Managing Money


Money management is an important skill needed to succeed in business. We have developed this job opportunity to help kids develop this skill. We have created this job to provide kids with options to be able to manage the money aspects of their business. This aspect of the training and business set-up is complex and will take some time and adult assistance.


The ideal selling process is to create a situation in which people pay you cash and you immediately e-mail the e-book (we will discuss how you will make payments for the e-books you sell as you will need to use a credit card to purchase the e-book for your customers).


There are other options which need to be considered to make the product more attractive to customers. You also have to be aware of competitors and alternative ways to buy this product. There may be another kid selling in your area and offering more attractive selling terms (discounts, credit terms, time of delivery, personalized gift idea)


Another option is a sale on credit.


Sale on credit has risks and complications, but it can be more attractive to customers, which could lead to more sales. In this situation, you sell an e-book and deliver it to your customer and then ask for payment. The risk is that it can be difficult to coordinate the payment later or for some reason they do not pay. The complication is that you have to cash-flow the purchase - you have to pay before you receive the money from your customer. To provide your customers with sales on credit, you need to have credit yourself or a cash balance to make payment or a credit card to make payment.


Example: If you go out and sell 10 books on credit. (sell the books, but do not receive the money until after you ship the book via e-mail);


You will have to pay 10 x $6.99 which = $60.99. Therefore, you will have to have this amount of money available from savings or a loan or with a credit card to make the purchases. If everyone pays you after the sale; you will make 10 x $9.99 in sales which equals $99.99. You will pay $60.99 and make the difference as profit, which is $99.99 minus (-) $60.99 or $30.00 in profit (difference between the sales and cost of goods expenses) Your profit (assuming no other expenses) is the same as your sales commission of 10 x $3.00 per book or $30.00.


If one person does not pay for the book that you sold them on credit; your profit would be reduced by the $9.99 and you would only make a profit of $30.00 - $9.99 or $20.01. The lesson is that credit helps drive sales, but the risk is that people will not pay. The business term is "bad debt" if people do not pay. The term account receivables is sales on account for payment to be received later.


It is important to decide who you give credit to. It is hard to really know your customers and if they will pay you. This is a complicated issue for businesses and there are "credit rating services" to help. One strategy businesses use is for the first purchase to be C.O.D (cash on delivery) or cash in advance of receiving the product. Once the customer demonstrates payment in cash then they can be considered for credit sales.


The issue with you extending credit terms is is how you will make payment to purchase the product online at Smashwords. You need to have credit available(cash or loans or credit card) to provide credit to customers.


An option is to work with your parents or a financing partner to provide you with a pre-paid reload able credit card or gift cards.  Visa and MasterCard offers a gift card that could be used for your payments online. This would be a good gift idea to launch you into business.


You can do a google search for "visa gift cards" or "mastercard gift cards" and you can obtain the necessary information.




In Canada


In the UK


Can I use my Visa Gift card for online or phone purchases?


Yes. However, to make an online or phone purchase, you will need to register your card. You can do this by either calling the issuer, or by visiting their web site. When you make an online or phone purchase, the name, address, and phone number you use will need to be exactly the same as the information you provided when registering your card. If the information is different, the transaction may be declined. You can verify or update your information by visiting the card provider's web site, or by contacting them using the toll-free number provided in your card documentation.


Online Payment Processing (

Examine the option of opening a account to receive payment online from customers. This would allow cash transfers and credit card purchases from customers. There is a charge for handing transactions of upwards to 5% on the value of the sale. On a $10.00 sale the processing fees from PayPal could be approximately $0.50 or 50 cents. This is an expense which will reduce the amount of money you make (profit). This is a "cost of doing business" or a cost you need to incur to do business.


Having a Paypal is also an option for you to pay for e-book purchases from If you open a account,t you could receive payments from customers and make payments to


This would also allow you to further develop your business to online sales from a website.


Accepting Bank Cheques


You can explore opening a bank account which will allow you to deposit money (cash or cheques).

There are costs to maintain a bank account and for making deposits and withdrawals. Check with banks in your area to understand the type of bank account that makes sense for your business needs and the costs of operating the bank account.