According to our Youth Economy Report, young people are rejecting a conventional career path in favour of being their own boss, with one in four kids aspiring to start their own business when they’re older. If your child’s thinking of starting a business, help them prepare by making a business plan.
A business plan is not just a tool to attract investors. Or a roadmap to navigate the inevitable ups and downs – as well as the unexpected issues you might encounter along the way. Making a business plan will also help your child see if an idea’s worth pursuing.
Here’s how to make a kid’s business plan, plus a template to get them started.
What should be in a business plan for kids?
A kid’s business plan doesn’t have to be complicated. But it should include a few key elements:
- Business name, idea, and goals
- Marketing plan
Helping your kids develop a business idea
Does your child have a business idea already? If not, there are ways you can help spark some.
- Have them make a list of their favourite things to do. If they’re animal lovers, for example, they could offer a pet walking, or dog sitting service. Do they love to crochet, sew, or make jewellery? If your kids are crafty they could sell stuff they’ve made on Etsy. Or sell baked goods locally.
- Think about special skills they have. Are they musically gifted? Great at maths? A tutoring business might be the way to go. Or if they’re techy, how about helping less computer-savvy people set up their devices?
- Which services does your neighbourhood need? Are there lots of families locally with young children who might want babysitters, for example?
- Don’t rule out seasonal ideas. During the festive season, kids could offer gift wrap services or make Christmas decorations to sell. If we get some snow, they could help with shovelling neighbours’ paths. And in the summer, how about running a lemonade stand or offering a lawn mowing and garden care service?
As your kids come up with ideas, get them to think about what each one offers. Is it a product or service they’ll be selling?
- Product-driven businesses include selling cakes and making gift baskets, jewellery, crochet blankets, or lemonade.
- Service-driven businesses include pet sitting, babysitting, lawn mowing, or snow shovelling.
You’ll find more business ideas for kids on our blog but whatever idea your child comes up with, try to encourage them. Tempting as it may be to shoot down an idea you think can’t possibly work, the end result doesn’t matter too much. Running a business is a learning experience, and that’s invaluable.
Helping your kids come up with a business name
Next, your kids will need a name for their business. The best names are:
- easy to pronounce
- easy to remember
- describe what the business offers.
Coming up with a catchy and creative business name isn’t easy. Suggest your kids get feedback. If they say the name and friends or family look confused, it’s probably not going to work.
Suggest they flick through a dictionary for inspiration. Or even one of their favourite books. And don’t rule out wordplay as long as the name still has something to do with the purpose of the business. Then make sure someone locally isn’t already using the name.
Business goals and objectives
As a future business owner, your child needs to know their business inside out.
Get them to think about their business goals and list them. It’ll be fun to revisit these and track their progress in a few months’ time.
They should also know what makes their business unique. For example, if they’re starting a business selling cookies, what’s special about these cookies? Are they baked using a recipe handed down from generation to generation? Are they gluten-free?
Helping your kids decide how to market their business
Before they decide on a marketing strategy, your kids first need to figure out who their customers are and what competition there is.
Create customer profiles
Get them to write down who they think will want to use their service or buy their product. These are called customer profiles. When you know exactly who your customers are, it’s easier to market to them.
For example, if it’s babysitting, they’ll be families with young children. If it’s dog walking, they’ll be people who have to leave their dogs at home while they work. Or they may be infirm and not able to exercise their dogs regularly.
To market to these customers they’ll need to work out their market area. It’s unlikely to be national, and unless you’re willing to drive them, their market area will be local.
Know the competition
Encourage your kids to work out the competition in the area. What are they charging for a similar product or service? What makes your child’s business stand out? Pricing a product lower is one way of competing. So is offering a better service.
Ask your child the following questions to help them decide which marketing route to go.
Will you have a website? Will you have business cards or flyers printed? Will you knock on doors? Will you use social media?
If your teen is thinking about offering a dog-walking service, for example, maybe they’ll want to post flyers at the local vet’s or put them through doors in your neighbourhood.
Whatever marketing strategy your child decides on, there will probably be costs involved. These need adding to the cost section of their business plan.
What to include in business start-up costs
When planning a business there are usually start-up costs involved. These need to be listed and totaled up. To help your kids work out their costs, here are a few pointers.
Do they need help to run the business?
Running a business solo will keep costs down. If your child needs someone to help, a sibling, for example, they’ll have to split the profits or decide how much to pay them. Either way the cost of staff, or a partner, is an expense to include in start-up costs.
What supplies, equipment or training will they need to get started?
Ask your child to list the things they’ll need to run their business.
For example, If it’s cookie-baking, they may have ingredients and equipment to buy. If it’s garden work, will they use their client’s lawn mower, trimmers and rakes, or take their own? If they’re offering a babysitting service should they take a first aid course and what age do they feel comfortable sitting for?
Will there be ongoing expenses?
As well as start-up costs, there may be ongoing expenses to factor in. Car washing equipment for example, or fresh ingredients for each batch of cookies. Get your kids to total up ongoing costs.
What will they charge for their goods or services?
How much will it cost to make the product or perform the service? Explain that to make a profit your kids will need to charge more for a product than it costs them to make. Here are some suggestions to help them figure this out.
- Say it costs £2.50 to make a batch of 12 cookies. To make a profit, they’ll need to charge more than £2.50 a dozen.
- How much time does it take to make the product or carry out the service? Don’t forget to factor in the time it takes to walk to a client’s home to babysit or walk their dog. There’s also time spent doing admin, like preparing invoices and marketing to account for.
- Say it takes a half hour to make the cookies and another half hour for marketing and selling them. This additional time is your child’s ‘wage’.
- To work out an hourly wage, you divide your pay for your product or service (minus expenses) by the amount of time spent working. So, for example, if your child charges £8.50 for a dozen cookies, they’d earn £6 for the hour spent making and marketing them.
- To work out their profit, they then subtract their expenses from the £6.
Kids’ business plan template
When your child is ready to write out their business plan, a template will help them organise their thoughts.
GoHenry’s business plan template for kids makes it easy. It’s already got sections for name, goals, marketing and costs. All your kids have to do is fill it in.
How can kids save and spend the money they earn?
Running a business is a great way to teach your kids how to manage an income. From budgeting to balancing the books and creating cashflow. And as fewer people pay cash these days, your child could benefit from getting paid via a transfer to a GoHenry prepaid debit card instead.
GoHenry makes it easy for them to track their earnings and expenses. Plus, you can use our parental features to keep an eye on their spending and saving. You can help them set saving goals too. All through our app.