My husband and I share the philosophy that it is never too early to encourage entrepreneurship in a kid or for them to learn about the mechanics of running a business.
One Friday evening, my son bounded home with some of his playground mates and announced excitedly that they were going to hold a lemonade and cookie sale the next day. I congratulated them on their business venture and asked them who was making the cookies and lemonade and how much they were going to sell them.
The boys excitedly said that they will just get whatever they can from their mom’s kitchen and sell it. Then I asked them if they had informed their moms of this venture and checked if they actually had the ingredients in their kitchens? That promptly brought on a big “UH…”
Luckily hubby was around. So I asked my recent EMBA graduate to give the three young boys a lesson in Business 101.
1) Business Planning
First, their business coach (aka hubby) gave them a brief run down on business partnership with the 3 boys. Then he went through the 4Ps of marketing with them.
Product — What were they selling? Lemonade and Cookies.
Price — How much will they sell their products for? Lemonade will be sold in two different sizes cup — $1.50 for the big red cups and $50 cents for the small yellow cups. As for the cookies, they will be sold in packets of 5 for $2 or 50cents each.
Place — Where will they sell it at? Setting up a Lemonade and Cookies Stand at the Clubhouse where we live. The boys rationalize that the Clubhouse by the poolside will be a good spot as lots of families gather there for afternoon dips in the pool.
People — Who are their target audience? They are targeting anyone who is thirsty on a scorching hot Saturday for a cup of cool freshly squeezed lemonade and the little kids who wants some cookies.
2) Logistics and Responsibilities
Next, the boys were coached to identify all the items they needed to make this venture happen and who was taking on what task. Then, they were given the marching orders to act on their tasks. Below, the boys pitch in to start the baking of the cookies before heading over to one of the boy’s home to make the lemonade.
At 3pm, they headed downstairs to set up their lemonade and cookie stand. I was impressed by the ease the boys worked together. The tasks they were given were quickly meted out as they worked together as a team. They seemed to be having so much fun, several other kids from the neighbourhood decided to join in (as volunteers).
Anyone who has been down the entrepreneur line knows it. Setting up shop is easy. What comes next is the hardest. Getting that first customer and having people patronize your business is a mountain that all entrepreneurs have to scale.
Leaving my son to take care of the “cash register”, the other two boys went to announce that their lemonade and cookie stand is ready. Initially, there were customers who walked up to the stand to get cookies and lemonade. Business was brisk for a while. Then, there was a bit of a lull.
The boys learnt a BIG lesson about running a business — customers don’t just show up. They have to actively go out to look for customers (i.e. market their business). They ran to anyone who was within reach to tell them about the stand and encourage them to swing by. They also rang the doorbells of all their friends to tell them that they were downstairs. These friends came down to support them with their pocket money.
The kids also learnt to be spontaneous and flexible in their business dealings. For example, when the lemonade ran low, the boys decided to sell only the smaller yellow cups ($0.50) which lasted longer and drew more business because each time someone stopped to buy the lemonade, it was an opportunity to sell them the cookies.
Another difficult issue the kids had to learn to manage was how to say no to friends who kept asking for free cookies or lemonade. Eventually, they did give their friends cookies on credit and shared the left over cookies with the volunteers who helped “for fun”.
3) Dividing the Profit
At the end of the 3-hour business exercise, the three boys packed up their business and brought all their logistics home. Now come the fun part — counting their earnings for the day. The boys had to wait till all the “stakeholders” were in the same room before counting the earnings. This was to teach them about openness.
Then the money had to be counted a second time by the business coach (who acted as the auditor) to ensure accuracy of the accounting.
Then the “stakeholders” had to pay the baking consultant (Krysh’s sister) $5 for her services and the suppliers (aka moms) for all the ingredients (lemons, cookie dough, eggs etc). Whatever was left were split equally among the three stakeholders who all upheld their duties equally well.
At the end of the day, the boys each took home a profit of $14 and some change. Not too bad for a first day of business as most business takes time to break even. The boys had a ton of fun working together and planned on doing it again soon. Look out for our Business 102.
If you wish your kids to have the same learning but do not have the time or space to do so, check out institutions like The Keys Academy which provide a selection of Entrepreneurship programs like Fundamentals of Entrepreneurship and Wall Street Basics for secondary 1 to 5 students.