What Do Lemonade Stands and Car Dealerships Have In Common?

When comparing lemonade stands to car dealerships, they have a few things in common, including the sale of products. However, lemonade stands only make money in one way - through the sale of lemonade, whereas car dealerships produce revenue by multiple means. 

Car dealerships generate their revenue through at least 10 different revenue streams:

• Through the sale of motor vehicles including purchases, sales and trade-ins 

• Through constant upkeep and maintenance on cars such as oil changes and tire changes especially seasonal ones in Canada 

• Through major repairs including collision repair and auto body work such as painting and rust proofing, tints etc. 

• Through sales incentives such as financing and leasing 

• Upgrades including motor, engine and air filters 

• Checkups and inspections, as well as diagnosis 

• The sale of parts and labour on vehicles  

The amount of ways in which a car dealership can make money is significantly higher than that of a lemonade stand and is part of the reason why car companies can expand and generate profit so rapidly. It is not uncommon to see rapid expansion among dealer groups such as AWIN and PFAFF in the GTA due to these multiple income sources. When a business has multiple streams of income, it can make it easier to grow, expand and establish it among customers, potential employees and competitors. One customer can be a source of 10 different income streams for the business if they are leasing a car, looking to buy a new car, and need work done to the vehicle they are driving, in addition, they might need a warranty and financing for their vehicle. Dealerships can also make additional money through the sale of extra services and upgrades for vehicles. 

Many smart entrepreneurs can find themselves struggling because they have only one income stream from their business. This is a risky move and does not make a stable good business that can withstand things such as recession, market changes or even a few slow months. This is because if that one stream of income is interrupted, slowed or stalled, the business is no longer generating revenue, which can lead to closures and unfortunate business failings. The world's leading billionaires all reference having multiple streams of income including Bezos and Musk who all have many streams of revenue, and tout that fact to other business owners. 

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Credit to Money, People, Deal by Stefan Aarnio for source information.