How the Humble Lemonade Stand Is Becoming a Pipeline for Young Entrepreneurs
It’s summer. It’s hot. It’s lemonade-stand season once again.
But that nostalgic picture of Americana got a 21st-century overhaul last month, as 11-year-old Jemma Walker rolled out a red carpet in front of a Krogers grocery in southern Indianapolis and set up an elaborate mermaid-themed stand. She had scoped out potential spots for weeks, haggled over ingredient prices with her suppliers, and taste-tested recipes for a new “blue raspberry” lemonade made to match her undersea decor.
“Before we did it, I thought it was easy. You just set up a stand, have lemonade, and sell it,” Jemma said. “It’s much harder than that. You have to think about a lot of different things, like design and start-up costs. ... There’s a lot of math involved.”
The rising 7th grader and her 9-year-old brother Miller were just two of more than 1,000 students who planned and built stands this year in Indianapolis for Lemonade Day!, a nationwide program that teaches students entrepreneurship skills through a club-based curriculum and selling events scheduled throughout the year. Business education advocates are seizing on extracurricular programs like this one to create a pipeline for skills that may not get noticed and nurtured in the classroom.
“We are seeing kids who are very well taught in how to be the best employees, but there’s nothing teaching them to be their own boss,” said Nathalie Virem, an entrepreneurship professor at California State University, Los Angeles. “That’s why many entrepreneurs don’t get educated in school, and don’t like school.”
A New ‘Pipeline Problem’
Business leaders argue that the nation’s economy could benefit from a K-12 “pipeline” for young entrepreneurs that mirrors ongoing efforts across the country to interest students in the science, technology, engineering, and math fields.
“I think sometimes there’s an assumption that entrepreneurs are born, but in a lot of cases, it’s really about having the knowledge and influencing their attitude fairly early that affects a kid going on to become an entrepreneur later in life,” said Ed Grocholski, a senior vice president for Junior Achievement USA, a nonprofit that promotes youth entrepreneurship.
The most recent Gallup-HOPE survey on youth entrepreneurship finds that from 2011 to 2016, the percentage of U.S. students in grades 5-12 who said they plan to start their own businesses fell steadily from 45 percent in 2011 to 41 percent in 2016. Students from racial minority groups saw a particularly dramatic drop in interest, from 54 percent to 42 percent during that time.
Those numbers mirror a generational decline in adult entrepreneurship; the Small Business Administration estimates that at age 30, fewer than 4 percent of millennials were mainly self-employed, compared to 5.4 percent of Generation X and 6.7 percent of baby boomers at the same age. Grocholski said he has seen high school and college students become more “risk averse” since the Great Recession began in 2008.
“When they are interested in entrepreneurship, they want it to be in a group and want a mentor involved,” he said.
The Gallup-HOPE study also found that students’ interest in entrepreneurship declines over their school careers. More than half of children in grades 5-8 said they wanted to start their own businesses, a rate that held steady from 2011 to 2016. But by high school, interest in entrepreneurship dropped to little more than a third of students in 2011, and an even smaller share, 27 percent, in 2016.
The skills needed to develop and run a business—including creativity, fast problem-solving, leadership, comfort with risk, and especially resilience after failure—might be more likely to be noticed and nurtured outside of school, according to Jessie Jones, the director of K-8 programs and partnerships for the Young Entrepreneur Institute in Ohio, which supports youth business competitions and other programs in and out of schools.
“We frequently have teachers come to us and say they have kids who were poor performers in a testing environment that did really, really well in the entrepreneurship activities,” Jones said. “It’s very difficult for teachers to predict that spark, because those kids have different skill sets that aren’t rewarded by the traditional classroom environment. And so I think we are sidelining those kids, instead of celebrating and helping grow their strengths.”
Programs like the nonprofit Lemonade Day! seek to fill that gap.
