3. Lemonade


When life gives you lemons…

One common simple business is a lemonade stand. This is a business so simple, it is often run by children. This also happens to be a business complex enough to showcase the various aspects of startup financial planning. That is why I’ll use a lemonade stand as our sample business in this book.

Additionally, if you have a desire to learn basic accounting, you can continue your lemonade stand experience within The Accounting Game by Darrel Mullis & Judith Oloff. Their book uses a lemonade business to teach you about balance sheets, income statements, and cash-flow statements.

What makes a lemonade stand a good model business is that it has a physical product, so we can learn about manufacturing (making things, such as lemonade) and inventories (storing things, such as ingredients). It is also a food business, making it a good model for restaurants or packaged goods. But, at the same time, the manufacturing process is simple and the inventories small, so, when you need to, you can ignore those aspects and focus on the service aspect of the company.

Just in case you never took the opportunity as a child to run a lemonade stand, the business is rather simple. You acquire some lemons, water, and sugar, and mix them in a pitcher. Then you set up a table by the street, draw a sign, pick a price, and sit around for a few hours, accepting money in exchange for individual glasses of lemonade. When you get bored, you pack it all up, drink the remaining lemonade, and enjoy being a child.


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