Here's a typical example:
Amanda decides to make hair scrunchies. She needs to buy elastic and fancy ribbon. She wants to make 15 scrunchies. Elastic and fancy ribbon cost $8.00. She plans to spend $2.00 on advertising. She asks for a loan of $10.00 from her parents, at a 10% interest rate. She guarantees that if she doesn't pay the loan back she will clean the basement and the garage.
She thinks she can sell 10 scrunchies at a price of $1.00 each.
She gets the loan, goes to the store, buys the materials, and makes the scrunchies.
At school, she spends $2.00 to advertise her product on posters, and over the announcements.
On June 17, she sets up a nice table in the gym. Other classes and some parents come around to look at her table. In he end, she sells all 15 scrunchies. She has a total of $15.00.
From that $15.00 - $1.50 is paid as taxes
She has $13.50 left.
She pays back her parents the $11.00 she owes.
She ends up with $2.50 in profit.
All in all Amanda did a pretty good job. If she had made more scrunchies, she could have sold more, but in the end, she proved that her business is profitable.
Here are all the rules to make sure everyone understands how it will all work.
- One or two students per group.
- Each group will develop and sell a product or service.- Groups can ask for a loan to start up their business.
- Loans can be for any amount, but no more that $20.00 per business.
- All loans will be paid back on June 19.
- Any loans not paid back will be covered by chores. Parents and student should work out, as part of the loan agreement, what an appropriate chore is.
- If the business has any money at all, loans must be paid back. Students cannot choose to keep the money and do chores instead,`
- Everything sold must be built by the students. No garage sale or flea market type items are permitted for sale.
- Students can use material from around their house (ex, glue, wood) for free.
- Parents can not go to the store and buy materials for the project with non-loan money. ALL purchases for materials must come from the original loan.
- No food for sale
Advertising rates:
A single page poster on the wall in the hallway - $0.10
A visit to one other class to show off the product - $0.50
A announcement over the PA in the morning advertising the product - $0.25
All money taken in by advertising will go to the Me to We Charity
Tax - I will take 10% of total sales as tax. This money will go to the Me to We Charity.
Profits - All money will be used to buy pizza for our year end pizza party. Students that earned more money can spend it on breadsticks, ice cream, and drinks. Everyone will get pizza.
Tips for success
- Come up with a good product, a good idea. Take your time and think about it.
- Who are you selling to? Parents? Teachers? Grade 8's? Grade 1's?
- Try to make something that people will actually want to buy.
- Parents: Go over the business plan carefully. If the student's idea seems shaky, suggest some changes before you lend them any money
- Do a really good job making it. If word of mouth gets around that you have a cool product, more sales will come. If word gets around that your product breaks easily, people probably won't keep coming to buy.
- Think very carefully of how much you want to sell your product for. $5.00 is a lot of money for a grade 1.A bookmark for sale at $0.25 might sell. A bookmark at $2.00 might not.
- Advertise smart, it can help build buzz for your business.
- Have a great name, logo, and a well decorated sales table.
- Build a model to show around the school next week. It will help build buzz.
- Think about taking advance orders. You can take advance orders with payment or without, your choice.
- Don't borrow any more money than you need, you'll have to pay it all back.
- Don't partner with someone just because they are your friend. You might be better off going it alone. You'll have total control and you won't have to share the profits.
- Be VERY careful of this happening: You decide to make and sell playdough. You spend $20.00 on material and start making your dough. It doesn't really work out, so you keep trying. You can't really get the mix right and the play dough is either too sticky or too firm. You end up throwing all your dough out and you have NO MORE money to go by new ingredients. In this case you are bankrupt. You have no business, nothing to sell, and a $20.00 loan to pay back. You cannot ask for more money or another loan, and you can't ask a parent to just go buy more ingredients for you. This is the end of the road for you. Be very careful of this. Think hard before you spend ANY money.
