New Venture Lab: Equipping Christian Entrepreneurs

Question

Is it possible for our kids to have a small manufacturing business (like sewing small stuffed animal toys for a specialized tourist shop) and complete with Chinese labor or is this a lost cause from the start?  Can they try just making some items or do you want an LLC before trying to sell any of these types of items?  Are there legal ramifications for a business type like this that we need to be aware of or can we try for a few months?

Answer

I think the labor and materials content would be so high that it would quickly turn into the egg laying example as mentioned in the How to Think Like an Entrepreneur webinar.  I don’t see any reason why you wouldn’t experiment though.  For example, as an experiment, have your children plan, purchase and account for all of the raw materials for 25 units, sew them, and deliver them to the store and track all of their time, fuel, billing costs, etc.  Then they can create a final accounting for their “beta” project and see how it compares to minimum wage as a benchmark and then have them do the math to see how hard they would have to work to hit an annual income (after all expenses and taxes) of $10k, $25k, $50k, etc.  It should be a very valuable lesson for them to want to migrate to a higher value-added type of business model.  I see no need for an LLC or other legal ramifications because of the low risk of the type of enterprise you describe.  Do check with your attorney, however.