PROFITABILITY – The Life Gave You Lemons, Do Something

                                                                                                         Life Gave You Lemons, Do Something

Hey, let’s begin with a quick case. Your client is a person who owns a lemonade stand outside your college. His revenue has been declining in the last 6 months. How would you help him?

Sounds interesting, to proceed further, I would like to continue further by asking a few questions.

Go on.

Firstly, what are we discussing pre covid or post covid time? Secondly, which season are we taking into consideration while further discussing this case?

We are considering it to post covid time and the summer season.

Okay, I believe we are good to go. So, I would like to proceed with breaking down the process from both the consumer and producer point of view.

Cool, start decoding from the consumer’s point of view.

So, I would like to ask a few questions:

1. Has the client faced a decline in the number of customers?

2. Is there any competitor in the vicinity of the client?

3. Is there any other alternative beverage option available that can act as a substitute for the customers?

No, there isn’t any significant decline in the number of customers of your client. No other person set up a lemonade stall in the vicinity of the college which could act as a competitor. Nor is there any other substitute available such that the customers might have changed their minds and gone for the substitute.

All the information that you have provided me with suggests that there isn’t any way in which the consumer side would have been the reason behind the decline in revenue.

I’ll then have to change my way of approach and think of it with the producer side.

 You’re on the right path, keep moving.

Yes so, considering the producer side, the possible issues which may be a reason behind the decline in revenues are:

1. Increase in price of raw materials

2. Increase in inputs used.

3. Shortened shelf life of the inputs used.

4. Purchases of new carts or glasses

5. Purchasing new squeezers to squeeze the lemons.

From the above-listed problems, the shortened shelf life of raw materials seems legitimate keeping in mind your client.

Possible reasons for the same might be:

1. Lower quality of raw materials used

2. Destruction of raw materials used either due to transportation reasons or some other reasons

Well, the reason behind the shortening of the shelf life of raw materials is a construction site nearby. It is situated nearby and has destroyed raw materials and hence decrease revenue. You got it, we may rest the case now