A Simple Way to Estimate Profit with Your Kid Entrepreneur
My kids love selling lemonade on warm summer days. After many weekends of selling refreshments to the neighbors, and little help from my husband and me, they learned some basic lessons about being an entrepreneur.
Revenue is the money that you take in from customers.
An expense is what it costs you.
Their operation was a pretty simple one. But what if my kids wanted to expand their business or sell something else? Would they be able to duplicate their success with different variables? If it got more complex, would they lose interest?
To give them a simple way to estimate the profit of selling their product I created a simple spreadsheet (that you can download) that would outline the cost to do business and determine whether or not their venture(s) would be profitable. It also helps them figure out how much to sell their product for.
To use it:
- Create a prototype of what it is that you want to sell. Since my kids were only making lemonade it was a simple task.
- Create a list expenses based on the supplies needed. My kids needed lemonade mix, water, cups, and posters.
- Decide on a reasonable selling price. This is typically 2x the cost to create your product.
- Estimate Profit based on Selling Price – Cost
They know how to multiple the money they have been gifted or earned.
Are your kids interested in starting their own business?
This post is apart of a 31 Day Series on Kids & Money.
Last Post in the series: Day 20 – Turn a Profit