Turning lemons into lemonade
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Hot summer days are a great time for kids to earn some cool cash by starting a summer business.
“Whether your child is looking into starting a lemonade stand, mowing lawns or babysitting, there are some steps every parent can take to help their child’s first business venture is set-up for success,” said Katie Scofield, Financial Education Officer at Numerica Credit Union.
This is a great teaching moment for parents. Going over start up costs should be the first step. For example, how many lemons will you need to make lemonade? And how much will those cost?
Take your child to the store so they can see the actual price of the lemons and other needed materials like sugar, a pitcher and plastic cups.
“Just because you may have the item around the house, doesn’t mean it’s free!” Scofield continued, “For parents, the opportunity to talk about costs of everyday items with young entrepreneurs is the beginning of conversations about budgeting and managing money that can last for a lifetime.”
Chances are your kid won’t have the money to get their business up and going. If this is the case, they might need a loan from the Credit Union of Mom or Dad. It’s also important they know before any profit can be made from their business, they have to pay the loan back.
There are other important considerations when it comes to running a business — big or small.
Create SMART Goals
Let’s talk about the payoff or goal of your child’s fledgling business. Why are they trying to make money? Perhaps it’s to save up money to buy something they really want to have. Great, if your child is saving for something specific — make sure their goal is measurable, attainable and relevant.
They also need to have a time frame in which the savings goal can be achieved. Make sure goals are S.M.A.R.T. (specific, measurable, attainable, relevant, and has a time frame to be achieved.)
Figure out your price
There are two main costs to consider – the startup and ongoing costs. How much will your child charge customers for the lemonade is a big question that needs to be answered.
As any good shopper knows, price point can make or break a sale. While it may be tempting to set a price that just “sounds” good, two main considerations are costs (startup and ongoing) and potential profit.
Getting a loan
Chances are you will need a little startup money to cover your costs. If this is the case, it’s even more important to know how much you will need to borrow. Add up the one-time costs with the supplies cost. Remember, this loan must be paid back before you can start earning profits.
Spend, Save, Share
When earning your own money, it is important to know about spend, save, share. A good rule of thumb is to have 70 percent going to wants or needs, save 25 percent for the future and share 5 percent in the community by giving back.
You’ll always have a relationship with money, why not make it a good one!