Just about every person in the country either owned a little lemonade stand with their friends when they were a kid or they knew someone else who owned one. What those people didn’t know was that they were learning valuable financial lessons that would help them later on in life and business.
The following are seven of those helpful financial lessons learned:
1. It Takes Money to Make Money –
One of the very first lessons that the lemonade stand kids learn is one of the most important money lessons. That money lesson is that one must spend money to earn money. Just about every business opportunity requires a short-term financial sacrifice of some sort. Stand owners have to invest in lemons, sugar, pitchers, cups, and possibly a table. The restaurant owner has to spend money on kitchen equipment, décor, tables, chairs, menus, and food if he wants to prosper. It’s all the same but on different scales. When a person grows older, however, he or she learns to cut down overhead costs to make the business venture work better.
2. Operating Expenses Are First Priority –
One of the other money lessons that come from the lemonade stand experience is the lesson that no profits are made until the operating expenses are paid. A business has to keep on operating to make sales. Lemonade has to keep coming. Thus, the first portion of the earnings has to go to the operational expenses. In the case of the stand, the money might go to lemon purchases, and some of it may go toward buying a new blender to help create the product.
3. Decreasing Expenses Requires Cutbacks –
Budgeting is another valuable lesson that lemonade stand owners learn early in life. Cutbacks are a part of the business budget whether business owners want them to be or not. One must decrease expenses in one area to save money. Unfortunately, the decrease may affect product quality, employee benefits, access to workers, or something else that’s important to the business. Young business owners will learn about ethics and consumer satisfaction when they learn this lesson.
4. There’s Always a Potential to Make Extra –
The stand teaches children that they can always make more money for their business. The sale doesn’t end when the consumer takes the cup of lemonade. It continues until the business relationship ends. Little business owners learn about tipping and that tips are not just reserved for certain businesses. Any person in any business can earn tips, so income is not restricted to pay rate or even available products.
5. Good Customer Service Goes a Long Way –
Young entrepreneurs learn lessons about customer service, as well. They learn that high-quality service increases transactions and profits. They also learn that happy customers are usually willing to pay more or provide tips. It’s never about the lemonade. It’s usually about how the person serves it and the type of experience the customer receives overall.
6. Saving for a Rainy Day Is Crucial –
Businesses and individuals have to save money for a “rainy day” as the ancient saying goes. A rainy day is a time of struggle or unexpected hardship. That might be a layoff, divorce, natural disaster, payment that didn’t go through or some other reason. People have to prepare themselves for such incidents by putting some money away as soon as it arrives. Click here for more ways to save for a rainy day.
7. Business Relationships Are Paramount to Success –
Finally, the lemonade stand teaches about business relationships and how businesses sometimes need to lean on each other and serve the community together to succeed. The lemonade stand owner may be able to get a lemon on credit if they run out product if they have a good relationship with the fruit stand next door. That’s just an example of how the respect of following businesses can help a company to survive within the community.
The lemonade stand lessons are some of the most helpful lessons learned for life and business. Perhaps all children should have the experience at least once in their lives because they can grow up to be wise business leaders and understand from an early age how to properly manage money and finances.
If your child wants to operate a lemonade stand this summer, let them know it’s a big responsibility that can bring about some big rewards. They won’t just make some money, they will also pick up good money management habits and behaviors. The 7 lessons outlined above will help your child make the most of their summer vacation and they will help carry them through the tougher financial times when they grow older.