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How to Open a Lemonade Stand

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

How to Open a Lemonade Stand

Fast Facts

Investment range

$550 - $6,800

Revenue potential

$5,400 - $108,000 p.a.

Time to build

0 – 3 months

Profit potential

$4,320 - $64,800 p.a

Industry trend

Growing

Commitment

Flexible

Lemonade stands have long been the go-to entrepreneurial venture for kids. However, lemonade stands don’t have to be just for children. You could start a mobile lemonade stand or cart, or even a lemonade kiosk in a mall. Interestingly, the lemonade industry is a large one, valued at nearly $10 billion and growing. 

But starting a lemonade stand, whether you’re a child or an adult, takes some business savvy. Luckily, this step-by-step guide details all the information you need to pour your way to lemonade stand success. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Pros

  • Lemonade is a refreshing and popular beverage
  • High profit margins
  • Low startup costs

Cons

  • Generally not a high growth business
  • Compete with other lemonade stands

Lemonade stand industry trends

Industry size and growth

Lemonade industry size and growth

Trends and challenges

Lemonade Stand Trends and Challenges

Trends

  • Lemonades with additional flavors like raspberry are growing in popularity.
  • Hybrid lemonade drinks, such as lemonade combined with iced tea or sparkling water are becoming more common.

Challenges

  • Canned lemonade drinks are creating more competition for homemade fresh lemonade stands.
  • The rising price of lemonade ingredients is cutting into the profit margins of lemonade stands.

How much does it cost to start a lemonade stand business?

If you’re starting a lemonade stand in your yard and plan to run it on a regular basis, you can start for about $500. If you start a mobile lemonade cart, you’ll spend about $7,000 for the cart and equipment. 

You’ll need a handful of items to successfully launch your lemonade stand business, including: 

  • Lemonade cart
  • Lemonade making equipment
  • Cups
Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$0 - $500$250
Business licenses and permits$100 - $300$200
Insurance$100-$500$300
Website$0 - $500$250
Homemade stand or a purchased cart$50 - $3,000$1,525
Lemonade making equipment and supplies$200 - $1,500$850
Ingredients$100 - $500$300
Total$550 - $ 6,800$3,675

How much can you earn from a lemonade stand business?

Lemonade Stand earning forecast

These calculations will include two scenarios. The first is for an at home lemonade stand and the second is for a mobile lemonade cart. In both scenarios lemonade prices will be assumed to b $3 per cup. An at home lemonade stand should have a profit margin of about 80%, while a lemonade cart would have a margin of about 60%.

A home based lemonade stand might have 20 customers a day, 90 days a year, bringing in $5,400 in revenue. This would mean $4,320 in profit, assuming that 80% margin. Not bad if you’re a kid!

A mobile lemonade cart that you set up in prime locations might have 200 customers day, 180 days a year, bringing in $108,000. This would mean a profit of a healthy $64,800. 

What barriers to entry are there?

There are a few barriers to entry for a lemonade stand. Your biggest challenges will be:

  • Funding the startup costs
  • Competing with other lemonade stands

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Step 2: Hone Your Idea

develop a business idea

Now that you know what’s involved in starting a lemonade stand, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research lemonade stands in your area to examine their products, price points, and customer reviews.

  • Make a list of lemonade businesses that offer similar products. 
  • Review your competitors’ products – their features, pricing, and quality – and marketing strategies
  • Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
  • Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing a neighborhood lemonade stand that offers country time lemonade, or a mobile lemonade cart that makes fresh lemonade.  

You might consider targeting a niche, such as fresh lemonade and homemade cookies.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Selecting the perfect lemonade recipes and stand setup

In addition to lemonade, you could offer cookies or other snacks. 

How much should you charge for lemonade?

Your prices will depend on market prices in your area, but also on your costs to make the lemonade. 

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will either be people in your neighborhood, or just thirsty people who like lemonade. You can market your business on TikTok, Instagram, or LinkedIn. Childrens lemonade stands can also distribute flyers in their neighborhood. 

Choosing a good location

Choosing a good location for your lemonade stand is essential for the success of your venture. Here are some steps you should consider:

  1. High Foot Traffic: Choose a location that has a lot of foot traffic. Parks, popular neighborhoods, shopping centers, or sports fields during a game are typically great options. The more people that walk by your stand, the better your chances of making sales.
  2. Visibility: Make sure your stand is easily visible to passersby. It should not be obscured by objects or other stands. A corner location can be ideal because it’s visible from two directions.
  3. Easy Access: The location should be easily accessible. It should not be difficult for potential customers to approach the stand.
  4. Weather Conditions: Consider the weather. If it’s sunny and hot, a location with some shade would be preferable to keep your lemonade cold and your customers comfortable.
  5. Nearby Activities/Events: Setting up near a local event like a farmer’s market, a fair, a sports game, or a concert can bring you a lot of customers. However, you should always make sure you have permission to set up in these locations.
  6. Safety: Choose a location where you, your employees, and your customers will feel safe. Avoid poorly lit or isolated areas.
  7. Permit and Regulations: Before setting up, check if there are any permits or regulations you need to follow. Some areas may require a vendor’s license or have specific rules about where you can set up.
  8. Competition: Avoid areas where there are already other lemonade stands, or many food and drink vendors. You want to stand out and not get lost in the crowd.
  9. Parking: If you expect customers to stop by in their cars, you should choose a location that has adequate parking facilities nearby.
Lemonade Stand business idea rating

