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Lemonade Stand Business Plan and Design

lemonade-glass

This is an excellent guide for anyone wanting to start a lemonade stand business. It contains a detailed step-by-step business plan for planning, starting and running a lemonade stand business. The best part is that you can download and print a PDF of the design to build your own lemonade stand table with overhead banner.

As a background, several years ago my four sons came to me and said they wanted to start making some money for themselves. After going through endless ideas such as selling all their toys, they decided to run a lemonade stand. Being the crafty father, I seized this opportunity to teach some fun but serious lessons in entrepreneurship. Below are some the things they did.

Also, it should be noted that in their third year of business they entered Inc. Magazine's lemonade stand contest and won some awards. They were even invited onto Good Morning America with their lemonade stand which was a blast for the boys.

 

Kids as Entrepreneurs

Looking back over this experience, I believe that I learned almost as much as my children did about starting and running a business. It sounds kind of silly that a successful business person could actually learn from a kids lemonade stand but that is what happened. It may have been the sheer simplicity of the endeavor with all the politics and distractions stripped away. In any case I would recommend this experience to every family and even business people who need to be refreshed with the basics again.

If you are interested in entrepreneurship for your children or at least curious about the subject, you should watch this TED talk by Cameron Herold titled "Let's raise kids to be entrepreneurs."

Please tell us about your family entrepreneurial adventures in the comments below or contact us directly.

 

Planning

  • Name / Brand
  • Company Structure
  • Product Distinction
  • Product Offering
  • Marketing
  • Location
  • Design fixtures

While the planning part is hard for any grown person due to the fact that everyone wants instant gratification, it is a million times harder for kids. This is the really boring stuff and not easy to hold their attention while completing. Because of their short attention spans, we broke this into smaller sessions which made this one of the longest parts.

The first part they worked on was deciding what to call their business. This was an especially difficult process as they each had different ideas and would not consider each others. I finally stepped in and took a couple ideas from each boy and presented them one at a time. This eventually led to combining a couple ideas into one, "B-Brothers". This worked since each boy's name starts with a "B".

Once they had a name, they felt like they had a group identity and we constantly referred to the endeavor by the company name to build on this.

Now that they felt like a team, we started talking about what roles each person would play. The main one they had to decide on was the treasurer because this would be the money person. That was an easy call for the oldest brother since he was the only one at that time that could add large amounts of money. I had him start a new spiral notebook to track everything moving forward. He built small tables on different pages using a pen and a ruler, nothing complicated just a few columns. He used these tables to track their initial purchase list with costs. He would later use this to track each day's earnings with who worked that day for an even split. He also developed a rudimentary balance sheet in the notebook.

After we had decided on the company name and roles, we started working on some basic marketing concepts. These included defining their product, logo, company image, and location to sell. The boys began to think about what would set their product apart or make people want to pay a premium for it. They toyed with the idea of going organic but decided against it. This is covered in detail in the recipe section. After a lot of discussion they decided that they/themselves would be the differentiator for their product. They decided to put together a cool looking table and to all wear the same yellow golf shirts. They also agreed that the younger boys were very cute and would attract customers with their smiles.

 

Budget & Finance

  • Starting capital
  • Pay back plan
  • Regular operating expenses
  • Inventory Control
  • Decide on pricing options (depends on weather)

The first consideration they had to make was how they were going to purchase the initial equipment they needed to start. After pooling all their money together they had $15. To find out if this would be enough they began to list out everything they would need to purchase. The exact list can be found in the Purchase Equipment section.

Measure and build a project

They figured out that the initial equipment and inventories came to $70 and were immediately discouraged that they couldn't start. I let them know that their mom and I would loan them all the initial money by purchasing these items for them. The terms for repayment would be that the first $70 they made would go to their parents for payment. This was hard for them to grasp as they would work quite awhile and not see any money. In actuality, we only collected about half of that money but the lesson was still learned.

We then briefly discussed how they needed to keep a certain amount of cash in their little box to purchase new supplies as needed.

The most fun they had out of this whole phase was deciding on how to price their product. They discussed things like how wealthy the community is and what they would be willing to pay. They also decided that they would raise prices on really hot days since they could get away with it as the demand would be higher.

