How to Calculate Startup Costs for a Kids’ Business

Startup costs are the money you spend before you’ve sold anything. For a kids’ business that’s usually supplies, packaging and maybe a table fee. Working them out together before shopping is a simple habit that teaches budgeting, planning and patience.

Step 1: Make a shopping list

List everything needed to make the first batch. Then go through it together and cross off anything you already have at home. Scissors, markers, kitchen bowls and an oven usually don’t need to be bought.

What usually belongs on the list

• Materials that go into the product itself, like clay, beads, paper or ingredients.
• Packaging: bags, tags, labels or boxes. These are easy to forget and add up quickly.
• Display items for selling in person: a tablecloth, a sign, a small stand.
• Fees, such as a market table fee. Ask the organizer before you plan your budget.
• A small buffer, about 10%, for the thing that breaks or runs out at the worst moment.

Going through the list out loud is a great conversation starter. Ask your child which items are “must haves” for the first batch and which are “nice to haves” that can wait until the business has earned some money. Learning to tell the difference is one of the most useful money skills there is, in business and in life.

Step 2: Look up real prices

Check prices at a craft store or online and write them next to each item. Compare two options for the most expensive items. This is a great moment to talk about quality versus price.

Step 3: Separate one-time and per-item costs

Some things you buy once and use many times, like molds for bath bombs or starter plants for a succulent business. Others get used up with every item, like clay or packaging. Knowing the difference helps kids understand why the first batch is the most expensive.

Step 4: Work out the break-even point

The break-even point is how many items you need to sell to earn back the startup money. Take the total startup cost and divide it by the profit on one item.

Everything sold after sticker number 45 is profit. That can sound like a lot, but bundles like “3 for $5” get there quickly, and the tablecloth, display and sign can be used at every future market. Kids love tracking this on a chart, coloring in a square for every sale until they reach the break-even line.

Ways to keep startup costs low

• Start with the smallest pack of supplies, even if bigger packs are cheaper per item.
• Use what’s already at home before buying anything.
• Make one design first and test it before buying supplies for more.
• Ask grandparents or friends if they have leftover craft supplies.
• Avoid buying tools you may only use once.