It’s been a hot summer across much of the US. We have had nineteen 90 degree plus days in Chicago already.
I wrote previously about what we as adults can learn from seeing kids and their lemonade stands. But is the lemonade stand a good training ground to learn the principles of entrepreneurship?
The experts in the video, Carol Roth, Business Strategist and Mike Michalowicz, The Toilet Paper Entrepreneur disagree!
[youtube]http://www.youtube.com/watch?v=c4aR8B8boDE[/youtube]
Hah! Did Carol and Mike throw down after this? I have to side with Mike, it was probably my first entrepreneurial venture. Followed shortly by the baseball card store game that I set up in my living room. The latter somewhat reminded me of the starting of BounceFire – no customers!
I do have to agree that the lemonade stand had the highest profit margins of any business I have ever taken part of. :)
Barry,
Thanks for sending me the link to this discussion. There would have been a time when I would have said it is just a kid thing-so what? In today’s world with so much competition for careers, jobs, education I agree with Carol, we should use these teachable moments to motivate our children and grandchildren to develop a passion for what they are doing aka the lemonade stand. Help them to make it the best and stand out, all the things we need to succeed in life!
Hi Barry, I think Carol has a good point here, but make no mistake: LEMONADE STANDS ARE AWESOME FOR KIDS!
I clearly remember being 5 and learning about marketing–having my little brother in diapers bang on his drum set to attract customers. I clearly remember learning about overhead–I went to go split the profits with my friends who worked all day with me and my mom said wait a second, how are you going to pay for your next batch of lemonade and about about the electricity it took to make the ice cubes??
I stop at every single lemonade stand I drive by no matter how much of a hurry I’m in. It’s where so many entrepreneurs get their start! I actually pulled over for two little girls yesterday who waved me down but they were selling “fashion stuff” and they told me I probably wouldn’t be interested….so I sent my sister!
Hey Carol,
Why stop there? If the kiddies don’t fill out tax forms at the end of the year, turn them into the IRS!
Steve
Barry,
My 6-year-old asked me this weekend if he could run a lemonade stand. I’m not sure where he got the idea, either.
He had just spent some of his allowance at Chicago’s ComicCon (super hero goodies!) and wanted to earn more money to replenish his funds….and buy more stuff. So the next day, I helped him set up his table. It was completely his idea. My wife and I asked him about prices, charging for refills, etc., and let him make the decisions. (50 cents a cup, 25 cent refills).
Yes, Carol, he used our lemonade and our cups, but the real interesting thing to us as parents is that the boy manned his stand (with occasional help) from noon until 5, not wanting it to end. He loved the experience and loved making money (about $15). We loved his attention to detail and ability to stick with it all day long.
I would call it a success on many levels.
Fun topic Barry! I think lemonade stands are a great idea because it teaches kids instant rewards for their work. When we had stands on our driveway, people went out of their way to stop and buy some. Plus, my kids understood the value of quality, because customers especially liked that our lemonade was homemade, and not from a mix.
Yes, it doesn’t teach them that they have to make the investment themselves, but as a primer on how good it feels to sell a product, nothing beats a lemonade stand.
As an adult, I agree with Carol. The kid in me agrees with Mike. Back in the Stone Age when I set up a lemonade stand (expecting to become a miniature mogul) my dad demanded that I pay for the lemonade, sugar, and rent (yes, rent!) for the card table. The demands were certainly a reality check, and realizing that 50% of my nickel were going to cost of goods and overhead, I decided to go ride my bike instead of become an entrepreneur that day. :)
I had a ‘lemonade’ stand but sold Kool-Aid. Only 5¢ a package and add sugar and water. So my cost of materials was not worth mentioning.
One year when I was around 8 my parents rented a camp on a lake. Lots of polywogs so I caught a bunch and brought them home to sell. Sold quite a few and the excess ‘inventory’ went down the toilet.
I was going to make a killing selling popcorn one year when the Giants and Packers came to town to play an exhibition game just up the street from our home. The morning of the game my dad came home and said he had an extra ticket to the game. My desire to see these teams in person overcame my greed to make money.
Go Carol!
While lemonade stands have the POTENTIAL to be “AWESOME FOR KIDS” (as Matt says), they usually fall short.
What we have here is a chance for the kids to have a lot of fun AND an opportunity to learn something (which can also be fun). This experience relies on the effectiveness of the parenting…
Long story short – lemonade stands are good but fun and thoughtful participation can make them great! Kind of like a regular business…
I remember my first adventure in the lemonade business fondly. Growing up in Montreal, we lived on a busy street, which made for great exposure. There was also foot traffic. Not only did we sell lemonade, but also home baked goods, (very important) old toys, comic books (maybe that was premature, given the market for comic books today) shells and other items that were taking up unnecessary space.
