Worm factory lesson: reinvesting profit

In another post I talked about setting up a small business to teach children entreprenership.  In the next series of posts, I write about the lessons that are being taught to my children from a simple worm factory. This post is about reinvesting profit into the business.

My household currently produces more organic waste than the worm factory can process.  So we have been thinking of adding to the factory’s capacity.  In worm farm terms, this simply means adding more trays to the worm factory. The business currently has $20 in profit.  We could use this profit to pay for ice-cream or we can reinvest it into the business.  I explained that reinvesting the profit wisely back into the business means the business can make more money in the future.  It is also better for the environment because we can recycle more of our household organic wastes into the worm factory.

Business needs vs wants

So we decided to reinvest it back into the business.  We are now faced with 2 options.  A set of 3 trays cost $80.  A worm farm blanket costs $10.  The business can afford to buy a blanket now or we can save the profit and buy more trays at a later date.

The purpose of a worm farm blanket is to help keep the farm in an ideal condition for the worms to thrive.  It keeps the moisture inside the farm so the worms do not dry out.  It blocks out sunlight to keep the farm dark (worm’s don’t like light) and in the Summer months, it helps keep the farm cool.

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After discussing whether to buy the blanket now or more trays later, we decided not to buy the worm farm blanket because it’s not something the business NEEDS right now.  The worm factory has thrived for many years without a blanket and whilst it is aesthetically nice to have one, it is something we that WANT not something that we NEED.

… whilst it is aesthetically nice to have one, it is something we that WANT not something that we NEED.

Having a worm farm blanket is also not something that will increase the earning capacity of the business.  Keeping the worms thriving will not produce anymore worms if the living capacity of the farm is limited.  So if we want to process more of our organic wastes, we need more space in the factory.

Do you have a small business that you can involve your children in?  Share it with us in the comments.