Your child comes to you: "I want to sell lemonade outside the house!" Your first thought might be squashed lemons all over the kitchen floor. Hold that thought for a second. Your child is about to have their first real lesson in economics.
Saturday: the harsh reality
Buddy buys lemons (CHF 8), sugar (CHF 2) and 30 cups (CHF 5). Total: CHF 15. He sets up his stand in his street and sells each glass for CHF 1. But the street is quiet. By lunchtime he's sold 12 glasses: CHF 12 taken. He's lost CHF 3.
First lesson: to make money, you first have to put some in, and nothing guarantees you'll get it back. That's the risk anyone who starts something takes.
Sunday: opening his eyes
On Sunday, Buddy notices there's a football tournament at the local pitch. Dozens of thirsty players. He moves his stand and sells all 30 glasses in an hour: CHF 30 taken for CHF 15 spent. Profit: CHF 15.
He didn't invent anything. He simply spotted an opportunity nobody else had seen. The economist Israel Kirzner called this alertness: an entrepreneur is someone who notices an unmet need where others walk straight past.
The following weekend: the new idea
Buddy has an idea: mint ice cubes, made the night before. They cost CHF 3 more, but his lemonade becomes the most refreshing at the tournament. He sells it for CHF 1.50. Result: 30 glasses, CHF 45 taken, CHF 18 spent. Profit: CHF 27.
The economist Joseph Schumpeter explained that progress comes from these new combinations: an improved product, a new way of doing things, a new market. It's entrepreneurs, by trying things out, who move everyone forward.
What your child learnt in three weekends
- You only get paid if you provide something people want. Nobody had to buy: customers came because they fancied the lemonade.
- Costs matter as much as sales.
- A failure isn't the end, it's information. The flop on Saturday led to the success on Sunday.
- Money you've earned yourself tastes special. Those CHF 27 mean more to them than any banknote they were given.
Your role: don't organise everything. Help with safety (the knife, the road), then take a step back. Let them set the price, choose the spot, make mistakes.
Try this tonight with your child
Ask: "If you had to earn CHF 10 this month by doing something useful for someone, what would you do?" Write down all their ideas, even the wildest: washing bikes, selling drawings, walking a dog. Pick one and help them make a little table: what it costs, what price to sell at, how many they need to make CHF 10.
Read also: When a company says thank you
Further reading
- Schumpeter, J. A. (1934). The Theory of Economic Development. Cambridge, MA: Harvard University Press.
- Kirzner, I. M. (1973). Competition and Entrepreneurship. Chicago: University of Chicago Press.
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