a real restaurant. Show them the state and local websites where they would obtain licensing and permits, and even look up the health department standards that govern such establishments.
Have them make up little file cards that list the ingredients for customers to see. Teach them that often people have allergies, diabetes or other ailments and need to know what is in a product. If they prepare the cards, they will be able to show their customers exactly what they are receiving.
Suggest that they create a punch card for repeat business. They can learn that treating customers well and rewarding them for their patronage will help them obtain customer loyalty. Perhaps a "buy eight and get one free" sort of thing.
Show them how to cash out their day, subtract the cost of goods, figure out their hourly wage and how to set aside a portion of the profits for ingredients for the next sale. Talk to them about the feasibility of staying in business and possibly opening up franchises with other friends.
Encourage them to put away a percentage of their profits, say 15-20 percent, in savings toward something they've always wanted. This is one of the most valuable money lessons we can teach our children — to hang on to some of their money for a rainy day or to earn something they really want.
Teaching our children as much about the real world as possible will help prepare them when they get out there. A simple lemonade stand can be a comprehensive education in entrepreneurship. It will make the process more fun and exciting for them.