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Regulation Killed the Lemonade Stand

Lemonade Stand signVideo may have killed the radio star but regulation killed the dreams of four teenage entrepreneurs. In this case, it wasn’t a lemonade stand. These four thirteen-year old boys …

set up a cupcake stand. Their dream? To make enough profit to open a full-fledged restaurant someday.



They chose a park, and set up shop on a Saturday, because they knew a lot of people would be there. Location, location, location – these young entrepreneurs got the message.

Their first day in business, they made more than they could have ever expected selling their tasty morsels – cupcakes, cookies, brownies and Rice Krispie treats for $1 a piece.

They netted $120 that day.

The boys quickly reinvested their profit, buying a shopping cart for $60 so they could transport more of their inventory to the site.

The next Saturday, they set up shop again, adding Gatorade and water to their mix. In the first hour alone, they cleared $30. They were thrilled …

… until the police arrived. They were nice to the boys, but they shut them down because the boys were operating without a license.  The police had received a call from one of the city’s councilpersons, who had been in the park and witnessed the boys selling their wares.

Government wins, entrepreneurs lose
The boys would have needed $1,000,000 in insurance and would have had to pay a fee of $150 – $350 for every two hours they wanted to be open for business.

Think about it: The boys were thrilled to clear $30 in their first hour on that second Saturday. The local government would have required $75 for that hour. So the entrepreneurs lose $45.

What’s the lesson? It’s better to be the government than to be the entrepreneur!

Yet it’s the entrepreneurs who take the risk. We need government officials who understand the risk / reward trade-off and partner with entrepreneurs accordingly. 

A threat to “real” business people
It’s true that other food vendors had to pay these costs. But c’mon … are four kids making $120 on a Saturday really a threat to a “full-fledged” business person? If so, it may be time to consider a new line of work!

Real leaders don’t blow up situations
Upon reflection, the councilman said he probably could have handled it better. But he didn’t know if he had the authority. He said the police are trained to handle this sort of thing.

Do you need “authority” to talk to thirteen-year old boys who have never ever been called to the principal’s office? One of the boys cried all the way home, according to his mother. He’s afraid that he will have a record. He’s afraid this will affect his future.

It’s that instinct to call the police that should be questioned. Where are the real leaders today? Real leaders solve minor problems. They don’t blow them up into major ordeals.

From regulation to shrugging
In the end, the councilman was right – the boys did need a permit to sell. We also assume they may have been violating the health codes since it’s doubtful that they were manufacturing their product in a commercial kitchen.

We hear politicians talking the talk about the importance of entrepreneurs because they create most of the jobs in our society. Talk isn’t cheap; it’s costly. Because if all you ever do, Mr. or Ms. Government Official, we respond accordingly:

We hunker down. We don’t invest. We don’t hire. We go on strike. We shrug.

Fostering entrepreneurship
Entrepreneurship is part science and part art. The science we can teach. The art has to be learned.

So how do we foster entrepreneurship in kids this age?
How many of today’s successful entrepreneurs had a lemonade stand or some similar business when they were kids?
How many of them couldn’t do it today because of regulation?
How many future entrepreneurs – future job creators – are we losing because of regulation?

Why not waive the fees altogether on one Saturday a month? Get more kids involved, setting up shop in the park, dipping their toes in the entrepreneurial waters.

Or what if kids under the age of 18 – or 16 – paid a nominal fee like $5? Keep the cost in line with the profit expectations of these young entrepreneur gonna-bes.

These are just a couple of our thoughts. What are yours?

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(Image in today's post from Flickr)