In the last week of term at Grant High School in Mt Gambier, they conduct the $20 Boss program. The program requires students to create a business with $20 and learn how to identify and deal with the problems that arise when establishing a business.

My daughter, who teaches at Grant High School, invited me to be part of the program through providing feedback to the students on the budgets they prepared as well as how to price the products they intend to sell.

My interaction with the students lasted about 90 minutes. I had loads of fun as I listened to the students explain the budgets for producing the product they were intending to sell and how they decided on the selling price for that product.

The consistent themes across the groups of students I met were:

1.    The budgets did not include the cost for their labour in preparing the product for sale; and
2.     When setting the price there was little or no consideration given as to the amount of money that would end up in the students’ pockets.

In reflecting on these themes, I realised I was having the same conversations with my clients  as they looked to establish and grow their businesses.

Thus, it does not matter where a business is in its life cycle, the business owner must ensure:

1.    They establish their worth by paying themselves a market salary for the role they play in the business; and
2.     To decide on what is an acceptable rate of return on the financial investment they will make in the business.