With my lemonade stand marketing series we have already talked about the business basics, marketing and life lessons. Today we are going to talk about how to take your lemonade stand from a single shot event, to a multi-million dollar corporation. Yes, it can be done and has been done.
My kids put up a lemonade stand outside our house during the busiest weekend of the summer and made a healthy profit. One of the lessons they learned was the importance of having large amounts of traffic to get strong sales. If they wanted to repeat their success they would need to put up a lemonade stand again during a busy park event.
Or, they could start investing in a booth at the summer festival. There they would need to put up more capital as there will be an entry fee and they would need to have substantially more equipment and supplies, but the profit would be equally higher from an event that draws a crowd. They will also increase their risks, because you never know if it will rain and then the crowd will not be as excited about a lemonade stand. They would need to calculate how many lemonades they would have to sell in order to cover their expenses. Only then can they determine if it is a worthwhile risk. They have the experience of their first lemonade stand to get a worst case scenario of how many lemonades they can sell (because the first booth wasn’t actually in the park and was a 10 minute walk from the festival).
So let’s say they decide to go the festival route, get a loan from mom & dad, and then operate their first lemonade stand at a festival. With their profits they invest in a second festival. And so it goes for the entire outdoor festival season. By winter they can pay mom & dad back (or sooner).
But now what? With this business strategy they only make money when they go to an event. They could hire someone to staff the event for them, but they still only make money when there is a festival. What will provide them an income in the winter?
Let’s look at the options for the next path they could take to expand sales. They could continue in the service business and convert to a year round operation or they could go the product route and start wholesaling their product.
What does it look like if they take the service route? Well, they would need to find a retail location that has a high volume of hot and thirsty drinkers. Because lemonade alone is not usually a good draw of business, they would need to diversify their service offering with complementary products. To grow from here, they would need to find similar locations to put up new retail outlets.
This method doesn’t seem very appealing because lemonade is not a strong enough year round draw to keep the retail location in business. It would need to have a broader service offering, which doesn’t play to the strength of the lemonade stand girls.
The other choice would be to stay focused on making the best lemonade products available and extend your distribution of those products. They can be the local provider of lemonade to caterers, hotels, restaurants and even package it for retail at supermarkets. After establishing themselves fully as the best provider of lemonade in their area, the can branch out geographically and grow their share of the market nationally, and then internationally.
While this is happening, it is likely they would take some of their profits and invest in product development and come out with more product line extensions. Perhaps they could make lemonade ice pops, and Italian ice. Lemonade fruit bars or snack cakes.
Initially, they should stick with products that share the same distribution channels that they have already established. So if it is beverage distributors that are selling their lemonade, their first products should be different flavors of lemonade, then other beverage related products like mixers for alcohol. From there they can expand into new distribution channels for the same products. For example, instead of fountain drink resellers, they can sell through grocery distributors.
Eventually, they need to make a major investment in establishing new distribution channels. This is possible but not as simple as just adding more products to the same distribution channel. This is one of the areas that most people make the biggest mistake. They don’t realize that their new products aren’t consumed by the same customer as their original product and that it needs a totally new outlet to reach its perfect customer.
So that’s it. That’s how you take a simple lemonade stand and grow in into a multi-national, multi-million dollar business.
About Debra Zimmer
