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Small Business Ideas: Are You Just Building a Lemonade Stand?

Heidi Thorne is an author and business speaker specializing in sales and marketing topics for coaches, consultants, and solopreneurs.

Lemonade stands are great for kids, but adults need to think bigger!

Lemonade stands are great for kids, but adults need to think bigger!

The Lemonade Stand Model

In addition to the return of robins and green grass, the dawn of spring brings another stream of new small businesses—literally the most micro of "small" businesses—to our area. What businesses are those? Kids' lemonade stands.

These pint-sized "kidpreneurs" always make me smile. I always wonder if they'll actually learn anything from their experience about opening and owning a business. Sadly, though, many of them that get bitten by the entrepreneurial bug as adults may treat their real small businesses like their little lemonade empires.

Here's what happens when small business ideas take on lemonade stand business strategies.

Selling to Anyone and no One

"Wanna buy some lemonade?" a little lemonade CEO yells from across the street. Unfortunately, I'm not interested. One, I'm usually walking my large active dogs which makes it a trick to purchase and drink it. Next, lemonade often sets my teeth on edge.

You have to cut the little lemonade barons and baronesses some slack for trying. But when they grow up and open a real business, we might find them doing the same thing, screaming their marketing messages and offers to anyone with a pulse within earshot, and then wondering why their business is failing.

Proximity does not equal possibility when it comes to prospects. You need to set up your stand where thirsty people hang out which, these days, could be offline or online. And those can't be just any people. They need to be people for whom lemonade would be a thirst-quenching choice.

Where a business is located can make or break it. Yet many small businesses position themselves where it's convenient or cheap, but where getting traffic (whether foot or internet) is either impossible or expensive. For the kids, that might be mom and dad's house. Okay, we understand that's their only choice. But I once went to a cocktail party at a micro-winery that was in the middle of a seedy industrial area. News flash: the wine-tasting crowd ain't hanging out there!

Moving Beyond the Lemonade Stand: When opening a business offline or online, find out who wants your "lemonade" and locate where they hang out.

Sell or Swim?

Ever notice that kids' neighborhood lemonade stands are usually only in business for a couple of days before they close up shop? They don't do business in the rain, when a cool wind comes through, or when the community swimming pool is calling their names. What if I really was looking for a sip of lemonade while I walked down their block?

The kids are in business as long as it's fun, makes some coin and they don't have anything better to do. Do you ever see small business owners act the same way? I have. When owning and running a business gets too difficult, they get out. Though many "funpreneurs" would really be better off going out of business, many real-life adult business owners give up just before their businesses turn the profit corner.

Granted, there are times when it is necessary to close a business (or a portion of it) that is not bringing in revenue and profits or just costs too much to operate. That's where sales forecasting and monitoring are so crucial. Armed with this data, an owner can make a more informed decision about the future of the business... other than basing it on that it is no longer fun.

Moving Beyond the Lemonade Stand: Know why you're in business and make a commitment to see it through the inevitable ups and downs until it reaches the end of its life cycle, becomes too unprofitable or there are other serious issues making it unwise to continue.

Cash Flow and Go

"Mom, can I make some lemonade to sell?"

"Sure, Honey. Everything's in the kitchen. Do you need some help?"

Wow, I bet many business owners would love to be able to ask "mom" for all the bits, pieces, and labor that go into setting up and running a business. Most of us know that "mom" isn't there for us. But there are small business owners and entrepreneurs who rush headlong into going into business for themselves without ever researching or understanding all the costs of being in business. Materials, labor, insurance, accounting... the list is endless.

Why would they do this? Often these folks are employment "refugees" who desperately want to be in business on their own, so much so that they will ignore many of these factors. Before long, they realize the gravity of their situation and fret about the cash flow becoming cash "go."

Moving Beyond the Lemonade Stand: Understand your business costs before going into business.

Mixing Friendship and Finances

"Hey, Mister, how about buying some lemonade?"

"Aw, you're so cute. Why not?"

One of the advantages lemonade kidpreneurs have is that they can sell on being adorable. Their unique sales proposition is that they are cute and their customers usually are friends, relatives, and neighbors who know, like, and trust them. Sort of sounds like social media, eh?

But what happens when the kids grow up and get acne, and friends and neighbors get tired of buying the same darn lemonade year after year? You guessed it. The business fails.

Yet haven't we all encountered small business folks who sell based solely on friendship? Haven't you purchased products or services based simply on the friendship factor? We all have at some point. Gets pretty uncomfortable for sellers when friends quit buying and quit connecting because they don't want to get roped into buying something else they don't really want or need. Those friends are afraid that every call is actually a disguised sales pitch. Ugh!

While friendship can help facilitate many a sale, having limited offerings and going to the friendship well for prospects too often will torpedo any business.

Moving Beyond the Lemonade Stand: Understand the target market and its demographics to avoid uncomfortably mixing friendship and finances.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2014 Heidi Thorne


Heidi Thorne (author) from Chicago Area on May 07, 2014:

Yep, Jeannieinabottle, I've seen so many friendships strained when direct/network marketing is put into the mix. Awkward! And you hit the nail on the head: We reach a saturation point with some of these products and services. At that point, the friendship factor fails along with the sales. Thanks for adding that insight to the conversation. Sending you some virtual lemonade! :)

Jeannie Marie from Baltimore, MD on May 07, 2014:

You are right about the friendship factor. It is always awkward when one of my friends decides to start selling Avon or knives or whatever the cool thing is now. Actually, I've noticed two people in my office building have started selling "thirty-one bags" and I've been pressured into buying them. Not that their purses and totes are not cute, but I've got more than enough bags - and all of mine are much less expensive. I can see how other people easily get suckered in though.