Step 3: Brainstorm a Lemonade Stand Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “lemonade” or “fresh lemonade”, boosts SEO
  • Name should allow for expansion, for ex: “Citrus Splash Beverages” over “Sunshine Sippers”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Lemonade Stand Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive Summary: Provide a brief summary of your business plan, outlining your goals, target market, and financial projections.
  • Business Overview: Describe your lemonade stand, including its location, size, and the types of lemonade products you plan to sell (e.g., traditional lemonade, flavored varieties).
  • Product and Services: Detail the types of lemonade products you will offer, their pricing, and any additional services like delivery or catering for events.
  • Market Analysis: Analyze the market for lemonade in your area, including potential customers, demand during different seasons, and pricing strategies of competitors.
  • Competitive Analysis: Identify any competitors in the lemonade market, such as other stands or beverage businesses, and explain how your offerings will stand out.
  • Sales and Marketing: Explain how you will attract customers to your lemonade stand, including marketing strategies, promotions, and any partnerships with local businesses or events.
  • Management Team: Introduce yourself and any team members who will be involved in running the lemonade stand and their roles.
  • Operations Plan: Describe the day-to-day operations of your lemonade stand, including sourcing ingredients, production, staffing, and opening hours.
  • Financial Plan: Present financial projections, including startup costs, revenue forecasts, pricing strategies, and operating expenses, to show the financial feasibility of your business.
  • Appendix: Include any additional materials, such as recipes, pricing lists, or photographs of your lemonade products, to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to lemonade stands. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your lemonade stand will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

types of business structures
  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

types of business financing
  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a lemonade stand business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Business Licenses/Permits

Business Licenses and Permits

Starting a lemonade stand business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. Even a neighborhood lemonade stand may need a permit. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your lemonade stand business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

types of business insurance
  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Vev, or ShipEdge, to manage your inventory, purchases, and sales. 

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Order Ahead”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

  • Eye-Catching Signage: Ensure your signage is bright, bold, and easy to read from a distance, attracting passersby with enticing visuals and a clear indication of your offerings.
  • Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
  • Sensory Appeal: Leverage the power of scent by strategically placing a few lemon slices near your stand; the enticing aroma will draw people in and enhance their perception of your lemonade.
  • Interactive Sampling: Offer small, free samples to passersby—let them taste the quality of your lemonade, creating a direct experience that can convert them into paying customers.
  • Themed Events: Plan themed days or events, such as “Lemonade Happy Hour” or “Thirsty Thursdays,” to create anticipation and attract a regular customer base.
  • Community Engagement: Establish partnerships with local businesses or community events to set up your stand, expanding your reach and becoming a familiar presence in the area.
  • Loyalty Programs: Introduce loyalty cards or discounts for repeat customers, encouraging them to choose your stand over competitors and fostering customer loyalty.
  • Social Media Challenges: Launch social media challenges or contests, encouraging customers to share their lemonade experience online and tagging your stand, boosting online visibility.
  • Mobile Lemonade Stand: Explore mobile options like a cart or a pop-up stand, allowing you to reach different parts of your community and cater to various events.
  • Bundle Deals: Introduce bundle deals, such as a combo with a snack or a discounted rate for buying multiple cups, enticing customers to spend more.
  • Thirst-Quenching Promotions: During hot days, offer promotions like “Beat the Heat Specials” with discounted prices or larger cup sizes to attract more customers during peak times.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your lemonade stand meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your lemonade stand business could be:

  • Ice cold fresh lemonade
  • Thirsty? We’ve got you covered
  • Fresh lemonade with only organic ingredients

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a lemonade business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in lemonade stands for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in lemonade stands. You’ll probably generate new customers or find companies with which you could establish a partnership

Step 12: Build Your Team

Building a Team for a New Business

If you’re starting out small, you may not need any employees. But as your business grows and you open a lemonade shop, you will likely need workers to fill various roles. Potential positions for a lemonade stand business include:

  • Store Clerks – make lemonade, customer service
  • Marketing Lead – create and implement marketing strategies
  • General Manager – accounting, inventory management

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Lemonade Stand – Start Making Money!

Running a Business

Whether you’re an ambitious kid or an adult looking for a new pursuit, a lemonade stand can be a great business. Most people love lemonade, making in a nearly $10 billion industry, so there’s money to be made. It’s also a simple business to start and you can have fun and be creative. 

You’ve got the business know how, so now you’re ready to launch your new money-making lemonade stand!

Lemonade Stand Business FAQs

Is a lemonade stand profitable?

A lemonade stand can be profitable, but it depends on various factors such as location, pricing, quality, and demand.

What is the growth potential of a lemonade stand?

The growth potential of a lemonade stand is limited, as it is typically a small-scale and seasonal business. However, with effective marketing and expansion strategies, it is possible to increase its profitability to some extent.

What type of business is a lemonade stand?

A lemonade stand is considered a small-scale retail business, focusing on selling a specific product (lemonade) to customers.

Can you start a lemonade stand on the side?

Yes, you can start a lemonade stand on the side, as it is often operated on a part-time basis, especially during the summer months or special events.

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How to Open a Lemonade Stand