The Green Sheet Online Edition
January 09, 2012 • Issue 12:01:01
Lessons from the lemonade stand
A freckle-faced child selling lemonade at the roadside is reminiscent of a Norman Rockwell painting. But the image happens to represent entrepreneurship at its most basic level. Imagine the setup.
The business is nothing more than a stand made of a used produce crate, a red wagon to transport pitchers of lemonade and plastic cups, a lawn chair to sit in, and a cardboard sign saying, "Lemonade - 25›." Of course, the "startup" is parked on the sidewalk at a busy intersection.
First of all, admire its simplicity. The overhead costs are minimal - a few dollars for cups and instant lemonade mix, no rent and no 1099-K forms to fill out. Then recognize the clear-cut pricing and the equally straightforward product. The young go-getter is not trying to reinvent the wheel; it's a tried-and-true product that has inherent value for consumers, especially on hot summer days.
Simplicity with a twist
But the lemonade is not simply water and lemon-flavored sugar mix. The child has incorporated freshly squeezed lemons into the drinks - the key attention-grabber. And notice that the business supports a local charity. A discreet jar placed on the stand is there to collect donations for school supplies for cash-strapped local schools. When customers break dollar bills to purchase lemonade, they often drop the leftover change into the jar - and feel good about it.
Because the entrepreneur is an exceptional math student, accounts receivable is assiduously kept in a notepad, with the proceeds deposited in a shoebox for the nightly batch to the child's sock drawer. Profits are then poured back into the business to pay for more cups and lemons, and maybe an assistant for expansion to a second stand.
The basics of business never change. This four-foot-tall lemonade vendor is essentially in the same business as ISOs and merchant level salespeople selling sophisticated services with complicated pricing to merchants. At the beginning of a new year, the example of a child's lemonade stand can serve as a reminder of the fundamentals that make a business successful.
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