Lemonade Stand Managment

Adam Aron, a former President of Norwegian Cruise Line, many years ago spoke to a group of travel agents in Anaheim, California. What he said then is as true today as it was when he said it.

In that speech, Adam conferred an honorary MBA from Harvard Business School to all participants who understand and follow the simple rules for running a lemonade stand that he learned while at Harvard:

1. Make good lemonade. Customers may buy bad lemonade once, but they will not return.
2. Don't spend too much making the lemonade. Service and quality are great, but not if they drive the cost of the lemonade so high that no one is willing to pay the premium (note: in an agency, our revenues for a transaction are frequently set by the supplier; if we spend too much making our "lemonade" we can't run a real business).
3. Find people who want to drink lemonade. This may sound trivial, but almost every business wastes a significant portion of their advertising money promoting their product to the wrong people. Small businesses are much better off putting a little bit of sweat into personally contacting highly targeted individuals than they are using money to reach a mass quantity of people and hope for a response.

4. Charge more than it costs to make the lemonade. Again, what we charge may be set by the supplier, but we always have the right to add to the commission being offered. If the commission isn't more than it costs to make our "lemonade," then we either have to charge extra (service charge) or get out of that particular business. If you lose 25 cents per transaction, you can't make it up in volume.

5. After the customer drinks, ask him if he would like a second cup. If he says "No," let him know the stand is open tomorrow from 9-5. So often, we help clients and then let them go. Do we follow up with a thank you note? Do we ask them what they want to do for their next trip?? Do we keep them on a mailing or emailing list to continue to ask them for future business??? If we don't, another lemonade stand will.