How to make money as a kid: Ideas, Budget Tools & What to Do with Profit!
Every entrepreneur starting a new business has one goal in common: to make money! Earning a profit is an exciting and rewarding part of launching a business. There is much good that can be done with a business’ profit. You can find some ideas on that topic here.
First, you must decide on your business idea that is one that you can actually make and sell. Break Into Business, a non-profit focused on growing young entrepreneurs through education and programs, suggests the SUPA Star framework for deciding on a profitable business idea: SUPA stands for Sellable, Unique, Problem-solving, and Aligned.
Once you have decided on your business idea, then you can determine how to maximize the odds that your business will actually turn a profit. You need to start with a plan. We call that plan a budget, and it’s truly the foundation of every business.
A business budget is comprised of three main sections:
1. Revenue: Revenue is made up of ALL the money that customers give you when they buy your products. Think of it as your bursting full cash box at the end of your sale. Revenue is calculated by multiplying the price of your product x the amount you sell. So, if you are selling smoothies for $4 and sell 20 of them, your revenue will be $80. In general, you want your revenue to be higher. You can increase your revenue either by increasing your price (within reason! No one’s paying $10 for a smoothie!) or increasing the amount that you sell (promotion can help with that piece).
2. Cost: Costs include the money that you need to spend in order to buy the supplies required to launch your business. Some of these costs will be spent on the materials to make your actual product. Others will be spent on things like packaging, signs, and even credit card fees. “It takes money to make money”, so, don’t be *too* skimpy on your costs. Be willing to spend more on things that customers will really notice and appreciate.
3. Profit: Every entrepreneur’s favorite part of their budget! Profit is the money left over after you subtract costs from revenue. This is the money you can use to spend, give, and re-invest in your business. Good work!
Note the relationship between the three components of a budget: Revenue LESS Costs EQUALS Profit. In general, you want your revenue to be higher, your costs to be lower, and your profit to be higher!
A critical first step in preparing to launch your business is to put your budget together and ensure that your business will be profitable. Things never go exactly to plan - you may end up with a higher or lower profit than you had budgeted - but having the plan in place will set you off on the right track.
You can find a budget template to get started in our Free Kid Entrepreneur Workbook. Need more help to get that budget just right? Check out our LAUNCH programs which provide additional coaching on this challenging, but important, part of the process.
Meet the Author:
Monica Lage is the Executive Director & Co-founder of Break Into Business. Monica holds a Commerce degree from Queen's University in Ontario, Canada as well as an MBA from Harvard Business School. Monica spent several years helping Fortune 500 companies solve their most pressing problems as a Management Consultant with The Boston Consulting Group. Throughout her journey she has sought out opportunities to share her love of business with young people, eventually pursuing Break Into Business full-time in 2014. Since then she has seen hundreds of young people flourish as entrepreneurs, all while raising her own three mini-entrepreneurs in Atlanta, Georgia.