Yesterday on my daily walk, I rounded a corner to the sound of a young girl playing her guitar. She wasn’t bad for a 10-year-old so I crossed the road to listen more closely and found her two younger sisters busy selling their product – homemade cookies.
I doubt that they understood the term “lean startup”, and for sure they had never heard of Eric Reis, Ash Maurya or any of the other gurus of the 9 segments of the lean canvas.1 I wished my university class from this past spring session could see the positives and negatives of this little business startup.
Quality Product: It is tough to find homemade cookies nowadays and my city is fairly affluent with plenty of discretionary money, especially residents in this area. So, they had hit upon a viable product. The girls did have some commercial bagged popcorn for sale but there was no customer interest – the customers wanted the homemade stuff.
Customer segments: It appeared they understood the importance of a strategic location right on the Burke Gilman Trail where hundreds of joggers and bikers pass daily. Old boys like me stroll slowly by and young bucks sail past on bikes built for this 14-mile former rail bed. They knew many of us would love the idea of taking home kid-friendly star and moon homemade cookies with sprinkles.
Problem to be solved: I asked them what motivated them, attempting to draw out their value proposition. They readily replied they were broke and needed some cash for summer spending. At one dollar a cookie, I decided to keep my cash outlay to five of the sprinkle cookies for the five grandkids back in my house and forego purchasing the chocolate chips. I might have doubled my order if the proceeds had been going to a good cause such as the homeless of our city; something these little entrepreneurs might have considered more closely.
Cost – Revenue Structure: The kids’ sales forecast indicated a high margin as the cost of the ingredients was pennies on the dollar; however, they discovered that baking cookies is labor intensive. They had been working in a hot kitchen all day the day before. There was no other overhead to speak of since the grassy shade provided a welcome break for the runners and kept the product safe from ants and mosquitoes.
Marketing: The kids were pretty much on target about the demand side of economics, but discovered how hard the supply side was, with the labor-intensive baking. I was willing to agree to their pricing model, as a treat for the grandkids at home. The older girl playing the guitar was an ingenious marketing technique and provided for a good conversation while deciding on which cookies to buy and how many.
Organization and Operations: It was pretty clear that the 8-year-old was in charge. She answered my questions and made recommendations when I asked what they thought my grandkids would like. The older girl had musical talent, so she was well qualified to display her skill for the benefit of the business. The seven-year-old served as a much-appreciated gopher.
Sales Strategy: Their plan was for each customer to buy one or two cookies and walk away eating them, but they were unprepared for contingencies. When I asked for a bag for my five cookies since I had a good walk ahead of me, they had none; but a good attitude ensued and the youngest girl ran to her mother and returned with zip lock bags.
I came home to my five grandkids aged four to ten. Before they each got one of these cleverly decorated cookies, we discussed the little business which I had visited and with delight I listened as they brainstormed what entrepreneurial activity they could generate. Of course, it was not long until one of them said, “Grandpa will you help us?”
The following website suggests that children can be prepared early on in life to think with an entrepreneurial mindset and parents and grandparents can help.Child Development Institute: How To Help Your Child Be an Entrepreneur
1. Cut the allowance
2. Encourage entrepreneurial activities
3. Be a mentor
4. Teach basic bookkeeping
5. Teach your kid to fish
1. Ries, Eric. The Lean Startup. Random House, New York, NY. 2011.
Larry Sharp, Director of Training, IBEC Ventures
larry.sharp@ibecventures.com