Years ago, my children suggested to me that I open up a restaurant. One might think that they were so taken with my culinary talent that they felt I had missed my true calling. One might think that they were fascinated with the inner workings of food service and wanted to explore the link between the back kitchen and the front table. One might think that they had suddenly developed an entrepreneurial spirit.
No, they simply wanted more money to buy stuff. In their minds, owning a restaurant was a natural way to bring in extra cash. Obviously, all you had to do was make the food and then people gave you money. After all, that’s what they saw every time we went out to eat.
My wife and tried to explain how difficult it was to run a restaurant, how most restaurants went out of business within a couple of years. We explained about the long hours, the back breaking work, and the never ending financial anxieties. But it was difficult for the kids to reconcile this with the model they saw at Denny’s. You give people food, and people give you money. And then you go buy toys.
Thank heavens for Lemonade Day.
Lemonade Day is a nationwide event organized by Prepared 4 Life, a nonprofit organization dedicated to empowering youth to become contributing members of society. Lemonade Day, their signature event, is designed to teach kids how to start, own, and operate their own business, in this case, a lemonade stand. The event started in 3 cities in 2007, and expanded to 11 more this year, including Indianapolis.
It’s a fantastic program. The kids receive packets of information that explain how to plan out their venture, how to calculate costs, how to seek a loan (usually from their parents), how to select a venue, and how to set up their stand. Although the kids get to keep everything they make, they are encouraged to give a portion of their proceeds back to the community. And most importantly, it dispels them of the notion that all you have to do is give people food, they give you money, and then you buy a Wii.
Both my boys took part in the event. With a bit of coaching on my part, my oldest son, put together a work plan and inventory, marking down everything he needed to purchase. He worked with his younger brother to create the signage, come up with a catchy name (“Winicur Bros. Limonade”), and make the lemonade. My job was simply to develop the perfect lemonade recipe, purchase the ingredients, secure a location, secure a second location after hearing the weather forecast of 90% chance of thunderstorms, drive them to the location, help them set up the stand, and sit on the sidelines, occasionally feeding them helpful advice, such as, “Make sure you say ‘thank you’ even if they don’t want to buy anything,” “Watch out for your thumb when you are slicing limes,” and, “Heads up, here comes a mother and her young girls. They look thirsty.”
My boys commented later that they didn’t realize how hard it was to work to make money (in this case, 2.5 hours). However, I think they both learned valuable lessons about entrepreneurism.
- Never underestimate the value of a quality product. After experimenting with various recipes using bottled lemon juice, we finally decided to use fresh lemons and limes to make limonade. Not only did the final product sound more exotic, but it tasted much, much better than anything bottled, frozen, or powdered.
- Never underestimate the value of good marketing. I had the boys put a bowl of lemons and limes on their table to show the raw ingredients. The boys had matching aprons that said, “Winicur Bros. Limonade, est. 2010,” (a homemade gift from their mother). And their main sign said, “Fresh sqeezed (sic) limonade,” which absolutely guaranteed a homemade product.
- Never underestimate the value of a good promoter. Their manager (and financier and chauffer and financial advisor and sales advisor) searched high and low to find a good spot to set up the stand in the rainstorm. He (yes, me, of course) found the perfect Marsh Supermarket with the perfect overhang, spoke to the manager, and called the corporate office to make sure we could set up outside the store. Marsh graciously acquiesced, and the boys had a steady supply of customers coming in and out of the store. Location, location, location.
- Never underestimate the power of a good pricing model. The boys charged $0.75 for a cup of limonade. This turned out to be the perfect price. Since their base cost was $0.41, they could make a decent profit. The price was the equivalent of three quarters so it was easy for the customer to pay. Furthermore, the price was under a dollar, so there was no sticker shock, but close enough to a dollar so that many people just said, "Keep the change." Yes, their financial advisor was very proud of his pricing strategy. I believe he even did a small victory dance in front of his boys.
- Never underestimate the power of an attractive sales force. Take a look at the picture above and tell me that you could resist their charm and walk on by. The boys made over $16 in tips alone.
- When dividing up the work between you and your business partner, play to your strengths. My oldest son did the strategic planning, cut and squeezed the fruit, mixed the limonade, and did all the “math stuff” like calculating change. My youngest son handled all the actual financial transactions and called out, “Get your fresh squeezed limonade! Come and get it!” at every person within earshot. The jobs were perfectly matched to their abilities and personalities, and neither seemed intent on trading duties.
- Even when every component of your business is perfectly aligned, selling a product is hard work with more misses than hits. For every one person who stops to buy a cup of limonade or just drop some money in the tip jar, two or three people will pass by explaining that citrus fruit gives them heartburn.
In the end, the boys made $43.18 in gross revenue, $25.72 in net profit. They agreed to donate $3 (about 10%) to the Indianapolis Zoo, leaving them with $22.72, or $11.36 per child. Not too shabby for 2.5 hours of work on a rainy day.
You know, we might just start that restaurant after all. Of course, we might want to expand our menu. Hey…my boys make a killer peanut butter and honey sandwich.