How to start a a lemonade stand

Lemonade Business

If you are interested in learning how businesses work, a lemonade stand is an excellent venture to start with. Building and running a lemonade stand will help you understand several things that have to be done before a business can become successful. These include product development, market research, pricing, marketing, and finance.
Learning Outcomes
At the end of this article, you will understood:

  • What a lemonade stand is and how it can be set up
  • How to do product development, market research, and pricing for a lemonade stand
  • How to do marketing and finances for a lemonade stand
    Lemonade Stand
  • A lemonade stand is a simple, easy to set up, and quite an intuitive venture used to sell lemonades and other similar products like squash and juice.

Normally, these stands do not require permits to set up if the stands are run by children and young teens.
Setting it up
You will need the following materials to set up a lemonade stand.

Table = Borrowed
Decorations = School Supplies
Lemons = $3 per pound from the store
Sugar = $1.5 per pound from the store
Cups = $0.1 each, usually bought in packs
Serving Jug = Borrowed
Stirring Spoons = Borrowed
Lemon Squeezer = Borrowed

In most cases, you will have the materials required to set up the table and the poster at home. You will need markers, coloring pens, and some duct tape. You can get creative with the designing but make sure that whatever you make is visible from a distance.
Product Development
Product development is the process by which businesses create or improve products in their portfolios. In the case of our lemonade stand, this process will involve creating new drinks to complement the lemonade while also suggesting ideas for similar products.

To develop a new product, you will have to look at your business model and your customers. A lemonade stand’s express purpose is to offer refreshing drinks made from fresh ingredients to the locals in your neighborhood. An excellent idea for a new product can be to introduce new flavors. You can offer a sugar-free lemonade, an extra tangy lemonade, and a citrus-infused lemonade which can be made using orange juice.
Market Research
This process looks at who is most likely to buy your product and how they could buy it. Our lemonade stand will sell to people physically visiting our stand. Since they know what they can expect at a lemonade stand, the products should match their expectations. If they visit the stand and find shoes for sale, they will probably not become customers.

Market research helps you understand who your customers are, why they would want to buy from you, what they would buy, and for what price.
Speaking of price, you have to be very careful about the selling price of your products. Your customers do not expect to pay a very high price for a simple product as a lemonade that they are buying from a lemonade stand. A good starting price for freshly made lemonade is $1.5 per cup.
Marketing mostly involves letting people know about your products or services. In the case of your lemonade stand, you will need to tell people you exist for them to come to you. You can do this quite effectively by making a large and colorful poster that you can attach to your stand.

Another way of marketing your stand is to tell your friends and family members about it. Since they know you, they will be very likely to visit and purchase from you. They might also bring along their friends. This type of marketing is called word of mouth.

A third way to market your lemonade stand is to make an event on social media platforms such as Facebook. You can invite your friends and family members who you cannot tell in person. The event will help them remember the date and time when you will be operating your lemonade stand. This is called digital marketing.
Once you start selling lemonades and other products from your stand, you will need to know if you are making any profits. To do that, you would need to go back to the drawing board and find out the cost of making your products.

For example, the typical costs of setting up a lemonade stand are as follows.

0.5 lb of Sugar (1 cup) = $1.5
1 lbs of lemons (4 lemons) = $3
Water = Free
Table = Free
Decorations = Free
Cups = $0.10 each

Total Cost = $5.1

Now let’s say you have priced a regular-sized lemonade at $1.5. The materials listed above will make approximately 6 cups of lemonade which will make a total income of $9. This means that for every 6 cups you sell, you make a profit of $3.9.

1 Cup Sale Price = $1.5
Total Sales = 6 Cups
Total Income = $9
Total Cost = $1.5+$3+($0.1*6)
= $5.1
Total Profit = $9-$5.1
= $3.9

Now, this assumes all the decorations were made from materials already in your possession and you borrowed the table. But if you managed to sell 60 cups from your lemonade stand, you would make a profit of $39. Not bad right?

Naveed Murtaza

Naveed Murtaza is Storyteller, Digital Marketing Strategist and Human Rights, Activist.

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