2019-2020 was an exercise in teaching our elementary school-aged children personal finance, driving independence, and encouraging them to make constrained resource decisions.
The girls decided they wanted to host a lemonade, cookie, and candy stand up at the neighborhood pool. In the past, we’ve done this where initially I paid for all the supplies (the most profitable), or some of the supplies (moderately profitable).
To teach them how business really works, the new model is that they need to cover all the variable supplies, within reason. The girls (ages 6 & 10) were up for the challenge.
We bought lemons and sugar, boxes of Starburst and Skittles, and materials for my best chocolate chip cookie recipe. We calculated how much the ingredients cost, and by extension what was the cost of goods sold for the cookies, lemonade, and candy packages.
The girls baked cookies, squeezed lemons, and set their prices to ensure they had a chance at profitability. We discussed volume pricing for the cookies and they landed on 50¢ each or 3 for $1.
After hauling our goods to the pool, they had to balance engaging customers as they passed by with trying not to eat all their product.
We discussed our customer targeting, based on what we observed. Teenagers were most likely to buy candy. Dads and older neighbors were more likely to be drawn to the lemonade. The cookies tempted everyone and who could blame them? The chips were still soft from the oven and they smelled heavenly.
Baby Girl is a raging introvert, so she had to really put herself out there, calling out to neighbors hawking the “best lemonade in Virginia” (true), “fresh-baked chocolate chip cookies” and “candy!” depending on the demographics of the passer-by. One neighbor overpaid and asked us to give his “credits” to his grandkids who stopped by later. We happily obliged. The girls practiced making change and saying thank you.
Between selling the world’s best lemonade and having extremely generous neighbors, they were able to earn a bit of spending money after each effort.
They practiced:
Sourcing (buying the raw materials)
Production (squeezing lemons and mixing the juice with water and sugar)
Marketing (colorful signs and loudly announcing their product to all passersby)
Fulfillment (serving the lemonade)
Customer Service (collecting payment, making change, and thanking the customers)
Logistics (set-up and breakdown of their stand)
Accounting (counting revenues, and reimbursing me for the upfront investment)
While they grumbled lightly at the cost of goods that came out of their revenues, they started getting the concepts. Light bulbs went off in the children’s minds. They realized that cash is fun and that they can earn it - enabling them to spend more.
At the end, as the food truck nearby closed up shop, we started putting away our leftovers. The food truck staff brought over a tray of funnel cake fries, and we returned the favor with gratis cookies. Everyone was happy, while also being ready to be done for the afternoon.
After the proceeds were counted, and the costs and starting change money had been netted off, the girls each had $7.95 to show for their efforts. Half got tucked away into their savings accounts, for a net of $3.98 each. Not a lot to show for many hours of work, but still profitable and they had fun. On a relative basis, it boosted their weekly income by 40%, so that $4 meant something to them.
My hope in agreeing to activities like lemonade stands (which are NOT worth my time on an absolute basis) is that it teaches them the skills noted above, while showing them what is possible. If they want more spending money, find a way to earn it. If they want to sell goods, they need to buy the raw materials and add value to them. Sometimes the value-add is combining them into something greater (I won't buy sugar and lemons at the pool, but I will buy lemonade). Other times the value-add is having the product available at the right time and place (i.e., prepackaged candy at the pool).
Will they become professional lemonade sellers later in life? Doubtful. Will they have a better understanding of business, entrepreneurship, and economics? Absolutely! Mission accomplished.
Stephanie Brooke Lennon is the author of Family Bank Blueprint, GoldQuest, and What Would Water Do? Simple Strategies for Navigating Life's Obstacles. Her titles are available in Paperback and Kindle on Amazon.com. Follow Stephanie Brooke on Facebook, Instagram, TikTok, YouTube, Twitter, Amazon, and at BrookeLennon.com.