The Lemonade Stand

The Lemonade Stand On the last day of 7th grade, Olivia and Jonathan came up with a brilliant idea to make some summer cash, a lemonade stand. But, they wouldn’t sell just any old lemonade, their lemonade would be infused with berries. They planned to call their stand, “Berry Good Lemonade”. They thought using frozen berries would be better than fresh to keep them from spoiling quickly. As an added benefit, they would help to keep the lemonade cold and not water down the drink. They rushed home after school and told their parents about their idea. Olivia’s parents agreed to invest $50 into their venture. Jonathan’s parents agreed to match that investment. They priced the items they would need to buy online, and Olivia’s mom took them to the store to get their supplies. They purchased: 1- 400 pack of 12 oz. plastic cups 3- 3 lb. bags of lemons 1- 25lb. box of sugar 2- 4 lb. bags of frozen assorted berries 2- 3-gallon glass pitchers $14.50 $4.50 each; $13.50 $13.75 $14.00 each; $ 28.00 $15.00 each; $30.00 They hoped the cups and sugar would last them a month. They expected to buy lemons and berries each week. Jonathan’s dad let them borrow a table he purchased the year before. It was basically new, he paid $50 for it. When Olivia and Jonathan went to the store, they saw a similar one on sale for $55. Jonathan’s parents also agreed to let them use their cooler and ice from their freezer to keep the berries cold. They could also store their extra supplies at their house. Once they got back from the store, Olivia and Jonathan scoped out locations for their stand. They decided on the corner almost equal distance between both of their houses. The sidewalk in their neighborhood was wide, so they would have plenty of space to setup. And, when cars were driving by, they would easily be seen. The next day, Olivia and Jonathan counted the number of cars that drove by their soon to be business location. Between 11 am and 3 pm, their hours of operation, they counted 150 cars and over 75 pedestrians! Because it was June, and very hot, they felt confident they could attract a lot of those people to their stand. Since their location was near both of their houses, Olivia and Jonathan agreed to take turns going to refill the pitchers with water. With their parents’ permission, Olivia and Jonathan setup an account for Berry Good Lemonade Stand on Facebook, Twitter, Instagram, and TikTok. They also text all their friends to let them know they would be open for business in three days. Now, all they needed to do was price their product. After doing some research, they found that most restaurants charged about $3.00 for a cup of fresh lemonade. They thought $3.50 would be a good price for their lemonade since it had frozen berries in it. To help their customers understand why their price was a little higher than some, they would explain the benefits of berries and lemons to their customers while they were preparing their drinks and on their social media pages. Jonathan’s mom helped them make a sign to go in front of their stand and some QR codes for customers to check out their social media sites. Olivia’s dad helped them make a logo and shirts. Olivia and Jonathan were ready to sell some “Berry Good Lemonade”! 1. Assuming that Olivia and Jonathan had to pay for all of the supplies they needed to start their business, what is their total startup cost? 2. For the month of June, complete a profit and loss statement for Olivia and Jonathan’s business assuming they sold 75 cups of lemonade each week. Keep in mind Olivia and Jonathan estimated how often they would need to restock their supplies, assume they were correct and there are 4 weeks in the month. 3. Now, complete a financial projection of Berry Good Lemonade’s P&L for the months of July and August. Sales are expected to increase 10% each month. 4. While Olivia and Jonathan’s concept had a twist, a lemonade stand is not a new offering. According to McKelvey, entrepreneurs, who dare to create something different, don’t benefit from a roadmap that gives them an idea about how their business could be run. He goes on to say that no amount of money, access, or experience can change that, every entrepreneur starts at zero. Do you agree? How can money, experience, and access affect the success of an entrepreneurial venture? If Olivia and Jonathan did not have the support of their parents’ investments (time, money, resources), how could they have funded the startup of their business? 5. Due to their age, Olivia and Jonathan are limited in the ways they can fund the startup for their lemonade stand. What ways can most entrepreneurs fund the startup or growth of a business? 6. Do you think Olivia and Jonathan are prepared to start this business? If not, what are they missing?

The Lemonade Stand

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