It’s summertime, which means it’s lemonade stand season. Right now in my house, there are a number of startups in various stages of development including a dog walking company, a spa, and a carting company. I have three kids who are 7, 8 and 9.
I am also an entrepreneur and a journalist who covers business. So, to me, all these budding businesses are more than just sweet ventures to memorialize in a photo. They are teachable moments that I hope give my kids the foundation for an entrepreneurial spirit that will last with them throughout their lives.
Regardless of what career path our children decide to follow when they are older, having an entrepreneurial attitude will serve them well. Entrepreneurship is about identifying a problem, finding a solution to it and then using your skills to bring that solution to life.
This summer, I, together with Melanie Staggs and S. Taylor, launched a book called The Startup Club. It’s a fun fiction book that follows a group of kids as they start a company called CJ Chainz. We wanted to give kids characters they could use as inspiration when they come up with their own ideas. We also wanted to teach the basics of running a business (in an age appropriate way) so that readers come away knowing the difference between revenue and profit, how to think about marketing, and how to handle competition.
As the summer winds down, here are some things you can do with your child and their lemonade stand to teach them the basics of running a business.
1. Let your children pay for the supplies. While it may be easier to just run to the store and buy the lemons and sugar yourself, if you do that, you run the risk that your children do not understand that the supplies cost money. This is the first step in teaching them the difference between revenue and profit
2. Put together a quick profit and loss statement. Simply write down your expected revenue, subtract your expenses and get to your expected profit. And, when you do this, use the actual terms so your kids start to get comfortable with them. Once the sale is over, you can put in the actual revenue number and compare their estimated profit to the actual one.
3. Explain to them that their signs are their marketing. Once they start looking at it like that, instead of just as a throw away, it will get them to think a little more seriously about their colors, messaging and design. You can talk through their choices with them.
4. Choose a cause. It’s never too early to teach social responsibility. Work with your kids to pick a cause that they care about (whether that is their school, a local animal shelter, the environment…) and determine what percentage of profit they will give away to that cause. You can sweeten the deal by doing a matching fund. Then, if it is a local cause, be sure to go with your kids to deliver the donation together so they can experience how nice it is to give back.
JJ Ramberg is the founder of Goodshop, the socially responsible coupon aggregator which has saved shoppers more than $100 million and raised more than $12 million for causes ranging from the ASPCA to local schools and healthcare needs. She is also the host of the MSNBC program, Your Business, the network’s second longest-running program.