For many of us, our first foray into entrepreneurship took the form of a lemonade stand. We got our first capital investment from mom and dad in the form of lemons, sugar and ice from their kitchen. We practiced guerrilla marketing tactics--holding up signs and waving frantically at cars whizzing by, hoping to solicit new customers. And then, after a long day of standing in the sun and shouting at the top of our lungs, we counted our profits, voiceless and exhausted but delighted over a few hard-earned bucks.
Although we may not have known it then, some of the most important business lessons of our lives were learned on those hot summer days selling cold drinks to strangers. These lessons still apply to our businesses even now that we're all grown up. And since it's been awhile since we last set up shop, here are seven lessons all businesses can learn from lemonade stands presented by American Express OPEN.
These kids are ADORABLE, but their lemonade stand is in the middle of a field. For brick-and-mortar businesses, picking a highly-trafficked area in a good part of town (or your neighborhood) is key to your success. Something else to consider: making sure you have enough space to grow or expand.
For B2B or online businesses, having good search engine optimization is your equivalent to a prime location. You'll want to make sure your customers can find you where they hang out the most -- online.
It's crucial to assess your operating costs as well as your competition when pricing your goods and services. It may be hard to strike a balance between pricing high enough to turn a profit but low enough to be competitive in the market. You'll have to figure out your priorities: In the lemonade stand analogy, lemons and sugar may be more laborious than using powdered mix, but there's a value in being able to market your product as "all-natural." Consider manufacturing differently or making operational changes to lower your pricing, but don't forget to consider how those changes might affect your bottom line -- and your brand's identity.
Here's a great scenario: Word has gotten out about your lemonade, and business is booming. But you seemingly can't squeeze enough lemons to keep up with demand.
Time to bring in some help! As you scale your team, you might want to consider hiring for the skills you lack or areas in which you are seeing opportunities for growth. Send dispatches to trusted friends and family and post job openings online (don't forget social media
!), and make sure you ask the right questions
in interviews so you hire people who will stick around
See this great article in Inc. for a nitty-gritty guide
Ok, so shouting might not be the best advertising option, but you get the picture. Find free options first, like emails, social media and flyers. Then bring out the big bucks if necessary -- online ads, newspaper ads and sponsored content (ahem) can really go a long way.
When you were a kid, Mom and Dad might have given you the supplies to start your lemonade stand, but everyone knows that in the real world, the cardinal rule of basic economics applies: there's no such thing as a free lemonade.
It's important not to take on loans that will hinder your profits too much. This mistake can affect you years down the road, even after you're way clear of the start-up phase. Check out this guide
to funding your nascent business, whether you choose to crowdfund, apply for an incubator, or seek venture capital.
Once you've made your profit, don't let it all go to salaries and savings accounts. Instead, pick stocks and bonds you'd like to explore and consider hiring an investment manager to help with your portfolio.
Your product or service is the lifeblood of your business. If you suddenly swap fresh lemon for powdered mix to meet a growing demand of customers and cut costs, don't be surprised if your repeat business declines. Prioritize preserving the quality of your product or services over scaling and make sure your growth plan has mechanisms in place for possible strains to your resources and manufacturing process.
Join the community and get insights on how you can manage your money. At OPEN Forum®, connect with a network of peers and experts to exchange advice and access resources that matter to your business. Join Now.