My mother interviewed my daughter about her recent business enterprise which draws out principles that are relevant to any small business, and I so enjoyed reading it on her blog, I thought I would share it here:
My grandchildren have just started a business, and the complete business plan is in place. I interviewed Isabel who is 9½. I was inspired by her lovely packaging.
Decide on your product
Lin: I saw a box of eggs that Grampy bought and it had your and Nick’s names on it. How long have you been an egg farmer.
Isabel: Ummm we’ve had the chickens for two and a half months but they have only been laying for about a month.
Work out the details of your product
Lin: Tell me about your chickens.
Isabel:We have four chickens and their names are Willow, Maple, Tulip and Lime and they are Neros.
Start-up Costs – outlay
Lin: How much were they and how much money did you have to put into the business?
Isabel: They were £12.50 each and Nick and I each put £25.00 into the business.
Estimate running costs
Lin: How much do they cost to feed. How many eggs do they lay per week. How much do you sell the eggs for?
Isabel: They cost Nick and I £6 every three weeks to feed them. Well, Mummy has three chickens and we have four, but we each pay half for the food.
Lin: Are there any other costs?
Isabel: Daddy said he would insure them for the first year. Dad insurance works like this: We had to each pay £1.00 (a one-off payment) and then if they die in the first year, he’ll replace the chicken.
Lin: What about the hen-house?
Isabel: Mummy said the chickens can share her hen-house, so we don’t have to pay rent.
Lin: How many eggs do the chickens lay?
Isabel: They lay about one egg a day, sometimes we get three eggs and sometimes five eggs a day.
Estimate selling price based on recouping outlay and making a profit
Lin: How much do you sell the eggs for?
Isabel: £1.40 for 6 eggs.
Lin: What about packaging costs?
Isabel: Our egg boxes are donated and I make the labels.
Lin: Have you got your outlay back yet?
Isabel: Yes and now we are making a profit.
Estimate labour time
Lin: What work is involved?
Isabel: I collect the eggs and feed the chickens on weekdays. Nick does it on weekends and cleans the hen-house every second weekend. Mummy cleans it every other weekend.
Who is the target market? Building a customer base
Lin: Who do you sell your eggs to?
Isabel: We have three regular customers: You, and two of our friend’s mothers.
Lin: How do you promote your eggs?
Isabel: We have an honesty box with the eggs outside our house (passing trade) and we told our friends, and Mummy told her friends. (word of mouth)
Lin: What will you do if any of your chickens stop laying?
Isabel: Get rid of it. (Country children are rather matter-of-fact!)
Well Done Isabel. I wish you and Nick lots of success.
And as you can see, these are the same issues we have to address ourselves…