It Takes Money, To Make Money

This month in my entertainment business finance class we are learning the importance of personal and business financing; along with finally giving our dreams a sense of reality by figuring out how much money it’s going to take to open and operate our personal business plan on a day to day and year to year bases. 

It is often said that, “It takes money, to make money.” Take a group of kids selling lemonade on the corner of the street, for example. Before they can sell ice cold lemonade they have a few startup cost that they will need to considered. How much will it cost to build the lemonade stand? How much will it cost to buy the supplies needed to make the lemonade? And of course you can’t forget about the cost of the cups and ice. Overall, they are looking at spending around thirty dollars before they have even sold their first cup of ice cold lemonade. 

So the group of kids get together and find out that they only have twenty dollars between the three of them, so they decide that it’s time to go and find an investor, on in this case mom, and ask for the remaining startup cost of ten dollars. An investor, also known as “mom”, will want to know that the kids have a plan, for what they plan to spend the money on, along with when she will receive her ten dollars back, plus interest. After some negotiating and deal making, the group of kids and “mom” come to an understanding. 

After all of the supplies is bought, and the ice cold lemonade is ready; it’s time to open for business. The group of kids start selling a cup of ice cold lemonade for twenty-five cents. After a week of selling lemonade the group of kids finally make back their original investment of thirty dollars. So they pay off their investor, “mom”, and continue to sell ice cold lemonade. So in the end the old saying still holds true, “it takes money, to make money.” It took the group of kids thirty dollars, before they could start to make money.