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7 Business Lessons from a Lemonade Stand

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The weather is warming up, children are getting out of school, and many summertime memories of our own come back to us.  Among these memories is that almost all of us along with with a friend, made a pitcher of lemonade and set up a stand. It turns that this simple lemonade stand also served up some interesting business lessons.

1. Deliver the best product you can. We started out selling better-quality lemonade we mixed from frozen concentrate. But when that ran out, we abruptly switched to some leftover powdered stuff with artificial sweetener scavenged from some forgotten corner of a kitchen cabinet. Guess what happened? Sales—which had been brisk—floundered.  We went back to our old recipe, this time adding slices of real lemon and crushed ice to help signal a product upgrade.

Lesson: “Crystal Light isn’t very good stuff, and the good stuff sells.”

2. Location, location, location. This real estate mantra applies to retailers, as well. The  entrepreneurs that set up on their street did okay but their was not that much traffic. Others that set up outside malls or in the middle of town did better. The ones that moved their setup to the head of the boardwalk leading over the dunes, and created their messaging around their unique value proposition, scrawling in marker on poster board: “Last stop before the beach!”

Lesson: “People will buy if they walk by you and then start to worry that they might get thirsty on the beach.”

3. Brand extensions can kill your brand.  If lemonade is selling like hotcakes, why not add… well, hotcakes? Or chocolate chip cookies? And corn muffins? And why not sell dog treats to dogs?

Because you can easily dilute your brand as well as increase your overhead exponentially, and you might bankrupt your enterprise if you don’t carefully manage the brand extension and market it sufficiently. In other words, it’s better to offer one great product and market it really well than haphazardly roll out a mish-mosh of things that drain resources and confuse your messaging without producing results.

Lesson: “No one eats corn muffins with lemonade. It was just a bad idea.”

4. Develop an integrated marketing plan. The kids that rolled out a multi-pronged marketing effort, which included low-budget outdoor advertising (they taped creative to nearby telephone poles), display (they posted a notice on the town bulletin board), and word of mouth, which is always free.
(“Tell your friends!” they said cheerfully to each customer; meanwhile, a third friend rode her bike around the streets, shouting, “Lemonade by the beach! Lemonade by the beach! Get yours today!”)

The kids could have rocked Foursquare and Twitter, too: Creating demand, and sharing news and updates, like so many cash-starved small businesses like theirs.  But these are kids, remember: I wasn’t about to risk my iPhone getting dropped in the sand.

Lesson: “You don’t have to spend money on advertising to get customers.”

5. Humanize your business. Children can sometimes be shy with strangers, but still they chatted up each customer who happened by, asking them how long they were in town for, or where they were from, or whether they were having a nice time on vacation. In return, they shared a little of themselves, too.

We felt awkward at first, they said, but then made an effort to be personable and real. We revealed a little bit about the people and personalities running our small stand, allowing our customers to connect with us on a human level.

Lesson: “It was weird at first, but it got easier as the day went on. Anyway, it was more fun talking to people than just standing there.”

6. Speak the language of your customers. Communicate with your customers in the words and language they use to describe your products and services, not the words and language you use or prefer. For example: Is your company a telemarketing outsourcing company, or an outsourced call center? Knowing which makes a difference for both your marketing and search engine efforts.

Lesson: “We got more customers because we could talk to everybody!

7. Have an exit strategy—or not. But at least know where you are going. I suppose each business owner makes a personal choice of how aggressively to grow a business: Ultimately, it’s a personal choice of whether to reinvest in the business and grow it, or to create more of an ongoing lifestyle enterprise that funds a solid living with the occasional extravagance. (Or, of course, something in the middle.)

By the end of the first day, the we split up our earnings and never had so much fun but decided that the long-term growth option didn’t interest us all that much.

We effectively dissolved a promising partnership—one which (you could argue) would have paid off consistently in the summers to come. But with basketball, baseball, and riding our bikes. we had other plans.

Lesson: “That was fun. But it was a lot of work. I’m glad it’s over.”

Adopted from 6/19/10 American Express Open Forum Writer Ann Handley


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