10 Business Lessons Learned From the Lemonade Stand

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Last Saturday, my six year old son Nick became an entrepreneur.

He wanted to set up a lemonade stand. My wife, who has happily professed not to have a single entrepreneurial bone in her body, insisted that I tackle this project with him. Working with him on this project reminded me of some very grown-up problems people have with running their own business, and I thought I’d share them here.

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1. Location, timing, marketing and sales are at least as important as a good product.

And man, we had a good product! Fresh-squeezed lemons, water, and a mix of sugar and splenda. This was the best lemonade I’ve had in many years. Simple, but we nailed the recipe. Was it enough to bring the customers in?

Of course not!

And while my wife rolled her eyes in the other room, my son and I had a ‘business development meeting’ in the kitchen. I think Nick would have been content to sit on the curb with a cup of lemonade in his hands, hoping someone would stop and ask to buy it from him. Through some guided questioning, we came up with a plan to sell and market the lemonade. We decided on a location (we live on a corner…perfect!). We also made signs. My three year old (Finn) made his own sign, which you can see being used as a floor covering in the above photo. We talked about how it might take a long time to get that first sale, and that he had to have patience. We decided on a price of 25¢ per cup.

2. Know who your customers are, and why they buy from you.

We discussed the demographics and basic customer profile. I explained to my son that there were two types of people who would buy lemonade from him: kids, who just want stuff because it’s there, but don’t have any money of their own. And grown ups, who think kids with lemonade stands are really cute.  These grown ups will buy lemonade even if they don’t want it, if they think the kids are cute enough.

I suggested that he and his younger brother waive and smile to cars as they drove by, for maximum cuteness and to attract the attention of an otherwise-distracted potential customer. I on the other hand should not be too close by, as this would drive down the cuteness factor considerably. I proposed instead that I wash my car in the driveway. This proposal met with some resistance from my eldest, as he’s a little shy. He just didn’t understand that no one wants to buy lemonade from some old dude on the corner. But he eventually agreed.

3. Know your strengths and weaknesses.

If you’re not good at something—for example, sales—make sure you’ve got someone on board who is.

It turns out Nick was so painfully shy about actually interacting with potential customers, that he couldn’t bring himself to waive. Nor say hi. Nor say thank you. About all he could do was bury his chin in his chest, look at the ground, and pour lemonade. Fair enough, we all have our strengths. He decided to get his three year old brother to do the waiving and saying hi instead. The little guy has NO reservations about chatting people up. He will one day be the skydiving member of the family, and will make a living selling trunks to elephants, straw to scarecrows and will no doubt be the boy your mother warned you about. Finn decided that cars two blocks down from our corner, heading in the opposite direction were in fact potential customers, and he shouted at the top of his wee little lungs to get their attention.

4. Partners don’t always see eye to eye.

Finn however has the attention span of a…umm, what was I talking about? Oh right. Finn got bored very quickly and decided that playing with toy cars was a much more interesting pursuit. His most favorite thing in the world is to talk about how fast Lighting McQueen goes. Speed, speed, speed, it’s all I hear about. Oh that and crashing. He’s always rooting for me to go really fast on the freeway and then crash. I find this unsettling.

Nick however is very much a “leader”. And by that I mean a control freak. It’s ok, his mother and father are both control freaks eldest children as well. His business partner’s sudden abandonment of responsibilities was a serious blow to company morale though. Nick stuck by that lemonade stand as long as he could, but it was difficult remaining on-message when his little brother was racing and crashing and racing and crashing, all with chortles of glee every time the blue car fell off the wall. How’s a six year old to make any cash with all that racket going on?

5. You must always have a “call to action”

Our first sale…excuse me, the boys’ first sale was to the mailman. He walked by just after we set up our prime retail location. He chatted with us for a little while. Ok, he chatted with ME a little while. Nick practically hid under the table. Finn mumbled something in threeyearoldese about crashing and red cars and going fast. I waxed poetic about the benefits of building confidence and the entrepreneurial spirit in children, and the mail carrier thought it was just great that the kids were selling lemonade on such a beautiful day. But did he offer to buy a cup? No! Why? Because there was no “call to action”. No request that he actually buy something.

6. “Free” is the best four letter word around.

So as the mail man walked away, I shouted after him: “hey…postal workers get free lemonade. Want some?” So he turned around, walked back, and ponied up 50¢ for a 25¢ lemonade. Our first sale!

7. Not all lessons from lemonade stands translate into the adult world.

He paid double for something, when he didn’t have to. We had another customer that day—yeah that’s right, we had two customers, what are you going to do about it? You gonna talk smack about me and my boys? Huh? HUH???!!

So he and this other customer (a dad and son who stopped their car and paid $1 for 50¢ worth of lemonade) both paid double the asking price. Never having tasted it. From a dicey, un-permitted, un-health-inspected street vendor in the middle of BF-Ventura California.

What’s up with that?

I hardly ever have clients offer to pay double my asking price for photography services. I can only assume that Nick was not charging enough for his lemonade. Either that or he’s just waaaay cuter than I am. Probably he’s not charging enough.

8.Initial success can make subsequent plateaus harder to handle.

Ok so Nick made two sales in the space of about half an hour. That’s a nice warm up. Middle of the day is the hottest, and the most lemonade-friendly…but people are usually somewhere by then. In the morning and evening, they need to get somewhere. But at 11am, they are already “somewhere”. So traffic slowed down. Well it didn’t slow down for Finn, who was still flying at lightspeed toward some imagined brick wall of doom in his red race car. But for the rest of us, well it was the business doldrums. The time when those who are going to make it in business buckle down, and the flim and the flam, and the flotsam and jetsam of the business world pack up and go work for the man. (Honey, I don’t mean you. You always work for the man! You’re consistent. I love that about you. Now please balance the checkbook because I’ve been spending again…)

That’s right, thirty minutes into the business venture, Nick wanted out. Finn was having the most fun a child could have, from the perspective of one who is shackled, figuratively speaking, to a lemonade stand. Meanwhile Nick had made $1.50. That is SIX TIMES his weekly allowance for doing chores. Yes that’s right, we run a tight ship around here: you do your chores, you get a whole quarter! Or if Daddy is feeling generous…ok, let’s be frank, the exchange rate is set by mommy…you can have two dimes and a nickel instead! But do NOT ask for twenty five pennies.

9. Know when to get out of the business.

So Nick is thinking, hey man, I’m way ahead. I’ve made my easy money. I’ve got dad to make the lemonade, plan all this out, and carry everything out to the curb. This is soooo much better than stocking the toilet paper in the bathroom cupboards and watering the plants in the front yard. What kind of chump am I, sitting on this corner watching the world go by? It’s time to pack it in.

10. Your investors might not always agree with your management style

“You want to WHAT??! We just put this murmblefrugin table out here! You can’t give up yet!” And then he pointed out the obvious to me, which is that he’d made his big score. I suggested he go the distance. He balked. I suggested he wait until I’d finished washing my car. He balked. I informed him that I would not help him bring the stuff in until I’d finished washing my car. So he waited another ten minutes, left the money sitting on the table ($20 worth of change, not just his profits) and played cars with his brother.

That’s ok. Nick was happy he made some money, and moreso was happy that it was all over. I got some free lemonade from the deal. My wife, bless her, actually paid him a quarter for it. When Nick tried to get the same from me, I explained that I was an investor, had put up significant sweat equity, and was entitled to a free cup of lemonade. What am I, a charity?

And I made him bring all that stuff back in the house.

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