Risk and the lemonade stand: how it matters in the simplest settings

Your neighbors are asking you for help.

Their young children, ages 7 and 9, want to set up a lemonade stand in front of the house. While it’s not a busy road, there is a periodic flow of traffic. Most are people who live in the neighborhood and observe the 25 mph speed limit.

The parents are interested in letting their kids run a stand because of the life lessons it will bring them. They also support the children’s desire to raise money that will be donated to feed homeless people in the general area. (The homeless are a few miles away, not close to the family home.)

The parents have developed a list of ‘pros and cons’ but are undecided. Since you help people at work understand this strange idea of ‘risk’ (although you prefer to talk about ‘what might happen’ and the likelihood of achieving objectives), they have asked for your advice on how to assess the situation, their options, and the best path forward for the family.

Pros

1. It would help the children understand what it is like to run even a small part of a business.
2. The children would develop skills in selling and communications.
3. It will encourage their desire to help…