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Small Business Ideas: Are You Just Building a Lemonade Stand?
In addition to the return of robins and green grass, the dawn of spring brings another stream of new small businesses—literally the most micro of "small" businesses—to our area. What businesses are those? Kids' lemonade stands.
Whenever I run across these pint-sized "kidpreneurs," it makes me smile. I always wonder if they'll actually learn anything from their experience about opening and owning a business. Sadly, though, many of them that get bitten by the entrepreneurial bug as adults may treat their real small businesses like their little lemonade empires.
Here's what happens when small business ideas take on lemonade stand business strategies...
Selling to Anyone and No One
"Wanna buy some lemonade?" a little lemonade CEO yells from across the street. Of course I'm not interested. One, I'm usually walking my large active dogs which makes it a trick to purchase and drink it. Next, lemonade often sets my teeth on edge.
You have to cut the little Lemonade Barons and Baronesses some slack for trying. But when they grow up and open a real business, we might find them doing the same thing, screaming their marketing messages and offers to anyone with a pulse within earshot, and then wonder why their business is failing.
As discussed in Cold Calling Sales Sins to Avoid, proximity does not equal possibility when it comes to prospects. You need to set up your stand where thirsty people hang out which, these days, could be offline or online. And those can't be just any people. They need to be people for whom lemonade would be a thirst quenching choice.
Where a business is located can make or break it. Yet many small businesses position themselves where it's convenient or cheap, but where getting traffic (the foot or Internet kind) is either impossible or expensive. For the kids, that might be mom and dad's house. Okay, we understand that's their only choice. But I once went to a cocktail party at a micro winery that was in the middle of a seedy industrial area. News flash: The wine tasting crowd ain't hanging out there.
Moving Beyond the Lemonade Stand: When opening a business offline or online, find out who wants your "lemonade" and locate where they hang out.
Sell or Swim?
Ever notice that kids' neighborhood lemonade stands are usually only in business for a couple of days before they close up shop? They don't do business in the rain, when a cool wind comes through or when the community swimming pool is calling their names. What if I really was looking for a sip of lemonade while I walked down their block?
The kids are in business as long as it's fun, makes some coin and they don't have anything better to do. Ever see some small business owners act the same way? I have. When owning and running a business gets too difficult, they get out. Though many "funpreneurs" would really be better off going out of business, many real life adult business owners give up just before their businesses turn the profit corner.
Granted, there are times when it is necessary to close a business, or a portion of it, that is not bringing in revenue and profits or just costs too much to operate. That's where sales forecasting and monitoring are so crucial. Armed with this data, an owner can make a more informed decision about the future of the business... other than basing it on that it is no longer fun.
Moving Beyond the Lemonade Stand: Know why you're in business and make a commitment to see it through the inevitable ups and downs until it reaches the end of its life cycle, becomes too unprofitable or there are other serious issues making it unwise to continue.
Cash Flow and Go
"Mom, can I make some lemonade to sell?"
"Sure, Honey. Everything's in the kitchen. Do you need some help?"
Wow, I bet many business owners would love to be able to ask "mom" for all the bits, pieces and labor that go into setting up and running a business. Most of us know that "mom" isn't there for us. But there are small business owners and entrepreneurs who rush headlong into going into business for themselves without ever researching or understanding all the costs of being in business. Materials, labor, insurance, accounting... the list is endless.
Why would they do this? Often these folks are employment "refugees" who desperately want to be in business on their own, so much so that they will ignore many of these factors. Before long, they realize the gravity of their situation and fret about the cash flow becoming cash "go."
Moving Beyond the Lemonade Stand: Understand your business costs BEFORE going into business.
Mixing Friendship and Finances
"Hey, Mister, how about buying some lemonade?"
"Aw, you're so cute. Why not?"
One of the advantages lemonade kidpreneurs have is that they can sell on being adorable. Their unique sales proposition is that they are cute and their customers usually are friends, relatives and neighbors who know, like and trust them. Sort of sounds like social media, eh?
But what happens when the kids grow up, get acne and friends and neighbors get tired of buying the same darn lemonade year after year? You guessed it. The business fails.
Yet haven't we all encountered small business folks who sell based solely on friendship? Haven't you purchased products or services based simply on the friendship factor? We all have at some point. Gets pretty uncomfortable for sellers when friends quit buying and quit connecting because they don't want to get roped into buying something else they don't really want or need. Those friends are afraid that every call is actually a disguised sales pitch. Ugh!
While friendship can help facilitate many a sale, having limited offerings and going to the friendship well for prospects too often will torpedo any business.
Moving Beyond the Lemonade Stand: Understand the target market and its demographics to avoid uncomfortably mixing friendship and finances.
- Gain Understanding of Market Segments.
- Learn to Avoid the Disguised Sales Pitch. (It often happens between friends)
- Find Out Why Know, Like and Trust Isn't Enough When Using Social Media for Business.
The Bottom Line
Time to grow up and grow your business!
Disclaimer: The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.
© 2014 Heidi Thorne