I’m not sure if we reimbursed my mother for expenses or not. What was clear… we were having a blast. We learned the values of positive attitude, sales pitches, having pullers, good signage, attractive displays, merchandising and the best,,, that kids are cute and a draw. It’s hard to say no. We certainly used that to advantage.
These lessons have not changed. Here’s to lemonade.
I agree with Carol and Mike on certain points!
Yes to Carol – parents absolutely should have their children replace the capital reinvestment that the children took out of the kitchen (cups, napkins, sugar, etc.) They should also talk about the profit and how the kids might want to use it: spend it, save it, share it and reinvest it into ANOTHER lemonade stand or a totally different business!
Yes to Mike – make it FUN! Support them! Let them be kids and by all means encourage them in their entrepreneur efforts!
NO to Mike on just treating them “like kids”! I have interviewed over 100 successful entrepreneur kids from around the world and they are successful because their parents treated them as CAPABLE of doing GREAT things and not just as a kid!
No to Carol on “raining on the Lemonade Stand”. Entrepreneur kids are the future leaders of tomorrow’s business success! There is even an organization called http://www.lemonadeday.org/ that is all about teaching best biz practices in a fun environment of a Lemonade Stand.
Here’s an article I wrote on 5 business lessons that can be learned from the lemonade stand! (There are many more!) http://raisingceokids.com/2010/07/20/lessons-from-the-lemonade-stand/
Please – let’s not PUSH kids into business but by all means whether it’s a Lemonade Stand, a young graphic designer, a bake sale – LET’S support young entrepreneurs! CEO Kids ROCK!
A friend just sent me this link because last weekend my boys wanted to have a lemonade stand. This was a nice read considering how I handled the stand.
Ironically, since I’m HORRIBLE at money management and would probably suck at running a business, I decided to make this a teaching moment for my boys. Therefore, I pretended to be a smart mommy and tell my 5 and 6 year old about how to run a business.
I explained that they first need an investor (mama and daddy). So, we went to the store and purchased our supplies for the stand. We came home, made the sign, set up the stand and away we went. I made them sit there and watch the stand so they didn’t ignore customers. I explained that if one was away from the stand the other had to watch the stand because otherwise customers wouldn’t get their lemonade.
In the end, the phone calls I made to friends to come by and purchase some lemonade, along with some neighbors passing by and even 3 separate stranger passersby helped the boys to make $13.50 in sales.
We came in the house and I said, ok, Boys, you need to pay back your investment loan to mama and daddy for your supplies. So I deducted $2.00 (well below the actual cost of the loan). After that I showed them what their actual profit was. They were pretty excited. Then I explained how we were going to take part of that money and put it away in a place where it will be saved and not spent and I said the remaining money will be money you can have access to in order to buy what you want.
How much they actually retained and learned I don’t know, but, I will keep explaining these principals throughout the year until they become much better with money and running a business than myself:)
I think Barry and friends have been drinking too much hard lemonade with this video discussion :-)
Kids and adults need a positive first experience with any activity in order to build a sense of confidence to keep at it. If the first time you played basketball you got constantly blocked and dunked on, you are probably not going to want to lace up the sneakers again any time soon. But, if you make a few baskets and have fun, win or lose, you are probably going to come back.
Leave the ROI lesson for another day :-)
In fact, we think lemonade stands are so useful that we created a simulated version that is now used in many schools: http://goventure.net/Products/LS/Watch.aspx
Barry, how about a sequel to this video to answer this question: “Should you actually drink the lemonade you buy at a lemonade stand? Those don’t look like lemon sprinkles!”
I, for one, think Lemonade Stands are a fantastic way for young people to get a taste for the entrepreneurial spirit.
While I didn’t set up a stand of my own, I did draw pictures and take them door to door selling my fine-art, original works. This was a great experience and got me to start thinking like a salesman. That is, after all, what we ALL are.
Like Carol says, we should treat these kids like little adults, they do comprehend and retain a lot more than we think they do. Just ask the parent who makes a comment to one of their friends on the phone thinking that their kid either didn’t hear or wasn’t paying attention, only, to their horror, hear it repeated a month later at the absolute wrong moment!
That being said, even as adults we learn things incrementally. We usually get a broad overview of a subject before learning the details. Kids with a lemonade stand don’t need to learn about cost of goods sold, gross vs. net income. If you are teaching them that you might as well have them register a business name, research zoning law, get a tax ID num, file a return, etc. etc.
Let them be kids and learn the overview!
NEXT year teach them cost of goods!
Thanks for all the comments! Great topic!
Wow…http://www.lemonadeday.org/