Start a lemonade stand by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your lemonade stand. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a lemonade stand?
A lemonade stand is inexpensive to open. Anabelle, a 10-year-old, opened a licensed lemonade stand for $3,500. Businesses with fixed locations or larger stands may cost more to open, but they’re still affordable to open.
These startup funds go toward:
a stand, cart, or storefront
commercial-grade equipment for making and dispensing lemonade
lemons, sugar, water, and ice
cups, straws, and napkins
licensing and insurance costs
What are the ongoing expenses for a lemonade stand?
The ongoing expenses for a lemonade stand business are low. They include the cost of ingredients (lemons, sugar, water and ice), and facility, licensing and insurance costs.
For Annabelle, non-ingredient costs totaled $500 per year. Businesses that have to pay rent will have higher ongoing expenses. Compared to other businesses, though, these expenses will still be minimal.
Who is the target market?
A lemonade stand business’ ideal customer is a family or group of friends who are hot and thirsty. If someone in such a group suggests getting lemonade, everyone may agree to get one. Thus, a stand might sell several lemonades at once rather than just one to an individual customer.
How does a lemonade stand make money?
A lemonade stand business makes money by selling lemonade. Lemonade is typically sold by the glass or cup.
How much can you charge customers?
Most lemonade stand businesses price their lemonades at $5 or less. The exact cost depends on a stand's location. Even in high-demand areas, though, businesses resist going over $5 because. Many customers will think twice before spending more than $5 on an impulse purchase.
How much profit can a lemonade stand make?
In a busy location, a lemonade stand business can bring in a good profit.
One lemonade stand business’ expenses place the cost for ingredients of a 16-ounce lemonade below 50 cents. Making a 32-ounce lemonade costs less than 85 cents. At these prices, selling a lemonade for $5.00 provides a profit of over $4.00.
With the right traffic, $4.00 per sale quickly adds up. In a single day, a business that served 100 people would have $400 to cover that day’s expenses and provide a profit.
How can you make your business more profitable?
When looking for ways to increase profitability, a lemonade stand business should be wary of adding more products. Additional products can dilute a business’ brand as a lemonade stand. They also can increase overhead.
Instead, a business should look for ways to make more on the sale of each lemonade. This can be done by offering flavorings for lemonades and charging for the flavorings. Alternatively, a stand can sell a cup that comes with free refills for the day but costs much more than $5.00.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your lemonade stand is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a lemonade stand business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a lemonade stand location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a lemonade stand business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a lemonade stand:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your lemonade stand business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a lemonade stand
Since most lemonade is bought by passersby, all marketing efforts should be focused on getting the attention of people who are going by a lemonade stand. Signs are one of the best ways to attract people’s attention in this manner.
How to keep customers coming back
A lemonade stand business can increase how many returning customers it sees by offering great tasting lemonade. If a stand’s lemonade is subpar, sales will decrease. If the lemonade is delicious, though, customers will return for another drink the next time they’re in the area and thirsty.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Lemonade Stand In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Anyone who is looking for a business that’s easy to own may be interested in operating a lemonade stand business. Lemonade stands have low costs and are easy to run, yet they can be quite profitable. For these reasons, they appeal to entrepreneurs of all ages -- from kids to retirees.
It helps to enjoy interacting with people. While business owners don’t spend a lot of time talking to any one customer, they will serve and interact with many customers each day.
What happens during a typical day at a lemonade stand?
Business owners spend most of their time service customers lemonade. To provide the freshest possible product and enhance the customer experience, each lemonade is usually made fresh when ordered. Making lemonade involves squeezing lemons, adding sugar water and ice, and mixing the ingredients together. It takes just a minute to make a lemonade.
When not serving customers, business owners order more supplies, clean their stand, and market their business. Business owners who have mobile stands must also spend time researching where to take their stands.
What are some skills and experiences that will help you build a successful lemonade stand?
Business owners should be comfortable with basic business principles, and they need to know how to make good lemonade.
Business owners who don’t know how to run a business may want to take a course on business practices. Local community colleges often offer courses. There are also many courses online. Coursera and OpenCulture have many free business classes.
What is the growth potential for a lemonade stand?
Most lemonade stand businesses remain local businesses that have one location. A few businesses might grow to have several locations in an area, but growing beyond this is uncommon.
There are lemonade stand franchises that have multiple locations, but growing a lemonade stand business through franchises is difficult. Because stands are easy to run, any training a franchise offers has limited benefit to business owners. Also, lemonade is often an impulse buy made by passersby. Thus, any advertising provided by a franchise is of little use to an individual stand.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a lemonade stand?
When starting a lemonade business, choosing a good location is very important. Most customers won’t specifically seek out a lemonade stand. Instead, they’ll decide to get a lemonade while passing by if they’re hot and thirsty.
Therefore, a stand should be in a high-traffic area where it’s hot. Good potential areas include:
the boardwalk at a busy beach
an outdoor market in a city
fairs and festivals
Outdoor locations are preferable. Most indoor places are air conditioned, and cool air will decrease how much customers want a cold, refreshing drink.
How and when to build a team
A lemonade stand can be operated by one person. It’s helpful to have an employee, though. With two people, speed of service will increase during rushes. Also, a business owner will have the freedom to go get more ingredients if they run out during the day.