There are three adjustments that we need to do. There are two screws, one to define the high limit of the derailleur arm and one to define the low limit of the arm. Setting these limits properly will prevent having the chain fall off of the gears in the front by going outside of 1st or 3rd gear. After that, the cable tension needs to be adjusted so that the bike will shift smoothly.
First, shift the bike so that the chain is on the smallest sprocket in the front, and the shifter on the handlebars is indicating 1st gear. Now, looking at the body of the derailleur, you will see two screws, right on the top of the derailleur itself. I've attached a photo above with these two screws indicated. Push the derailleur arm towards the bike, looking inline at the gears from the back of the bike from the front. Use a Phillips head to adjust the lower limit screw (the right screw, marked with L in the plastic). Loosening this screw will allow this arm to travel closer to the wheel, while tightening it will make the derailleur arm stop farther away from the wheel. You want the silver guard that goes around the chain on the derailleur arm to be centered with the smallest gear as shown in the picture below.
Next, shift the bike so that the chain is on the largest gear, and the shifter on the handlebars is indicating 3rd gear. Leaving the derailleur arm alone, use the Phillips head screwdriver to adjust the upper limit screw (The left screw, marked with H). You want to make sure that you can adjust the screw and see the arm moving, and that the silver guard that goes around the chain on the derailleur arm to be centered with the largest gear as shown below again.
Now, try leaning the bike forward on the kickstand so that the rear wheel is off the ground. Spin the pedals, and shift the bike through the gears, one gear at a time. If the bike is having trouble climbing into the next highest gear (as you're shifting from 1 up through the gears to 3) then you should stand at the front of the bike and twist the barrel adjuster half of a turn clockwise. If it's having trouble downshifting, from 3 through to 1, then you can try turning the barrel adjuster counterclockwise by half a turn at a time, each time testing to see if the bike shifts smoothly. You can see the barrel adjuster indicated in this picture.
If you have any questions about this process, please contact us and we’ll be happy to help any way we can!