Our neighbors recently engaged in a longtime summer tradition, the lemonade stand! It was well done with homemade signs and cheerful service. The price these girls asked for a cup of lemonade was in line with the current lemonade market, though when I think back to my youth a quick calculation would indicate we should all be glad the Fed uses the PCE Index instead of the Neighborhood Lemonade Index in gauging inflation. Otherwise, we might be looking for a return of the hawkish Paul Volcker as Fed Chairman.
The stand reminded me of my own occasional foray into the business as a child. I would guess my experience mirrored your typical lemonade stand—tremendous excitement when you get a customer, but painfully long intervals between transactions. Usually after a couple of hours I’d lose patience and close up shop. One day I had an idea to drive more traffic. I would sell a better-known product at a heavily discounted price! There was a fresh case of Coca-Cola in the garage that my parents had recently purchased, so the timing could not have been better. With a superior branded, packaged product, I set up shop and got to work selling cans of Coca-Cola below cost. This actually worked great for me—it was pure profit. However, it was obviously not so great for my parents, who served as my unwitting venture backers supporting a highly flawed business model.Read More