Online Lesson

Follow us

All In Business

Key Economic Concepts:

• Choice
• Decision Making
• Entrepreneurship
• Incentive

Description:

This is a lessons on entrepreneurship. It can be used to help students understand what innovations are, and what it takes to get an idea off the ground. This lesson will take students through the process of calculating risks associated with starting a new business -- the decisions and choices they'd have to make and how to calculate what makes something "worth" the risks.

Lesson Objectives:

Students will:

• Identify steps necessary to plan and start a business.
• Recognize that there are costs and benefits associated with any new project.
• Assign their own values to each of the identified costs and benefits in order to determine whether or not to take the risk of starting a new business.

Introduction:

None of your Business? It's ALL your business. In this lesson, you'll map out the basic decisions you'd have to make to start your own business. You'll weigh the risks and benefits of each decision to determine whether the trade-offs provide a strong enough incentive to get you going!

Resources:

• IRS Tax Interactive's The Real Planet: This is an IRS Tax Interactive talk show simulation where students learn from other students about what it takes to start their own business.
  www.missouribusiness.net/irs/taxi/realplanet/index.html ^[1]

• My Own Business: This site is rich with audio clips from people who are in business for themselves. Some of the people providing advice are more helpful than others, but students can learn about incentives, business plans, and marketing from people who have been through all of the ups and downs of starting their own businesses. The audio file index is particularly helpful in finding specifics on deciding on a business and business planning, which are emphasized in this lesson.
  www.myownbusiness.org ^[4]
  www.myownbusiness.org/audio/index.html#top ^[3]

• Small Business Administration: The Small Business Administration of the U.S. provides good information and tutorials for people interested in starting their own businesses. In this lesson, students will be asked to explore the "Your First Steps" section to answer questions and begin weighing the risks and potential benefits of starting their own business.
  www.sba.gov ^[5]
  www.sba.gov/smallbusinessplanner/index.html ^[2]

• Balancing Act: An activity  to identify costs and benefits.
  Interactive Activity

Process:

Activity One

Use the IRS Tax Interactive's "The Real Planet ^[1] series to learn about what it takes to start a business. What do the teenagers in this imaginary show have in common? How are they different? Make some notes on the skills they needed and the lessons they learned in getting started in business. Pay special attention to the introductory section "They've Got What it Takes" and the "Rockin' Business Plan" section that outlines the steps to follow.

Now answer the following questions about the information you read.

Characteristics of entrepreneurs: What are the things that the main characters say are most important in starting a business? [Planning, hard work, knowing the customer, and good management.]

Starting with a plan: What are the four main things you need to consider when you start your own business?
[Business description, marketing plan, financial management plan, and management plan.]

The business description: What is the Business Description, and how can it help you? [This identifies what your business is, what competition exists, and how you will distinguish your specialties.]

Financial management: What are two parts of a Financial Management plan, and how does having both help you? [The two parts of the plan are "start-up" and "operating" costs. Outlining which costs are one-time ("start-up costs") and which are ongoing ("operating costs"), will help create your budget and determine what you will need to get going as well as what you will need on a monthly basis.]

Management: What is the difference between management and financial management? [Management is about managing people and logistics, while financial management is about budgeting. Both are important in a business plan.]

Activity Two

The first decision you need to make is whether you will be in business on your own or in partnership with someone else. Unless your teacher has assigned partners already for this activity, pick a partner or get started alone.

Use the notes you took in Activity One to begin mapping out your plan.

Visit the Small Business Administration section called "First Steps - How to Start a Small Business ^[2] " to answer some questions about your hopes and ideas for your business.

Discuss with a partner what you need to consider, and add to the sections on Business Description, Financial Management, and Management.

Activity Three

Each of the questions you have considered and each idea you have written down points towards a potential risk or cost and a potential reward or benefit. People who are considering going into business for themselves must weigh the costs against the benefits to decide if their idea is worth the effort. This is called a cost/benefit analysis.

Have your students listen to several of the audio files ^[3] (or read the transcripts) available at My Own Business.

• Session 1 -- Deciding on a Business
  • Collette Paul - STM Media Inc. Publisher of Trade Magazines
  • Elaine Mitchell - Specialized Veterinarian
  • Millard MacAdam - Pro Active Leadership
  • Sophia Garcia - A-Z Glass Company
• Session 2 -- The Business Plan
  • Antoinette Douglas - Mother Love Family Day Care
  • Ezequiel Padilla - Jugos Tropacales Mexican Food
  • Mari Lohr - Graphic Artist
  • R.D. McDonnell - Architect

These are some of the people you met in Inventive Incentive. Use this index page to find comments and stories of people who have tried their own businesses. Focus on "Deciding on a Business" and "The Business Plan" sections to see what challenges people faced, and what they might do differently if they were starting again.

Activity Four

Use this "Balancing Act" activity to identify the costs and benefits you'll have to consider. Place a number value on each one to say how important it is compared to the other things you're considering on the lists. The activity will help you determine whether you are leaning in favor of or against building the business.

Conclusion:

Now that your students have a sense of what it takes to start a business. Here are some questions that they might think about and discuss with their classmates:

• What do you think you'll do next?
• Will you start the business or look back to the idea of licensing your product?
• What are some important parts of a business plan? Why are they important?
• What are some of the costs (risks) and benefits (rewards) of starting a business?

If you decide to start your own business, one of the next things you'll have to consider is whether you'll have employees - and how to keep them happy if you do.

Assessment Activity:

Have you considered all the potential costs and benefits that might be involved in starting your business? Check over your printed answers and then hand the journal activity and "Balancing Act" papers to your teacher.

Collect student work on the journal activity and "Balancing Act" activity. Look for examples of student understanding about the risks they would take and the things they would have to consider in order to structure a sound business.

Links Used:

1. ^{^ ^} "IRS Tax Interactive's The Real Planet" - (www.missouribusiness.net) This is an IRS Tax Interactive talk show simulation where students learn from other students about what it takes to start their own business.
2. ^{^ ^} "Small Business Planner" - (www.sba.gov) The Small Business Planner includes information and resources that will help students start and run a business.
3. ^{^ ^} "My Own Business Audio File Index" - (www.myownbusiness.org) This site is rich with audio clips from people who are in business for themselves.
4. ^{^} "My Own Business" - (www.myownbusiness.org) My Own Business, Inc. is a nonprofit organization committed to helping people succeed in business
5. ^{^} "Small Business Administration" - (www.sba.gov) The Small Business Administration of the U.S. provides good information and tutorials for people interested in starting their own businesses.

Teacher Reviews

Insert a comment, suggestion or review of this lesson here. The comments will not appear immediately due to a time delay to allow for a review by a member of our staff.