This past weekend I got the awesome pleasure of working for less than minimum wage in the hot Georgia sun! What you say? I got to be a barista of a different order, instead of being a fine purveyor of wonderfully roasted coffee beans and scrumptious delights, I was pushing a fine yellow powder kissed with just the right amount of water and with a tinge of sweetness. Really confused? I hope not. Simply put, I had the awesome pleasure to help my daughter in her very own lemonade stand.
The “big event” had been some weeks in the making and finally our big break occurred. The neighborhood was hosting a garage sale. What goes better with other people’s dusty junk and the Georgia heat and humidity? If you answered Ice Cold Lemonade from a pretty, blond-headed five year old you would be right on the money. Although my daughter probably was more focused on drinking some of the fruits of her entrepreneurial efforts I had a slightly more educational approach in mind. I had the pleasure of reading a post some months ago on Sebastian Marshall’s blog regarding entrepreneurship and what it really means to be an entrepreneur. Its a great article linked here: “What Skills Do You Need to be an Entrepreneur, Only Two”. In the article Sebastian mentioned showing his future kids the path of an entrepreneur at an early age, showing them specifically how to (1) add value to the things they touch & (2) get some share of the value they create. This is a wonderfully simple idea and kudos to Sebastian for boiling down an idea that graduate business school professors (no offense to my special professor buddy at a great school) spend months trying to teach.
My goal in this endeavour was simple, help Mackenzie understand the concept of entrepreneurship and particularly the concept of investing and most importantly “PROFIT”. All in all it was a tremendous success and something that I will continue to repeat in different forms and fashions with both Mackenzie and my other daughter Carrigan. The formula for us that worked so well was pretty simple:
- I let Mackenzie use her “investment” envelope to buy the supplies. She counted out the money, she knew how much she was investing & I let her decide what she wanted to purchase (with a bit of guidance). Her total investment was $6.50 – including bottled water, ice, lemonade mix, fresh lemons, etc. (NOTE: We use the Dave Ramsey school of thought with our daughter. Each week she gets a small allowance that she allocates (her choice) to four different envelopes (a) spend (b) save (c) invest (d) donate.)
- I let her carry her money, pay the cashier, etc. (seems small but the concept of money, profit, revenue, etc. is an elusive one when your 5)
- We discussed our marketing, how would we get people to purchase her lemonade. The concept of competition, marketing, sales tactics … you get the idea – some great concepts here. This was particularly funny part of our endeavour in that Mackenzie decided one of the best tactics for drawing in customers was dancing around, smiling big and waving while shouting “Ice Cold Lemonade”.
- During our selling I encouraged her with some ways she could interact with her customers (selling) and attracting the crowds (marketing). This also resulted in a funny outcome. One particular patron who was perusing earlier said “dusty junk” was not in the mood for lemonade. However, after four very convincing sales pitches from the 5 year old she folded like proverbial cheap suit.
- I encouraged her to manage her money and the transactions. Giving people change, managing the supplies, making more product… it was her business and I helped her keep track of the moving pieces.
- As we wrapped up the day’s activities we had a lengthy sit-down where she counted her sales for that day. We talked a bit about the concept of sales, etc and what that means.
- We then payed her investment envelope back (the whopping $6.50) and were left with her profit. We talked a bit about profit and the idea that in those 4 hours she made $15 in profit. Normally her allowance is $5 per week. The point she got very quickly was in a few hours of work she made “ALOT” (her words) more than what she normally does. …This was the best realization – she labored, she applied her ingenuity and her talents (ADDED VALUE) and then got to pocket the profit (GETTING A SHARE OF THE VALUE SHE CREATED).