If you notice your kid having entrepreneurial tendencies, like buying candy for a dollar and selling it for two, or always asking for help with a lemonade stand, you might have a budding business brainchild. Even though business concepts can be complex - it’s easy to break a few of them down in a way that they’ll learn the overarching concept, even as a kid.

What an exciting time for your little entrepreneur!! Here are some of the most important concepts to teach your child when they are looking to branch out into the world of entrepreneurship.

Market Need

Kids’ brains are quite magical and imaginative - which is what makes their ideas so amazing. But if your little entrepreneur wants to sell Mardi Gras beads in September, in Nebraska - they might find the market need to be quite slim. If it’s February in New Orleans however - the market need might be high. Push your kid to do some research in their area through surveys, Facebook posts, asking friends, etc. in order to find a true market need.

Explaining supply and demand to your young go-getter might seem too complex, but using very basic analogies and real life examples can be helpful. For example, if your child wants to set up a lemonade stand this summer in front of your house but there are multiple kids in your neighborhood that you know set up stands too, you can point out to your child that the supply in your neighborhood may be too great and challenge them to think of another idea that might be more in demand, like cookies or popsicles. You can even challenge them to think about complementary things to sell like salty pretzels - a salty snack always makes a thirsty customer! This can also lead to an explanation of market saturation, which can really encourage them to think outside the box.

Margins

Margins are a really important component to a successful business. Buying a fidget toy for $5 and selling it for $6 leaves your kiddo with a very slim margin. The rule of thumb is to always make sure you retain a 30% margin. There is a quick and dirty formula for finding this, you can make it into a fun math game and learning opportunity for your child – you simply multiply the cost by .41. For example, if I bought the fidget for $5 and I multiply it by .41, that gives me $2.05. Adding $5 and $2.05 gives me $7.05. That’s what I should charge in order to retain a 30% margin.

It’s never too soon to teach your child about finances, a healthy and straight forward relationship with money can set your child up for a lifetime of success. Along with teaching your child how to set a reasonable profit margin, teach them how to manage the profit they receive. Help them group their profits into categories, they can be as simple as – expenses, savings and “fun money”. No need to get too complicated, but helping them budget and plan can instill confidence in managing their own money and establish good spending habits early on in life.

Customer Acquisition vs. Customer Retention

Discuss how hard it is to get a new customer for a one time sale vs. retaining that customer to pay you over and over again. In Taylor Landis’s article Customer Retention Marketing vs. Customer Acquisition Marketing on OutboundEngine.com she states that “Acquiring a new customer can cost five times more than retaining an existing customer.” This is a good lesson no matter what age you are, if you have loyal customers you need to nurture your relationship with them.

It is much easier to sell your existing customer, that knows and loves your brand, new services than it is to acquire new customers each and every time. So if you live in Minnesota and your kiddo wants to shovel driveways for some extra cash, discuss what it would look like if your little entrepreneur set up a weekly shoveling appointment with each new customer, and perhaps parlay that into a mowing gig in the summer (market need, remember?)

Customer Service

In a world where you can now get just about anything you want with the push of a button, an outstanding customer service experience is often one of the only things that can set a business apart from their competitors. Sometimes the impact of exemplary customer service is even more important than the actual goods or services themselves. Zendesk’s Customer Experience Trends Report from 2020 found that “Nearly three out of five consumers report that good customer service is vital for them to feel loyalty toward a brand.” Giving customers excellent service is always an amazing lesson for business owners.

So get creative with your kiddo on how they can make the customer experience unforgettable for their new customers or clients. If they are selling cookies at a stand in front of your house maybe they keep their cookies in an insulated bag so they’re warm and gooey when they’re served, and if someone accidentally drops their half eaten cookie on the ground, replace it free of charge. It may cut into their overall profit margin, but explaining to them that that simple act may get people talking about their business and help them gain more customers. Or if your child decides they want to sell those fidgets, perhaps they add a personalized thank you note signed by them in the package. These small gestures can give their customers that warm and fuzzy feeling that will keep them coming back for more.

Keep nurturing your kidpreneur's ideas and imagination!