Thursday, June 28, 2007

Business 101

There's nothing like a lemonade stand to teach your kids about business. I felt like Donald Trump with all the wisdom I was imparting. Yes, I am a huge fan of "The Apprentice", and I always loved his common sense bits of information that were peppered throughout each episode. He would preface each with, "In life, as in business....." I took that format and ran with it. The kids just want to make a quart of lemonade and sit at the end of the driveway, make a few bucks and call it good. I, on the other hand, am trying to use this experience to teach them a little about how business works. After all, don't most successful entrepreneurs get their start from a humble roadside lemonade stand?

First of all, every business owner needs "seed" money-- the old adage, "You have to have money to make money" holds true for any business. They didn't have to fill out tons of paperwork for their business loan, it came from a mom who can spot a good investment when she sees one. (let's see, they are busy doing something productive, working together, making some money, and providing material for a blog post. Not a bad investment at all.) We were off to the store to buy cups, ice and lemonade.

The second lesson they learned was that the success of your business comes down to marketing and pricing (why yes, I did learn that from the Apprentice, why do you ask?) We found out something very interesting. When the price for a cup of lemonade is set at 50 cents, the customer is more likely to wait for their change back. BUT, when the price was only 25 cents, about one in three customers would give them a whole dollar and tell them to keep the change. Why, I don't know but that's what happened. It would certainly make a very interesting study for a doctoral thesis, don't you think?

Having a cute little stand helps to bring in customers because it catches their attention, and that my friends, is marketing. It doesn't really matter if you have the best lemonade in the world if nobody stops to buy any, am I right? (oh The Donald would be so proud!) The kids borrowed our little Tiki stand from last year's Survivor Party and transformed it into a very cute little stand just by turning the Tiki Bar sign around and finding some stickers to spell "LEMONADE".

Another thing the boys learned is the value of a cute little sister. She can bring in the customers like nobody's business, just with her little princess wave and her cute little voice saying, "Lemonade for sale, 25 cents." If you can drive past something like that without stopping and buying a cup, then you have a very hard heart and bigger problems than lack of a quarter and a little thirst.

The next thing they learned is that said little sister works fairly cheaply, although she will insist on drinking a few cups of lemonade. Each time she earned a quarter, she would turn around and buy another cup.

They learned that fireman ALWAYS stop for a drink and a little conversation. It seems they have a soft spot for kids who run lemonade stands. They were the best customers ever.

Another thing they figured out is that you can make your product stand out simply by using fancy descriptive words (this is the generation of kids who have been marketed to from the time they were born, after all) They are good at it. "This lemonade is made from the finest quality water, includes the cup AND ice!"

The best thing to come out of this is to see the kids earn their own money and have the satisfaction of a reward for their hard work.

Never mind that the supplies cost mom $10.00, while the kids earned $8.00. Those two dollars have an important function--- they are an investment in future entrepreneurs.

1 comment:

Shelly said...

I just came across your blog from the Catholic Mothers blogscroll...that is one *cool* lemonade stand!! Dh work? :O)