Perfect Profit: What a Lemonade Stand Can Teach You About Profit

A lemonade stand may seem like simple childhood fun, but aside from the cups of your citrus refreshment lies a world of real-life lessons. Lemonade stands can teach kids about understanding supply and demand to managing costs and the most effective way to price items. A lemonade stand has often been regarded as a young person’s first experience with leadership and entrepreneurship, and it can be a surprisingly significant lesson.

Lemonade stands often start off with a basic question: How can I make money? It’s the foundation of all businesses. Lemonade is affordable, broad, and simple, this is why it is so popular to sell. But even its setup involves key business concepts that are applied to businesses both small and large.

For example, let’s say you spend a few dollars on lemons, maybe $5. $2 on sugar and $3 on cups. In total, you would take $10 to set it up. Even selling each cup for a small price of $1 is enough to break even the $10 spent. Everything after that, is called profit. What we are doing right now is cost analysis, and it is essential to all businesses so that we can maximize profit. Although sometimes not our costs are at the start. Imagine you are running your lemonade stand, and suddenly you run out of ice! You need more supplies immediately, so you need to plan out variable costs to understand ahead of your budget. It is important to always stay prepared, even in the case of a small problem like this.

Another lesson we can learn from lemonade stands are ways to effectively price our goods, which in this case is lemonade. Many young entrepreneurs like you and I sell a cup at $1 a glass. But what if you are selling on a very hot day? Lemonade would likely be more in demand, and you could possibly sell for even $1.50. Maybe you have unique flavors, like strawberry? This adds value and you could put it at a higher price. Understanding the concepts of market demand and product differentiation are essential foundational skills that start at your stand!

Now, all this talk about price, but you can’t sell any lemonade without a smile on your face. A smile, and a well-decorated sign, even a cute slogan (use those puppy-dog-eyes!) can go a long way. These are core to your branding and customer service. You’re not just making lemonade, but putting a smile on their face. Friendly interaction builds loyalty, repeat customers, and bigger tips.

You can even take it further by using social media to advertise your lemonade stand. Offer discounts or referrals, it will attract even more people. These customer service approaches teach social impact marketing, business can be good especially if your intentions are!

Now, let’s say your lemonade stand takes off, and you make $30 in profit. Many kids would spend it immediately, however some reinvest instead. Maybe buy a bigger sign, or some yummy new flavors! This is scaling your business. Learning to reinvest teaches a life full of long-term thinking, and patience to make even more success.

So now you’ve bought your materials, made your sign, shown a smile, and reinvested into your little lemonade stand. But it’s raining? Or another kid is right down the street and you have competition. These unexpected challenges teach can teach you the importance of adapting and resilience. Everyone at all ages, needs to learn to adapt because challenges are everywhere. Think creatively and positively, even in the case of setbacks. Another person is down the street, and is driving you out of business? How can you win your customers back? How can you be more unique? I know! Maybe a buy 1 get 1 half off deal? Come up with new solutions, and most importantly stay friendly, positive, and kind to all.

Now lemonade may look like just a summer hobby, but it’s a business incubator in hiding. A lemonade stand teaches kids to calculate profit margins, develop customer relations, and to think outside the box even with problems. It also encourages ownership, builds confidence, and introduces a mindset to them that is essential for success and allows them to thrive.

Organizations like Dreams to Business are helping the youth build a foundation by offering mentorship, resources, and workshops to help you in whatever means necessary. Whether you’re launching a startup  or a lemonade stand, understanding is the basis of it all. There is absolutely no way better to learn than by doing.

So next time you see a lemonade stand, don’t see a kid selling juice, you are looking at a future innovator and change-maker in the making!