Long blog post title, but you get the point. Ever since I was a little child I can remember wanting to own a business. In my exit interview from Clemson University they asked me about my long-term career goals. In an almost knee-jerk reaction, I said to own my own business in the computer industry. Today I can say I fulfilled my dream and did just that. Maybe it was my own father constantly pounding into me the statement, “Don’t ever work for someone else. Start your own business!” After all his father owned a jewelry business, and I think my father regretted never following in the same footsteps. I guess from an early age, I knew that if you want to be financially successful, controlling your own destiny was the way to go.
Fortunately the day was hot. Like vultures circling around the dead, there were other kids on the block and the adult neighbors were nice enough to visit my establishment. After doing this for a few hours I figured why not copy how the “big boys” did it. Being like every other kid with a sugar habit, I frequented the local pusher, er I mean deli, on my bike. I noticed they sold candy, and thought why not sell candy at my “store”. So off I went to the deli, and bought some of their candy to resell at my stand. I brought the candy back home and offered it, initially for the same price! Unfortunately, my parents weren’t much help in my first venture. I questioned my mom, “How does a deli make money if they buy, and then sell it at the same price?” Unfortunately, she couldn’t answer me. Keep in mind this was before the days of super bulk sized offerings from Costco, Sam’s Club and BJ’s. So I proceeded to add $0.05 to each candy bar I sold. I did earn a few dollars from the experience. I remember I had a blast, and it was fun. While in the process I learned some valuable lessons that I could apply today.
Here are some of the lessons I learned from my first business:
I needed to make sure people were aware of my business. So I created a simple sign promoting what I was offering. I knocked on a few houses and made them aware of what I was offering. I even came up with the idea that my block didn’t have enough car traffic, and I needed a better location. I got the cockamamie idea of moving it down the block to a busy road. My mom immediately rejected the idea as people drove somewhat fast on it.
Lesson Learned: Build it, and people will not necessarily come. In order to be successful, you need to advertise, sell and promote your business.
Don’t Eat the Profits
Unfortunately, I literally did just that. After getting home from the deli I would eat some of the candy while waiting for others to buy my stuff. Related to this, the only way to make money is to sell something for more than what it took to acquire it. Since my neighbors didn’t have to make their own lemonade or go to the store for candy, they had the convenience of buying it right in front of my house.
Lesson Learned: Be mindful of your cash flow. Not only what comes in but also what goes out (and into your stomach!).
Upsell Other Products/Services
I didn’t know it at the time, but offering candy with my lemonade was a method of upselling other products to my customers. So while they were buying lemonade, I offered them to buy candy from me.
Lesson Learned: Upselling is an easy way to make additional money with little effort.
Your Competitors Don’t stand still
After creating my lemonade stand, a neighbor down the block liked my idea. He liked the idea so much he setup his own lemonade stand. That bastard! My first competition in business. I can’t say we had a price war or anything like that, but looking back now it’s interesting how it happened.
Lesson Learned: If you are in a profitable business with low barriers to entry, expect competition. You need to constantly improve your products/services, and focus on ways to differentiate yourself from other businesses.
The Purpose Of Owning Business is to make a Profit
Yeah I know another statement made here by Captain Obvious. When I bought that candy and then proceeded to sell it at the same price, I wasn’t going to make any money from the transaction. I quickly learned adding $0.05 would allow me to at least make some money on each transaction. In reality, I should have bought the candy from a wholesaler.
Lesson Learned: After taking the income and deducting the expenses you must have profit, or else your business won’t live to see another day.
How Can This Help Your Children?
Currently I have two boys (a 4 year-old and 1 year-old) and another baby on the way. I’ve made a promise to myself that I want to teach the important lessons I learned about money and business. What better way than having them create a lemonade stand or do something similar. It’s a great way to get them to at least learn how to be an entrepreneur. In the process of making it fun, they also can learn basic money skills.
Readers as a child did you do something like this? If so, what did you learn from your childhood business?