In more than 63 cities and communities across the country, local clubs and classes use the program’s curriculum to teach students from kindergarten to 8th grade business concepts like profit and expenses, advertising, and finding a good location. In many cities, local banks and businesses provide small-scale “lemonade loans” to students who present business plans for the stands. The national organization’s curriculum can be taught over several weeks in the run-up to sales days, but individual lemonade clubs can run for a semester or all year long. Some cities, like Indianapolis, hold multiple sales days during the spring and summer.
“We walk them through the books,” said Erica Gould of the Indianapolis YMCA, which sponsors one lemonade club. “Obviously [for] some of them, their reading or math skills are not up to par, but we just tell them, we will use our fingers if necessary. Even if they don’t understand how to do the math completely, they generally can count change. If they are having trouble, we send them to sell.”
On average, children stay with the lemonade-stand program for three years, with the curriculum building as students get more experience with running a business. Some students partner with their families or fellow students, while others run their businesses alone.
“We’re the Pee-Wee leagues of entrepreneurship,” said Steve Gordon, Lemonade Day! president.
The program was started in 2007 in Houston by local computer entrepreneur Michael Holthouse.
According to the group’s lore, Holthouse decided to develop a business training program for children after his own young daughter spent a fruitless afternoon trying to sell lemonade from the family’s driveway on a quiet street. The program has evolved in the years since to a full curriculum with 64 participating cities.
An internal impact study of the program found, in contrast to the Gallup-HOPE poll results, that 72 percent of students who ran a lemonade stand through the program in 2016 said they planned to start their own business. In fact, nearly a third of participants said, like Jemma, they already were running their own business after the program, compared to only 4 percent of students overall in the national poll. Participants made on average $168 in profit each year from the stands.
Jemma’s mom, Sherri Ann Walker, said she’s seen a separate benefit from her children running lemonade stands for the past three years: “There’s a lot she has learned about the value of money that we really appreciate,” she said.
“That first year, [Jemma and Miller] were talking about all the toys they could get. But then last year and especially this year, her first thoughts were, ‘I want to give half of my profits to my charity.’ I was really proud of that.”
Tying business education to social issues has proven especially popular with students. Lemonade Day! and the similar nonprofit Lemon Club recommend students donate a portion of their profits to a charity, and Grocholski said Junior Achievement has shifted the focus of its business education programs to social entrepreneurship.
“It used to be more about, ‘Let’s produce a product and see if we can make money from it.’ Now it’s more, ‘How can we try to solve a problem in society and potentially turn it into a business?’ So the types of businesses we’re seeing now are considerably different than what you may have seen two years ago.”
Dotting the I’s
Entrepreneurial organizations also increasingly help provide legal cover for children at a time when kids’ pop-up businesses can risk running afoul of local ordinances—and even spur police calls from unsympathetic neighbors.
Data by the libertarian Freedom Center of Missouri identified more than 40 incidents nationwide in which city officials shut down child-run stands or refused to give them permits.
“In Indiana, they don’t even allow you to put a stand up in your yard without a permit,” said Luke Walker, Jemma’s dad.
Gordon, the national Lemonade Day! president, said his group has been on higher alert since Memorial Day weekend, when Denver police shut down three elementary-age brothers who had set up a lemonade stand without a permit near a local festival. Later in June, the Internet exploded when a white woman was filmed calling the police to stop a black 8-year-old girl from selling water in front of her building.
Gordon said his group has since started working with the Denver boys’ mother, Jennifer Knowles, to change local ordinances to waive permit requirements for children’s lemonade stands; it successfully got similar rules changed in Austin, Texas, last year.
“For the most part, with persistence and education and the help of many of our participating government officials, we are able to persuade agencies to cooperate” by changing rules or providing waivers for single-day student events. But he said the program’s business curriculum also gives students a crash course on “safety, proper sanitation, and advice on following local guidelines.”
“Failure is a teacher, and I think overall there’s a lot of reluctance in schools to let kids fail,” Grocholski said. Extracurricular entrepreneurial programs, he said, “create an environment for kids where it’s safe, where they have that opportunity to fail and learn from it.”