My son, Asher is seven years old, and he has successfully completed his third summer business. His first two summer businesses were built on a little manufacturing and door-to-door sales, one with cookies and one with lemonade.
The Business Model
This year he took it a step further. He learned how a rent-to-own business works. And where his first two businesses were over in a day, this business lasted 15 weeks. We intended it to be about 10 weeks, but late orders extended it. Although he has the attention span of a young kiddo, he hung in there for this one.
We needed to pick a product that was simple to sell, and something that Asher could track easily. We decided on picture frames, so that Asher could also create all of the branding around them. We ordered them in bulk from Amazon.
Marketing
A part of each of his businesses is to do the logo design and marketing materials for his company. This year he chose to call his business “Asher’s Dynamite Frames”. He begin with the logo design:
In addition to illustrating it with traditional media, he also used my touch tablet and Photoshop to color it in. The result is pretty impressive for a seven-year-old, as it took many hours to complete.
The next step was for him to generate an online video that we could post to Facebook and generate orders. Asher is comfortable with being in front of a camera, and he delivered his script staring right to the camera. For his first two businesses, he went door-to-door selling his product, which is always awkward. For all businesses we develop a spiel for him to practice. Below is a shot of him writing his spiel for the video.
And here’s the video. We shot it on an iPhone, and I cut it in Premiere.
Legal
We coincidentally went home to celebrate his sister’s birthday party with family, and he was immediately met with customers ready to support his business. It was a real treat. We developed a rental agreement that Asher had signed by each customer.
Cash Flow & Retained Earnings
Another benefit of Asher’s businesses is practicing math in a practical way. So we built a spreadsheet that he could fill in for each week that he was renting a frame. We set the rental payments to an even dollar per week. This allowed Asher to add up the dollars of rent for each week at the bottom. And then add the week’s earnings to his total earnings. Shown is an early version of the ledger he used to tally his earnings each week.
By the end of the business, it evolved to this:
Loan Financing
This is also the first year we decided that Asher had to pay for his own supplies. This presented the largest learning curve for Asher. He wrestled with the idea that we were taking away his money. Instead of having him pay for his frames upfront, we waited until he had enough profit to pay us and still have cash left over. We told him each week that this was going to happen and that eventually he would have to pay his loan back to us. Each week he did not like hearing that he was going to have to pay back his loan. But when time came to do so, he did a great job and he quickly got over the fact that he lost some of its profits to paying us back for the original supplies. Next year we may have him invest his own savings first.
I was delighted during the middle of the summer when he told us the differences between paying for something and renting something as my wife and I discussed rental houses. This told me he was starting to make the link for what renting versus purchasing really meant and that we’d planted the seeds for what earning residual income could be like.
Escrow
Since we couldn’t let his business run on forever, and since no one is going to be willing to pay for a picture frame in perpetuity, we made it a rent-to-own business. Each rental period was 10 weeks for any frame, tallying up to $10 per frame. Each week Asher would get a one dollar payment from each of his customers. Most of his customers were from out of town, being extended friends and family. This was since the marketing video generated the most interest on Facebook and our networks are all friends and family. So most of his customers paid in full for the frames. We put those payments in a little box called “escrow”, and each weekend we paid him out of escrow. One customer went so far as to place a dollar and a letter in each one of 10 little envelopes. He really enjoyed opening each envelope every week. 🙂
Customer Service
Halfway through the 10 week period for each customer, Asher made a customer service phone call to his customers. He spoke directly with eight of his customers and left two voicemails. In order to prepare him for this, we wrote two phone spiels. One was written like a dialogue, anticipating how each conversation would go and one was a standard voicemail spiel.
At the five-week mark for a customer, if Asher had not provided his customer service call, he did not get paid. And there were a few weeks where he did not get paid by a couple of customers, which we captured as little empty circles on his ledger above. Asher handled the phone calls really well. It would’ve been very easy for us to just pay him the $10 and not stretch him a little bit, but we felt the customer service call was a good way to get him the customer face time that he got in his past to businesses going door to door. Below is a video of his first customer call. By the time he made his fourth or fifth call, he was comfortable.
Shipping
Asher enjoyed learning process of shipping to customers for the first time too. We had two customers that ordered frames from cities far away out of state that needed shipping. The cost of the frames was $2.20 each. The cost of shipping was cheapest when we used priority mail, as even ground was not cheaper than that. That was an additional seven dollars. So Asher learned the hard way that shipping can really eat into your margins, if you are not planning for it ahead of time. The cost of each frame was $10. We did not charge shipping to his customers, which of course meant he had to cover it with margin. One customer ordered two frames, and so the shipping was a little less than four dollars each, leaving a decent margin on the $10 frame. For the one customer who ordered one frame, Asher essentially earned one dollar of profit.
Shipping can really eat your margins, if you are not planning ahead. Not only does this apply to shipping overseas when you’re manufacturing in China, but also the shipping necessary to get products to customers.
Late Fees
In our haste during the trip home, we took a couple orders without payments. We noticed we still had not been paid when doing the books a few weeks later and told the customer. They had some fun with it, added some late fees, and gave Asher this delightful letter. It’s a great example that when you start an entrepreneurial, there is no telling what you will learn about.
Asher enjoyed this summer business, even though it was longer than the others. Fortunately, he likes math, and the math wasn’t complicated, so that was a positive aspect to the business for him. The phone calls when were awkward, but he did well on them. And his marketing efforts are always delightful. It’s always fun planting entrepreneurial seeds.
If you like stories on entrepreneurship, consider ordering our book on TROBO called Little Robot Big Dreams. Below, if you have ever had a kidpreneur in your life, or you are/were one yourself, please share your story below. If you believe others would find value in seeing Asher’s summertime business, please like and share this article.
