Tuesday, August 14, 2007

Money & Management Lessons From a Lemondade Stand

A very profitable lemonade stand fills the gap between school and camp for my kids. My youngest children -- elementary and middle-school students -- earned about $60 in their first two days (less than three hours total) as beverage entrepreneurs.

The lemonade stand did more than fill their wallets with cash. We all learned some valuable lessons about sales and personal finance. Here are our group lessons:
  • Earn money from something you enjoy. "A lemonade stand is an easy way to have fun and get money," my son said. All of the career management/get rich books that I have read make the same point. "No man can succeed in a line of endeavor which he does not like."--Napoleon Hill in Think and Grow Rich (Ballantine Books.) "Successful people do what they love to do." --Brian Tracy in Change Your Thinking, Change Your Life (John Wiley & Sons.)

  • Expect disappointments: "Some people pretend they're going to stop [for lemonade], but don't," my daughter said as she described false leads. Career gurus offer this advice: "Don't take it personally," --says Brian Tracy in Change Your Thinking, Change Your Life . Failure can be our best teacher,” says Gillian Hennessy-Ortega in It’s Not Where You Start, It’s Where You Finish (John Wiley & Sons.)

  • Accept or solve difficult working conditions: "Being in the hot sun is very hard," said my daughter. On Day 1, she stopped working after an hour. On Day 2, the young entrepreneurs finally accepted our advice and moved to a shady spot.

  • Marketing Matters: "You have to yell lemonade to get attention," my daughter said. Her brother also held an attractive sign. The marketing mavens agree: “In high performing organizations, everything starts and ends with the customer.”-- Ken Blanchard in Leading at a Higher Level (Pearson Prentice Hall)

  • Do the Math: "The hard part: you have to give people change and figure out the math," my daughter says. Napoleon Hill in Think and Grow Rich would applaud her statement: "Money without brains is always dangerous."

  • Carefully select business partners: My 12-year-old son recommends setting up a lemonade stand with a younger partner. Why: "It gets more money," he told me. The cute factor is instant gold. His sales slowed down when my daughter (the younger biz partner) retired early one day because of the heat. As a pair, they were unstoppable. The business management world agrees about the importance of careful selection of partners for professional and personal collaborations. Team work is important: "When teams function well, miracles happen.”-- Ken Blanchard in Leading at a Higher Level (Pearson Prentice Hall)

  • Contain costs: Through trial and error, my children developed a winning and profitable recipe for lemonade. Filtered tap water, ice, powder mix and a few slices and squeezes of lemons or limes. It's expensive and time consuming to produce fresh squeeze juice from lemons and limes, my son said. "Using powder is easier than actually squeezing lemons," he told me. We did, however, enhance the mix with lime slices, juice and pulp.

  • Location, Location, Location: My kids set up shop on a high-traffic corner and on the second day, they moved under a large shady tree. A real estate agent was hosting an Open House for a large home. The corner was decorated with large signs and balloons from the Open House. The real estate agent cut a deal with my kids: She directed traffic to their stand and encouraged them to promote the Open House.

Lemonade Advice from a Corporate Finance Specialist:

Location is very important for many businesses, especially a lemonade stand, says Michael Mitirione, a mergers and acquisition specialist. The kids who operate a highly successful lemonade stand in his neighborhood usually select a high-traffic spot.

"They sit on the corner inside the guard gate," Mitrione says: "Location, Location, Location."

Here are my other tips for parents of Lemonade Stand Entrepreneurs:

1. Keep tabs on the stand. My children were close to our home. I could check on them through the window. My husband and I constantly visited the operation. They were also on a high traffic area under the watchful eyes of neighbors and friends.

2. Let them make the signs. Their handmade signs were eye catchers.

3. Make them pay for the ingredients. When we paid for the ingredients, a fortune was spent on lemons, sugar, cups, etc. When the raw materials came out of their own pockets, they opted for frugal powder mix. (We kicked in a few limes for added spice and flavor). This pay-for-it-yourself procedure provided an education in profits, costs and losses.

4. Encourage the kids to establish their own hours. Let them be self-starters. Our kids decided when to open and when to close.

5. Assist with the preparations, but don't force the kids to accept your ideas. My husband and I had our own ideas about the stand and marketing. We offered our tips, but let the kids select their options and business practices.


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cindy@staged4more said...

I really appreciated this post. As a small biz owner, a lot of these ideas seem simple yet it really resonated with me. Most people dove into opening their own businesses having grand ideas, but that's just the easy part. Anyone can open and start a business, sustaining it is a whole new ball game.



Chief Family Officer said...

Your kids sound so cute!

Michael Donlan said...

It sounds like your kids have got good business sense. Is it genetic?

I hope you can visit my blog (littleengineblog.blogspot.com) where I am reviewing the book “Think and Grow Rich”. I would appreciate your own insights on the book.