February 10, 2020
By Liz Frazier, CFP, MBA
The idea of the lemonade stand conjures up nostalgia in most parents as they remember summer days and simpler times. Today, the lemonade stand is still a source of summer fun for many children, however it’s also a shining example of an easy activity that can teach these budding entrepreneurs some valuable lessons. The key to teaching kids business, finance and really just about anything, is to incorporate it into an activity that they enjoy so it gets them engaged. Below are five easy tips to make the most of their lemonade stand by keeping it fun and educational.
- Come up with a business plan. Treat this like a real business with your child and be intentional with your efforts. Before doing anything, sit down with your child and create a strategy around the key business components. Brainstorm with your child different places and times that will make the most money, such as a busy street corner (with adult supervision, of course) in town when people are getting off work. Determine the price point, and budget for ingredients and materials. Develop an advertising plan, such as what type of materials you plan to create and where you’ll advertise. By discussing all of this with your child before, you’re showing them the importance of making thoughtful decisions and preparation before getting started on a project.
- Involve your child in every step. The more involved your child is in this project, the more engaged they will be, and the more pride and ownership they will feel over the final product! Bring them to the grocery store to pick out ingredients, make the lemonade together, and let them create the signs and decorate the lemonade stand.
- Make it matter: Consider donating some of the money earned to a charity. If you go this route, be sure to tell your customers—people love to support a good cause.
- Use real world business accounting: Unless you’re an accountant, this may seem intimidating. Fear not, it’s really just simple math. In the beginning, have your child help you calculate the total “Cost of goods sold” (cost of all ingredients and materials). Once you’ve closed the shop for the day, your child will enjoy counting up all the money they made – equaling the total income. The final step is to subtract the cost of goods sold from the total income earned, and you have your net profit.
- Recap: Discussion is always an important final step for any activity with your child. Ask them questions about their experience – What did your child find most difficult? What were they the most interested in? What surprised them? What mistakes did they make? Did the customers like what they were selling? Why or why not?
Liz Frazier, author of Beyond Piggy Banks and Lemonade Stands, is a Certified Financial Planner (CFP), and a member of the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA). She contributes regularly to Forbes.com.