They discovered that it is extremely difficult to set their price without knowing what their cost for one cup of lemonade would be. They couldn't determine their cost until they knew their recipe as this determined materials needed. Once they had the recipe they figured out how much material to make one pitcher then how many 16 ounce cups from the pitcher. They finally worked the math down to ten cents per cup. So they set their regular price at $0.50 per cup and $1.00 on hot days. They felt that this gave them a fair profit for their work.

 

Recipe

  • Factors: product distinction (organic, etc.), inventory control (real lemons and waste), starting budget for food supplies
  • Run many taste tests
  • Decide on typical ice content
  • Agree on quality

The boys found out they couldn't set their initial inventory list or their price without first having a consistent recipe.

First they wrote down several different kinds of lemonades and recipes. We then went to the local supermarket and other stores to purchase several different lemonade options. Here is their final list of possibilities for lemonade:

  • Bag of real lemons (Sam's Club®)
  • Country Time® Lemonade Drink Mix
  • Frozen lemonade concentrate
  • 1 gallon jug of Hawaiian Punch® Lemonade drink
  • 1/2 gallon jar of organic lemonade (from Trader Joe's®)

For their homemade recipe, they used an old fashioned hand juicer to squeeze down four lemons into juice. Then they added a half gallon of water and two cups of sugar then mixed. Everyone including their baby sister wanted a turn at squeezing down lemons. While this was great fun for everyone at first, they quickly realized how much hard work squeezing lemons is. This was a key factor in their final decision for a recipe.

The Country Time and frozen concentrate required a little additional work to mix. The Hawaiian Punch and organic lemonade were purchased ready to serve in bottles.

The boys then asked their older sister and mother to taste test each of these options and vote. They were blindfolded and the cups were not labeled so mom and sis had no idea what they were voting on.

The organic mix did not fare well in the taste test and they figured they would have to charge close to $2.00 per cup in order to make any money.

The Hawaiian Punch out of the bottle was rated the worst tasting along with the frozen concentrate.

Mom and Sis agreed that the fresh-made lemonade and Country Time mix were the best.

Because of the cost of the lemons and the hard work involved to prepare fresh squeezed, the boys decided on Country Time as their lemonade recipe. They decided to cut up real lemons to flavor each batch and added slices to the cups for "presentation". They also agreed to keep the Country Time recipe a complete secret from customers. So don't tell anyone ;)

 

Purchase Equipment & Build Fixtures

Initial equipment list:

  • wood for table
  • paint for table
  • hardware for table
  • wagon for transport
  • small cooler for ice
  • 1.5 gallon pitchers x2
  • cloth for banner sign
  • small box to keep money

Initial Inventory:

  • 2 extra large cans of Country Time Lemonade
  • 1 bag of real lemons
  • 2 bags of 16 oz. cups (24 each) These were clear disposable plastic party cups.

 

Put Plan into Action

  • Schedule adequate staffing
  • Prepare signage and do dry run on table set up
  • Check weather before leaving house
  • Guarantee children's safety with rules and proper supervision
  • Supreme customer service

There was a lot of excitement on the Saturday morning of their first day in business. The boys talked mostly about how they were going to spend all the money they were going to make.

They had already gone through a couple of sessions with dad practicing the table set up. They had also gotten practice on making lemonade from the taste tests. This all made for a rather smooth process of getting things ready.

show-money

They checked the weather and determined that on their first day they would charge $0.50 per cup. This worked to their advantage as most people would give them a dollar bill and say keep the change.

Mom was especially nervous about letting the boys be alone so dad helped them out a little and tagged along with the babies. I stayed a safe distance away so they could operate on their own but stayed close enough to intervene should the need arise. We would later purchase walkie-talkies when we felt comfortable for them to go it alone so we could check on them and they could call for help if needed.

The younger brothers' job was to stand beside the table and smile while waving at people and cars as they passed. They found this to be the best marketing they could ask for.

They did learn some hard lessons in customer service when multiple people stopped by at the same time. The boys would get flustered when people looked impatient while waiting. This caused the boys to think of better ways to serve and be more efficient. They also discovered that some people would come back the next time if they really liked the drink and felt the service was great.

They celebrated their first day in business where they made about $20 dollars by walking down to the local pizza parlor and ordering a large pepperoni pizza.

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Timeless Wisdom

Your success as a family ... our success as a society depends not on what happens in the White House, but on what happens inside your house.

 

- Barbara Bush (former U.S. First Lady)