Last week, my wife and I took our daughters to a town fair. We stayed until the end and as we were walking out were offered free cases of blueberry yogurt drinks and bottled ice coffees–whatever was left over from what they couldn’t sell at the fair.
At my urging, my eight year old daughter Camilla accepted all the free inventory and decided to put up a stand outside the house selling the stuff–instead of a lemonade stand she was going to sell kafir and bottled coffee.
Next, she needed staff so she hired her little sisters (4 and 2) and mom as contractors for $1 a piece (I negotiated the contracts for her). At this point, she knew that she would need to sell at least $3 worth of drinks to break even. While it seemed daunting at first, she began to see the potential upside and got very excited.
She almost gave up after the first hour with no customers but I had to remind her that she would still be on the hook to pay her employees. Pretty soon, her luck started to change and by the next hour she had broken even. Then there was another grueling 30 minutes of waiting and she started to get a little nervous. Maybe it was all a big big waste. Maybe she should have taken that dollar as an employee since it was “guaranteed” and let her 4 year old sister be the entrepreneur.
But as I often say, the key to business is sticking around long enough until the next time you get lucky. My daughter saw that for herself when 4 of the neighbor kids came out of no where and raided her inventory. Before she knew it, she had now collected $20 in total and she was super excited. In fact, we decided to call it a day and quit while we were ahead.
However, before that, she had to pay her sisters and her mom so she was down to $17. Then I told her she had to pay me half of that in taxes. That’s a very quick way to teach a child about taxes!
Anyway, she actually did learn a lot from this exercise and I am now thinking about a future in which rather then giving her an allowance, I buy her inventory and make her sell it. What do you think of that?
Inventory could mean anything obviously–I would let her figure out what she could sell and buy that for her. After all, that’s real life. If you want to be successful in business, you have to figure out what people want or what they need. A successful business comes down to either providing something that solves a problem or pain OR entertainment.
We usually don’t talk much about entertainment as an asset, but it is indeed a very powerful and potentially lucrative asset class to consider. My guest on Wealth Formula Podcast this week has a very elegant business that focuses on this. Make sure to tune in this week to find out how you can collect royalties by owning songs.