Building a Lemonade Empire
KidBiz
February 25, 1998

So little Bunny has come to you and wants to start her own business. You pat her on the head and say, "That's nice, sweetheart."

She then throws her $80 "American Girls" high top at you and shouts with her hands on her hips, "No, Daddy! I mean it!"

You then realize, with no small amount of pride, that 15 years from now anyone who has thoughts of glass ceilings or sexual harassment is going to be in for a big surprise.

She's come to you for support and advice on her new venture. Do you know how to help her? What kind of parental wisdom should offer? Well, as not-so-old entrepreneurs ourselves, we've got a few tips to get you both started.

The Plan -- Explain to her that if she just wants money she can always get a job at McDonald's. But that if she really wants her own business, she has a lot of thinking to do. Help her make a business plan. Ask her to describe her service or product in three sentences. What will she name her company?

The Customers -- Remind her that no matter how good her service or product is, if no one will pay for it then it's not a good business idea. Who will her customers be? Why will they buy her product?

The Competition -- Are there other kids who are doing the same thing? Why should someone choose her company over Joey's down the street? What makes her business different?

The Pricing -- How much should she charge? And how did she figure it out? If she does have competition then it's almost easier because there's already a gauge set. If there's no direct competition, there still might be other kids doing the same thing somewhere else. Tell her to do a search, perhaps on the Internet, for other companies like the one she wants to found.

Manufacturing/Service Delivery -- Can she really do what she wants to do? Is she physically able to do manual labor (if that's what is involved)? What about transportation? Will she need a car? If so, is one available? What are the hours of her company? Can she baby-sit past her curfew? What is the back-up plan if she gets sick? Does she have a friend who can pinch-hit if need be?

Customer Service -- Probably one of the most important lessons any young person can learn from starting their own company is to understand the importance of doing what you say you will do. Her company will never be successful if she misses deadlines or forgets to do something. (Especially in the summer when many more fun things often beckon for her attention.) Make sure that she's really ready for that responsibility.

Advertising/Marketing -- With a personal computer, she can make business cards, stationery, and flyers all with her very own company's name and logo. Learning about how to get the word out about what she does will help her go far in any business situation.

Numbers -- She's going to have to learn to keep a set of books. It doesn't have to be complicated, but it should be accurate. Now would be a good time to explain the difference between "sales" and "earnings." Just because she made $15 babysitting for the Luke's doesn't mean that that's how much she made. Didn't the bus cost $1.50 to get her there and back? That's an expense that she needs to account for in her log. Go to an office supply store and help her pick out a simple ledger for her company. She can even decorate it with the logo she made up for her company on her computer. Will she need to set up a bank account? Your bank probably offers a free "Young Savers" account.

The Law -- Small businesses are almost always regulated at the local level. Every place is different. Ask her to call the local county office that deals with business licenses. (Resist the temptation to make the call yourself.) Have her explain what kind of business she wants to do and tell them how old she is. What kinds of things does she need to do? Chances are that she won't make enough money for things like licenses to come into play, but it's good experience for her to find out for herself.

Taxes -- Talk to your tax preparer about how best to handle the situation with any money that your dependent child will make. Much of this depends on how much she's likely to rake in and what other things you may have set up for her in her name.

Starting your own business is a great adventure, no matter how old you are. It's also a tremendous responsibility. If your little pumpkin is up for it, it's a great time to encourage her bravado. Don't forget to check out our next article for 10 Foolish Kid Biz ideas. Then come back to the Fool and talk about your awesome enterprise on the Family Fool message board.

-- Trudy Bowen ([email protected])