A few weeks ago, on a sweltering Sunday afternoon, my son decided that he wanted to sell lemonade. Not wanting to stifle his entrepreneurial spirit, I agreed to help…even though it was nearly 100 degrees outside and I was pretty comfortable inside in the air conditioning. But as he and I set up and ran his small operation, it occurred to me that there were many similarities between what we were doing and what much larger businesses need to do to be successful.
So even though all he wanted to do was to sell a few cups of lemonade, our little endeavor highlighted some important points about business success, such as:
- Sourcing: Originally I asked for a portion of the revenues because I was providing all of the supplies (cups, pitchers, lemonade mix, poster board, ice, table, cooler, beach umbrella, etc.). He smiled but said "No way!" and I acquiesced, beaten down by his shrewd negotiating skills. Lesson: His profit margins were much higher because he negotiated extremely favorable pricing from his vendor (me). Are you getting the best pricing available from your vendors? Have you even reviewed all of your pricing and terms? Have you explored alternative sources recently?
- Marketing: At first, we hung the poster board sign on the front of the lemonade stand, only to quickly determine that no one could read the sign as they drove by. So, he sent me down the street a bit to wave the sign at cars as they approached. Lesson: Adapt your marketing to your situation and needs. If one form of marketing hasn’t produced the desired results, try another. Are you doing what is necessary to maximize awareness and attract customers to your business?
- Product Offerings: My son wanted to offer choices, so he searched our pantry for a variety of drinks and chose pink lemonade, fruit punch, and traditional lemonade. Lesson: Provide customers with choice based on their true needs, not on what you think they need. However, don’t try to be everything to everyone. Too much customization can increase costs, lengthen delivery times, and move you away from your core competencies. Do you know what your customers really need or are you merely pushing what you want to sell?
- Value Proposition: He wanted his pricing to be simple and fairly inexpensive but we had both small and large Styrofoam cups, so we had a decision to make. He chose to sell a large cup for 50¢. He assumed that on such a hot day, customers would prefer a larger drink; which he filled to the very tip-top. Lesson: Provide more than what your customers expect and make your value obvious. Do you make it easy for your customers to understand the value they are getting from you for the price they pay?
- Customer Service: A friend stopped by our stand but then realized she had left her purse at home. My son offered her an icy cold lemonade absolutely free. She thanked him and drove on, only to return in a few minutes with a request for four more lemonades for her family. She paid with a crisp five dollar bill and, for his kindness, wouldn’t accept any change. He was thrilled! Lesson: Peter Drucker writes that the primary function of a business is to attract and maintain customers. Is your company providing "wow" moments that compel your customers to continue to do business with you?
- Have Fun: After a while my son decided that he was ready for a break from the heat. So we put the items away and set the lemonade stand aside for another day. We went inside to cool down and talked about how much fun the lemonade stand had been. We then each drank a lemonade and went to the pool. Lesson: Don’t get so caught up working that you forget to have fun. Balance all aspects of your life so that you can reach more of your potential. Do you take things too seriously and get stressed out, too often? Are you not having enough fun?
I learned a lot on that hot Sunday afternoon; most of it by merely hanging out with my eleven year-old son. If we keep our eyes, ears, and minds open, it’s amazing what we can experience and learn, especially when we least expect it. Here’s to your next "lemonade stand moment."