Leadership in the Lemonade Stand Stage

After a company has determined their basic business model, most businesses (like a classic lemonade stand) focus on three key things:

  • Sell the product or service
  • Deliver the product or service
  • Collect the money

That’s it! At this stage, most entrepreneurs minimize their time spent on secondary functions like accounting, financial management, analysis, legal, processes, written procedures, taxes, systems, and human resources. While this approach makes sense to get the business started, at some point the business growth will be limited if these secondary functions continue to be ignored.

In the lemonade stand mode, the entrepreneur usually directly supervises every major task. Some minor tasks will happen without direct supervision, but there is no need for significant delegation since the entrepreneur directly controls all the big decisions.

In order to move to the next stage (Professional Analyst) and grow further, the business needs to develop the secondary functions mentioned earlier.

Clara and Aaron (not their real names) operated a business in the lemonade stand mode for many years. They grew the company to over $4 million in revenue. This business had not reconciled a bank statement in over 5 years and had not filed a federal corporate tax return in over 8 years. The company was able to generate enough income to provide a nice house and lifestyle for a family of seven. However, the company was at the highest level of sales it could go in this mode. However, they business was stuck at this level and the tax issues were not getting resolved with the current approach. Clara had become very nervous about the risk to the family.

P.S. – Don’t worry, the company is no longer in this situation. Clara and Aaron sold the company’s asset, resolved the tax situation and the family is fine

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