Loading…
Friday, August 22, 2014
Current Weather
Loading Current Weather....
Published: Tuesday, 7/4/2006

On Independence Day, a look at a free-enterprise start-up

The proverbial lemonade stand is an icon for America's free enterprise and entrepreneurship.

It's true, of course, that a kid could start with a few lemons, some sugar and ice, and a homemade stand and parlay that meager beginning into hundreds of dollars over the summertime.

But what if someone wanted to start a totally legal, taxpaying, ongoing, and (hopefully) profitable lemonade stand? Let's call it "Katie's Lemonade Stand."

Well, for starters you'd need a business plan that would look at costs, the market, pricing, licenses, taxes.

You would quickly discover you'll need a food-service license from Lucas County: $243.53 for the first year, which includes four inspections.

You'd need a bunch of lemons, and sugar, at wholesale - at the grocery, lemons typically run two for $1, but you can get about 140 of them wholesale for $32.50. Sugar is more expensive than it once was, but we found 25-pound bags for anywhere from $9.99 to $14.95.

An ice maker would be a good idea. Bags of ice cost $1 and up for 7 pounds, $3 and up for 22-pound bags, and ice doesn't last very long on hot summer days. We priced used ice makers at $400 up (eventually you might want a new one, costing well upwards of $1,000).

To prepare the merchandise, from left: a metal juicer, a sharp knife resting on the two-quart measure's lid, and the measure. To prepare the merchandise, from left: a metal juicer, a sharp knife resting on the two-quart measure's lid, and the measure.
Enlarge

Naturally, if the business is going to be viable, you'd want good-quality equipment.

"You'd have to have a good, sturdy chef's knife," said Sharon Dela-Hamaide, owner of Kitchen Tools & Skills in Perrysburg. She recommended a serrated version at $19.95, plus a stainless-steel juicer for $17.50, and a large measuring cup that does double duty as a 32-ounce pitcher, for $17.

Oh, and you'll need a cutting board, but it could be an economical plastic one for just $3.

Now, you could probably get by with a homemade stand for a few days (until the neighbors complain). But for the longer term, you'd probably want to get permission to put Katie's Lemonade Stand in a business place or commercial building.

For one thing, the Lucas County Health Department enforces Ohio's food-safety code that requires, among other things, proper sinks for cleaning equipment and a facility for food servers to wash their hands.

Enough space for a stand, or kiosk, could be rented at Erie Street Market for $8 to $10 a square foot, so 125 square feet would cost $1,000-plus for a year, plus electricity, said Peter Kepler, general manager of the market. Mr. Kepler noted that eventually, a permanent structure for the stand would be needed, requiring a city building permit ($127 minimum fee). The structure itself could cost hundreds, or more likely thousands, of dollars.

If the entrepreneur made a deal with a soda-pop distributor to sell pop, too, he said, the distributor might throw in a free fountain, with ice maker. But, of course, that would require another permit, a $20 pop licence from the city.

Before opening Katie's Lemonade, you'll want to register the name with Ohio's secretary of state (for a $50 fee) and get a Toledo tax ID number.

You'll be reporting profit and losses to the city (2.25 percent tax on profits) and to the Internal Revenue Service, which will require a Schedule C or C-EZ.

And you'll be collecting and paying sales tax of 6.75 percent to Ohio - lemonade is a non-food item under the state's definitions, so tax is charged whether it's takeout or consumed on premises.

So what's the price for Katie's Lemonade? You'll have 35 to 40 cents of direct costs tied up in a 16-ounce cup of lemonade, twice that much for a 32-ounce version. Can you charge $2, $3, or more?

For that answer you need to do some due diligence research, said Aggie Dahar, senior adviser for the Small Business Development Center operated by the Toledo Regional Chamber of Commerce.

Research is needed on costs of raw materials and equipment, regulations, and the demographics of the local market, she said. A key question, she said, is: "What is the benefit to someone who is purchasing? Without a benefit, no one will buy."

Ms. Dahar said, "Most people are overwhelmed [when they see a business plan]. They don't realize a business plan goes into such depth." She added that about half of prospective entrepreneurs decide not to pursue it when they discover the work that lies ahead.

She prepared a six-page outline for our mythical lemonade stand that also would serve as a guide for nearly any food-service business. For a copy of it, e-mail me.

Our estimated start-up costs of about $800 for an ongoing, viable lemonade stand do not include cleanup supplies, liability insurance, a cash register, legal or accounting work, worker costs, banking charges, or such amenities as more expensive plastic cups with a "Katie's Lemonade" logo.

So, perhaps a lemonade stand is not your cup of tea?

But maybe on this Fourth of July you're thinking of starting some sort of business. Good for you. Lots of folks are ready to help.



Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. If a comment violates these standards or our privacy statement or visitor's agreement, click the "X" in the upper right corner of the comment box to report abuse. To post comments, you must be a Facebook member. To find out more, please visit the FAQ.