You want to start a summer business to earn money. What will you do? You have to consider how much money you can afford to invest in this business, how much it will cost you to make each item, and how much you’re going to charge for each item. Research something that would be reasonable to make and sell with the startup investment you have determined.
Task 1 - Investment
You are going to start a lemonade stand at your local farmers market. Answer the questions:
1. What is the total amount of money you are willing to invest in this business?
2. How much will it cost you to make one serving of lemonade?
3. How much will a customer pay for a glass of lemonade?
4. Do you think your business will be profitable? Why or why not?
1. The total amount of money I am willing to invest in this business is $200.
2. It will cost me approximately $0.50 to make one serving of lemonade. This includes the cost of lemons, sugar, water, and other ingredients.
3. I will charge customers $2 for a glass of lemonade.
4. I believe my business will be profitable. By selling each glass of lemonade for $2 and considering the cost of $0.50 to make one serving, I will be making a profit of $1.50 per glass. If I sell 100 glasses of lemonade, I would make a profit of $150 ($1.50 x 100), which is a good return on my initial investment of $200. Additionally, during the summer season, there is typically high demand for refreshing drinks like lemonade, especially at a local farmers market.
Task 2 - Getting Your Business Started
Answer the following questions
1. Write an inequality that represents the maximum amount you are willing to spend on your business start-up.
2. Solve the inequality
1. Let x represent the maximum amount I am willing to spend on my business start-up.
The inequality representing this would be:
x ≤ $200
2. To solve the inequality, we simply state that the maximum amount I am willing to spend on my business start-up is $200.
In Task 1, you determined how much you will charge for each item.
1. Write an inequality that represents your total earnings based on the price of your item and how many you sell.
2.What is the most money you can earn from your business?
3. Consider the cost of making your item. Did you make or lose money?
4. If you lost money, would you change your business plan?
1. Let x represent the number of glasses of lemonade sold and y represent the total earnings.
The inequality representing the total earnings based on the price of each glass of lemonade and how many are sold would be:
y ≥ 2x
2. The most money I can earn from my business would depend on the number of glasses of lemonade sold. If, for example, I sell 100 glasses of lemonade, my total earnings would be:
y = 2(100) = $200
3. Considering the cost of making each glass of lemonade is $0.50, and if we sell each glass for $2, the profit per glass would be $1.50 ($2 - $0.50). Therefore, if I sell 100 glasses of lemonade, my total profit would be:
Profit = $1.50 x 100 = $150
Since the cost of making each glass of lemonade is less than the selling price, I would be making a profit of $150.
4. Since the business plan has resulted in a profit, there is no need to change the business plan at this point. However, if the costs were higher than the selling price resulting in a loss, it would be advisable to reevaluate the business plan and make necessary changes to ensure profitability.
Step 1: Determine the total investment amount
To start a lemonade stand at your local farmers market, you need to determine the total amount of money you are willing to invest in this business. Consider factors such as purchasing ingredients and supplies, renting a booth space, and any promotional or marketing expenses.
1. What is the total amount of money you are willing to invest in this business?
Example answer: I am willing to invest $200 in this lemonade stand business.
Step 2: Calculate the cost to make one serving of lemonade
Next, you need to calculate how much it will cost you to make one serving of lemonade. Consider the costs of lemons, sugar, water, cups, straws, and other necessary supplies.
2. How much will it cost you to make one serving of lemonade?
Example answer: It will cost me approximately $0.50 to make one serving of lemonade.
Step 3: Determine the price to charge for a glass of lemonade
Now, you need to determine how much you're going to charge for a glass of lemonade. Consider factors such as the quality of your product, local market prices, and what customers are willing to pay.
3. How much will a customer pay for a glass of lemonade?
Example answer: I will charge $2.00 for a glass of lemonade.
Step 4: Assess the profitability of your business
Based on the investment amount and cost and price calculations, you can now assess whether your lemonade stand business will be profitable.
4. Do you think your business will be profitable? Why or why not?
Example answer: Yes, I believe my business will be profitable. Here's why:
- With an investment of $200, I can purchase enough supplies to make 400 servings of lemonade.
- Each serving costs $0.50 to make, so the total cost for 400 servings is $200.
- Selling each glass of lemonade for $2.00, if I sell all 400 servings, I will earn $800 in revenue.
- Subtracting the cost of making the lemonade ($200) from the revenue earned ($800), I will have a net profit of $600.
- Therefore, considering the relatively low investment and potential revenue, I believe my lemonade stand business will be profitable.
Remember to adjust the numbers according to your specific circumstances and local market conditions.
Task 1 - Investment
1. To determine the total amount of money you are willing to invest in this business, consider how much you can afford to allocate for start-up costs such as purchasing ingredients, supplies, and any necessary permits or licenses. Let's say you are willing to invest $200.
2. To calculate how much it will cost you to make one serving of lemonade, you need to consider the cost of ingredients and any consumable supplies. For simplicity, let's assume that one serving of lemonade requires the following ingredients:
- Lemon juice
- Sugar
- Water
Research the prices of these ingredients and estimate their quantities needed for a single serving. Let's say that the total cost for these ingredients per serving is $0.50.
3. Determine how much a customer will pay for a glass of lemonade. Research the average price range for a glass of lemonade at local farmers markets or similar establishments in your area. Let's assume that the going rate for a glass of lemonade is $2.50.
4. Assess whether your business will be profitable based on the information gathered. To determine this, calculate the profit per serving by subtracting the cost per serving from the price per serving. In this case, the profit per serving would be $2.50 - $0.50 = $2.
Assess how many servings you expect to sell in a day, considering factors such as foot traffic, market demand, and competing vendors. For example, if you expect to sell an average of 50 servings per day, multiply the profit per serving ($2) by the daily servings (50). In this case, the daily profit would be $2 x 50 = $100.
Evaluate whether the daily profit is sufficient to cover your expenses and generate a desirable return on investment. Consider additional costs such as transportation, marketing, and any permit fees. Keep in mind that market conditions and sales fluctuations may affect profitability.
Based on the information provided, it seems that the lemonade stand has the potential to be profitable. However, it is important to conduct further research and fine-tune your estimates to ensure a realistic assessment of the potential success of your business.