Lemonade Stand

My son opened his own business yesterday. As you can guess from the title of this blog (and the fact that he’s only 8 years old), his small business is a lemonade stand.

His immediate impetus for intitiating this endeavor is to garner enough cash to acquire a coveted Star Wars Lego set (valued at ~$45). But he has a more long-term goal of acquiring as much money as he can. In fact, he’s become quite the Alex P. Keaton lately, being excessively interested in counting his money, and grabbing change from the change machines before his mother or I can grab it.

I hadn’t realized the real-life experiences and lessons afforded from a simple lemonade stand until Owen expressed a desire to have one. I never operated such a stand when I was a kid (though I did play the computer game), but I’ve always tried to support them when I see them. So, when Owen said he wanted one, I immediately began using it as a teaching tool:

Where will you get the lemonade from?
The store

Do you have money to buy it?
Yes.

Will you buy it frozen? That’s cheaper.
Yes.

But then you have to make it. Can you do that?
Um…can you show me?

Sure. What are you gonna pour the lemonade into when people buy it?
We have cups.

Yeah, but we don’t want people walking away with our dishes. What about paper cups?
Okay.

So, do you have money for paper cups, too?
…And it went on like that. We discused advertising (e.g., signage), location, how to keep ice frozen while outside in the summertime, how to make change, and even how best to present the beverage. This included using a table cloth, ensuring his hands looked (and were!) clean, using tongs to grab the ice out of the cooler, placing the ice in the cup prior to pouring the drink, filling the cup pretty far (so that buyers feel they got a good value), but not so far that they risk spillage.

We also discussed price. I’ve frequently seen lemonade selling for 50 cents a cup, which is anywhere from double to quintuple the price I saw when I was Owen’s age. We decided to go with 25 cents a cup. We calculated that he would still be able to cover expenses at this price, but that it would still be low enough so that no one would decline the drink on account of price. I suggested that some people might just tell him to keep the change, too.

Owen was able to cover his costs this way:
Table, chair, bag for money: Previously owned
Ice, cooler, table cloth, disposable cups, trip to the grocery store, tongs, plywood, paint: Provided gratis by parents
Lemonade: Start-up cost covered by Owen

After returning from the grocery store (where Owen spent just over five bucks for four cans of frozen lemonade), we painted a sign to advertise his stand. This took two tries, as Owen initially painted the words so large, he could only fit LEMONA on the sign before he ran out of room. He would’ve ran out of room on the other side, too, if I hadn’t stepped in and finished the letter M so it didn’t take up a quarter of the board.

Owen set up shop on the west end of our property, near the corner (to maximize exposure). He began right around noon – equipped with four books to read while he waited. I had to replace those books once he finished them, and then I had to replace those.

He stayed out there for five hours – coming into the house only twice to use the bathroom. I kept telling him he could wrap it up if he wanted, but he was insistent on staying out there. We kept moving his table to keep him (and his beverage) in the shade. Isla even asked him to fill up their watering cans and water the rose bushes, but he told her to go fill them, and then she brought them over and he helped her water the bushes (which were near his stand). I stayed outside the whole time, a safe distance away so I wasn’t hovering. I worked in the garage mostly, and sometimes I sat around the corner and read.

I had three hopes for Owen: First, I hoped he sold something, because I would’ve felt just terrible if no one came (and an employee at the grocery store helpfully informed us that his daughter tried her hand at a stand the day before and didn’t have any luck). Second, I wanted him to break even with the five bucks he spent. Third, I wanted him to have a desire to do it again, on a busier day (Friday and Saturday would be better for business, actually).

To my delight, Owen sold his first cup within ten minutes after setting up shop; a guy walking by purchased one glass. Then a mom came by with her children and bought her two daughters each a glass. Then some guy pulled his car over, and gave Owen 35 cents for a glass. Then another woman drove by, gave Owen a thumbs-up and told him to keep up the good work. Which…isn’t exactly what Owen wanted…but it’s nice when a new business feels wanted by the community.

Then our neighbors came home, and the woman walked over to get a cup for her and her husband. When she walked by me, I thanked her for supporting the local economy, and she said it’s such a hot day, the thought of lemonade sounded good to her. A neighbor girl from down the block, not more than ten or eleven years old, walked over and bought two cups. Later, a man on a bike gave Owen a dollar for a cup and, according to Owen, “didn’t care for his change.” Then another man pulled over his minivan and purchased four cups – one for everyone in his family. Isla, of course, also wanted lemonade, and I thrice had to give her money to bring over to her brother to buy a cup. The first time this happened, Owen giggled with delight that his little sister actually had a quarter for him and was acting just like a “real” customer.

Owen isn’t exactly sure how much profit he yielded. He wasn’t sure how much money he started out with in his bag, and a few people gave Owen more than the asking price, so he couldn’t just count up the number of cups he used. All in all, though, he made somewhere over nine dollars which, after expenses, is over four dollars profit. And half of his inventory is still in the freezer, so his next go around will begin yielding profits right away.

Speaking of profits, I asked Owen if he was going to report his income for tax purposes, but he said no. I think he makes a good point: No taxation without representation, as they say, and since Owen is disenfranchised, he should not be expected to pay for a government in which he is given no say.

Let’s just hope the FDA doesn’t come running…