Lemonade Stand Example

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Lemonade Stand Example

• Flowcharting a business for growth

B. Woltjer 5/1/2007
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Single person single outlet business
Go to market and buy lemons and sugar
Set up lemonade making operation in kitchen
Borrow money from parents or best friend
Manually make lemonade
Set up stand on street, make cardboard sign with
advertisement and price
Set up stand on street, make cardboard sign with
advertisement and price
Set up stand on street, make cardboard sign with
advertisement and price
Acquire manual juicer, pitcher, and glasses
Stay in stand and sell lemonade to customers
until gone
Close and secure stand, take money and repay
portion of loan
Clean up equipment, pitcher, glasses, etc.
Each time the product is sold out the businessman
must stop operations and spend his time making
more product. This results in a lot of
non-productive time when there are customers
ready to buy lost opportunity.
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The business grows through staff expansion
Go to market and buy lemons and sugar
Set up lemonade making operation in kitchen
Borrow money from parents or best friend
Manually make lemonade
Set up stand on street, make cardboard sign with
advertisement and price
Acquire manual juicer, pitcher, and glasses
Return to kitchen and make more lemonade
Keep stand in operation, take money and repay
portion of loan
Clean up equipment, pitcher, glasses, etc.
Hire person to stay in stand and sell lemonade
If the lemonade is selling the businessman can
continue to make product and have the hired
person sell it. Each cycle brings more profit.
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The business grows through distribution expansion
Go to market and buy lemons and sugar
Set up lemonade making operation in kitchen
Borrow money from parents or best friend
Manually make lemonade
Set up two stands on street, make cardboard sign
with advertisement and price
Two stands increase the number of times the
volume of lemonade is sold for a profit and the
profit is increased for the same amount of time
selling. Business Considerations Employees must
be paid increase cost Amount of money in
inventory increases Volume of manual production
may be exceeded.
Acquire manual juicer, pitcher, and glasses
Return to kitchen and make more lemonade
Keep stands in operation, take money and repay
portion of loan
Clean up equipment, pitcher, glasses, etc.
Hire person to stay in each stand and sell
lemonade
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The business grows through mechanization
Go to market and buy lemons and sugar
Set up lemonade making operation in shop
Borrow money from bank
Mechanically make lemonade
Set up multiple stands on street, make cardboard
sign with advertisement and price
Multiple stands increase the number of times the
volume of lemonade is sold for a profit and the
profit is increased for the same amount of time
selling. Business Considerations Employees must
be paid increase cost Amount of money in
inventory increases Mechanical juicer requires
electrical power and maintenance Product
inventory may need to be refrigerated
additional cost
Acquire mechanical juicer, refrigerated
dispensers and disposable glasses
Return to kitchen and make more lemonade
Keep stands in operation, take money and repay
portion of loan
Clean up equipment, pitcher, glasses, etc.
Hire people to stay in each stand and sell
lemonade
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The business grows through innovation
Purchase lemons, sugar and packaging for
delivery to shop
Set up lemonade making operation in larger shop
Borrow money from bank
Mechanically make lemonade
Set up bottling facility and bottle lemonade
for delivery and sale over wider region
Acquire mechanical juicer, refrigerated storage,
Profits can be multiplied significantly with
addition growth pushing them even higher. Allows
for additional innovation such as additional
flavors, carbonation, etc. Business
Considerations Investment is significant and
production must be consistent and at significant
volume to pay for cost of equipment and hired
help.
Keep production high enough to provide for
growing sales
Keep good records of operation, take money and
repay portion of loan
Hire person to clean up and maintain equipment
Hire people to sell and deliver product to other
retailers
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Lemonade Stand Example

• Flowcharting a business for improvement

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Adding Quality Control to the Production Process
Manually make Lemonade
Set up stand on street, make cardboard sign with
advertisement and price
Manually make Lemonade
Set up stand on street, make cardboard sign with
advertisement and price
Sample test lemonade - sweet enough?
Sample test lemonade - strong enough?
Yes
Yes
No
No
Quality control process may improve sales due to
customers appreciation for consistent good
product. Poor initial quality will increase
costs due to the need to rework the product to
raise it up to acceptable standards.
Add sugar
Add lemon juice
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Manufacturing/Business Considerations
Income/Expense Statement
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Other manufacturing business considerations

• Capacity analysis
• Product Quality
• Packaging, labeling
• Order entry, sales recording
• Distribution
• Organization and description of responsibilities

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Business plan Development