Great hub! And now I want lemonade.

Heidi Thorne (author) from Chicago Area on May 06, 2014:

Hi Elizabeth/epbooks! Glad you enjoyed it. Yep, being in business is work and lots of it. Thanks so much for stopping by and your kind support! Have a great day!

Elizabeth Parker from Las Vegas, NV on May 05, 2014:

Your point hit home and was very inspiring. I love the analogy to the lemonade stand. Every business takes work and there's no time to sit back and relax or rely on others to grow it for you. Great hub!

Heidi Thorne (author) from Chicago Area on May 05, 2014:

Nell Rose, I love watching those "business makeover" shows. What seems so obvious to someone outside, is completely blurry to the beleaguered owners. In addition to the lemonade stands, it's also garage sale season. So we've got a lot of impromptu operations doing business on the lawns and driveways of suburbia. I'm surprised the local government hasn't found a way to make 'em apply for a business license. :) Actually, for the garage sales, residents are limited to a couple a year otherwise they'll consider them a commercial operation. Thanks for adding that aspect to the conversation! That's another way that many entrepreneurs aren't serious about their businesses... they don't apply for the necessary licenses, permits, etc. and just set up shop. Then if the state government finds out, they might hit 'em up for sales taxes and more. Uh oh! Great to hear from you as always. Have a terrific week ahead!

Nell Rose from England on May 04, 2014:

Great advice heidi, I totally get your point. There was a program on tv the other night with a business man trying to help out a small coffee shop who had set up shop near a Cathedral, trouble was there was about 10 of them there! He said they should try opening down the other end of the town where people had Gyms, rollerskating and so on! Obvious? as you say sometimes people just don't get it. as for kids selling lemonade, we just don't get that over here, as the council would 'jump' on anybody trying to start any business big or small if it happened to be on their pavements! go figure!

Heidi Thorne (author) from Chicago Area on May 04, 2014:

Hello travmaj! Thanks for the kind comments and, yes, I hope it helps those who are thinking about making the entrepreneurial leap. Have a lovely Sunday!

Heidi Thorne (author) from Chicago Area on May 04, 2014:

Hi rajan jolly! Yes, the excitement of opening a new business can blur budding entrepreneurs' vision of the realities they'll deal with during the long haul. Thanks so much for your support and comments! Happy Sunday!

Rajan Singh Jolly from From Mumbai, presently in Jalandhar, INDIA. on May 03, 2014:

Great ideas for anyone wanting to start their business, Heidi. Good listing of all the pitfalls that one usually ignores in the heat of the moment.

This hub will certainly be useful for such people.

Voted up, useful.

travmaj from australia on May 03, 2014:

This is a great hub and so useful for anyone about to open their own business should be helped enormously. Very interesting and informative.

Heidi Thorne (author) from Chicago Area on May 03, 2014:

Thanks, Eddy! I do hope that it hopes those considering going into business think a little more carefully before making the leap. It's a major investment. So appreciate your support and sharing! Happy Weekend!

Eiddwen from Wales on May 03, 2014:

A wonderful help to anyone beginning out in a new business venture Heidi. Voting up and sharing.


Heidi Thorne (author) from Chicago Area on May 02, 2014:

Happy Friday, purl3agony! Lots of folks toy with the idea of going into business. But it's a huge undertaking! I'm glad to see that you're approaching it thoughtfully and looking at resources for it. Wish more people did before making the leap. Thanks so very much for reading and sharing! Happy Weekend!

Donna Herron from USA on May 02, 2014:

Another great hub, Heidi! This is great information for anyone considering opening their own business. I toy with the idea every once in a while, so I'm pinning this to my Business board in Pinterest. Thanks!!

Heidi Thorne (author) from Chicago Area on May 02, 2014:

Well, billybuc, as you and I both know, writers don't think they're in business. :) Until that gets embedded in their heads, we'll have to continue being business evangelists. Guess we got our work cut out for us. Thanks for the kind comments and have a beautiful weekend!

Heidi Thorne (author) from Chicago Area on May 02, 2014:

Oh, FlourishAnyway, the "family and friends" sales model is very common, especially in network marketing scenarios. While, on the surface, that sounds like a great idea, it really can become uncomfortable and destroy relationships. Been there, done that, not doing that again. Glad you liked it. Thanks for your kind comments! Have a beautiful weekend!

Bill Holland from Olympia, WA on May 02, 2014:

I wish I could get about one-thousand of my closest writing friends to read this. The longer I am a writer the more convinced I am that most writers have no clue how to run their business. You are a gem with your information, Heidi! Thank you!

FlourishAnyway from USA on May 01, 2014:

Creative analogy with a very useful message! There are so many folks who sell to friends and family and that seems to be their business strategy. I like how you've tied together multiple elements of strategy, from location to marketing to finances.