Teaching your children proper money management skills at an early age is very important. Without being exposed to good financial habits at a young age, children can grow up to be reckless, greedy, or possibly even Federal Reserve Chairman. One of the best ways to give your children some experience with money is by helping them operate a small business. Unlike your typical kid-sized jobs like delivering newspapers or working for H&R Block, helping them run their own small business is a much better way to introduce your children to a wide variety of adult financial topics—everything from supply and demand to price gouging. It’s also a terrific method for bringing in a few extra bucks for yourself—I mean, your kids and their college funds.
One great small business that any set of kids can run almost entirely by themselves is a lemonade stand. Yes, the most cliché of all child-run money-makers is still one of the best. That’s because it’s a microcosm of the entire U.S. economy in one 2′-by-4′ wooden stand. For a startup investment of just a couple hundred dollars, your kids can experience all of the trials and tribulations of real grown-up finances—paying the bills, making ends meet, and mercilessly crushing the competition.
Of course, as with any business, it’s a lot easier to make more money if you’re the only lemonade stand on the block. So when the Joneses across the street read this post and decide to help their kids start their own stand to compete with yours, you’re going to have to take them down fast. Here are some tips that I stole from those brats three doors down for cornering the market in lemonade stands.
- Advertising is key. If you live in the dreaded cul-de-sac or some other area without a lot of vehicular or pedestrian traffic, you’re going to have to find other ways to get the word out about your fine lemonade establishment. Flyers posted on telephone poles may work, but don’t stop there! Target any place that may see lots of hot, sweaty people such as home improvement stores, gyms, and the romance section of your local bookstore.
- Cut down your expenses. Have you seen the price of lemons lately? Not to mention sugar, water, cups… You’ll have to be creative to earn a good profit in the lemonade business, and the best way to do that is to minimize your expenses. For example, go for paper cups over plastic. And instead of fresh lemons, use lemon cough drops.
- Hire attractive workers. I hate to break it to you, but your children could stand some improvement in the looks area. So while you’re stuffing away that hard-earned lemonade money to pay for their plastic surgeries, consider borrowing better-looking kids from family or friends. Adorable little girls in cute dresses covered in bows are sure to melt the hearts of anyone passing by your stand enough to score a slew of sales.
- Price competitively. If little Bobby and Jane next door are selling their lemonade for 20 cents a cup, your kids can sell it for 15 cents—even if it means taking a loss in the beginning. When Bobby and Jane don’t sell a single cup and run home crying to Mommy, your kids will be free to jack up their price 700 percent.
- Offer a rewards program. Encourage repeat customers by setting up a rewards structure for frequent buyers. Punch cards that give clients a free drink for every five or six purchases will keep them coming back every day. Just be careful of that creepy guy down the street coming back twelve times a day to your kids’ lemonade stand; he’s not there for the rewards program, that’s for sure.
- Don’t be afraid to play dirty. If your kids’ lemonade stand just can’t compete with the others in the area, then it’s time to pull out the big guns. After all, big guns are useful for scaring away other people’s children from their lemonade stands so your kids can sell their inferior product for twice the market price.
- Find a way to stand out. Anyone can run a lemonade stand, but you can help yours “stand” out by offering additional services you won’t find at your typical beverage vendor. How about a lemonade and leg-waxing stand? Or a lemonade and iPod repair stand. The possibilities are endless, and soon so will be your profits!
Following these simple tips will help your children learn just how the adult world of money really works. Just be sure to share the responsibility of managing the lemonade stand with your children so they can find out for themselves just how stressful and aggravating it can be to have to manage their own finances. They’ll either become the most financially responsible kids on the block… or they’ll be too scared to ever move out of your house.