Mightier Than The Pen

Making The World A Bitter Place

Classic Thag, July 2011: I Need that Lemonade Stand Business Plan

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Originally posted July 25, 2011

Son, this business plan for a lemonade stand needs some serious work. I haven’t seen such a sloppy job since your sister’s proposed itinerary for walking the dog. It’s time to sit you down and go through this lame excuse for a business plan so you know what to fix. And there’s plenty to fix, young man.

First, there’s the business goal. You want to “make some money so I can buy stuff.” We all do, son. That’s why people go into business in the first place. You need to get more specific. How much money do you want to earn? How long do you plan for it to take? As your primary investor, I need to be confident that you at least intend to do something worthwhile with the capital.

I don’t see a decent treatment of anticipated expenses anywhere. You’ve got to determine who your target market is – oh, wait, I see that: “people walking by at the corner by the library.” But you need to present how much you plan to spend, and on what. I can’t just give you some lemons and send you on your way. No, you need to give me a detailed discussion of costs: marketing, production, distribution, personnel, overhead, pricing and the rest. “Mom will make some lemonade for me to sell” doesn’t even come close. What materials are necessary? In what quantities? How much will they cost? What is the projected outlay for employee wages? I see none of that here.

You’ve got to deal with the government, as well. They’ll want their share in tax revenue. When you arrive at your target income figure, have you factored in your tax bracket? What health or employee safety regulations must you comply with? You refer to a lemonade “stand,” which implies an actual structure, and which will require all the relevant zoning and construction permits. And then there’s the environmental impact statement, which can get quite complicated. What are the risks of a massive spill? Is there a controlled method for disposal of used materials such as squeezed lemons and plastic cups? You haven’t discussed these issues at all.

As far as marketing is concerned, you have to find a way to create demand for your lemonade. Banking on hot summer weather seems a pretty safe bet, but that’s insufficient for real profit. You need to make people think they need your lemonade, not the free water they can get from the library drinking fountain, or their own nearby homes. That’s going to take research, and a good plan, including advertising. A hand-written sign over the stand just won’t do it. You need to figure out how, when and it what media to advertise. Do you need air time? Radio or TV? Print media? Is your audience merely local, or do you want to attract business for afar, perhaps through shipments of your product?

Have you explored the feasibility of packaging and delivering the lemonade long distance? Do you need a web site? Who will run it? You need to consider all of these questions before I can invest in this project.

Who are your employees? Does your mother expect to be compensated for the time she spends in production? Who will perform Quality Control? Do you have a good way to transport the goods from the production facility to the point of sale? Remember, son, business is rough, and only those who are truly prepared can succeed. You get back to me within fourteen business days with some real answers, and then we can discuss my stake in this enterprise.

Now, let me see that outline for your letter to Grandma.

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Written by Thag

July 11, 2012 at 7:40 am

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