Looking for a lesson that ties Common Core Standards in Reading Informational Text with Economics? This lesson spotlights the life of Milton S. Hershey and allows students to learn about the risks and rewards of entrepreneurship through a biographical sketch of one who experienced many bitter disappointments and sweet successes.
- Describe an entrepreneur.
- Identify benefits, costs, risks, and rewards involved with entrepreneurship.
- Reflect on the life of Milton S. Hershey and use this reflection to identify the successes, failures, risks, and rewards of entrepreneurship.
Can you remember to the last time you ate a Hershey's Kiss, a Reese's Peanut Butter Cup, or a Hershey's Milk Chocolate Bar? While enjoying it, did you stop to think about the successes and failures of the clever entrepreneur who made it possible to buy those yummy treats? This lesson will introduce you to the economics of entrepreneurship through the story of Milton S. Hershey.
Discover Hershey: Milton S.Hershey
(Optional: The story will be provided in the "Process" section of the lesson.)
- A&E Biography of Hershey: Runtime 45 min
- NOTE: This website may be difficult for students to understand. Please use it as a resource. Post on Entrepreneurship from the Library of Economics and Liberty.
Tell students that the goal of this "Spotlighting Entrepreneurs" lesson is to help them learn the economics of being an entrepreneur by introducing them to a famous American.
Ask students to describe an entrepreneur. (Allow time for students to share thoughts.) Explain an entrepreneur is a person who accepts the risk of business failure and success. This person discovers new ways to combine resources to provide goods and services that others value in profitable ways.
Ask students if they have ever thought of starting their own business like a lemonade stand. (Allow students an opportunity to share.) Continue the discussion by asking why someone would want to start his or her own business. (Encourage students to share. Responses may include they: see opportunities to help others, like being their own boss, want to earn profits, like being creative, want to introduce new goods in the marketplace, and want to find ways to reduce costs.) Ask students if they think it is easy or hard to start a business and explain why. (Allow students to share but many will probably feel it is hard or challenging. Entrepreneurs do not know if (1) they will be successful or fail, (2) they do not know if consumers will value their product, (3) they do not know if others will help them finance their business to produce/provide goods and services, pay expenses, etc.)
Tell students that today they will learn the economics of entrepreneurship by researching the background of a gentleman who overcame many obstacles and persevered, "kept on keeping on," becoming a successful entrepreneur.
Milton Hershey was born September 13, 1857, in Lancaster, Pennsylvania. As a child, his family moved a lot as his father started several businesses across the United States. In eight years, he attended seven different schools.
In the 1800's, young boys were often trained to develop skills for a particular job or trade. The training was called an apprenticeship. An apprenticeship allowed boys to learn by watching and practicing a craft. Eventually they would grow into a job they would have throughout their lifetime.
In 1871, Hershey was apprenticed to a local printer who published a German-English newspaper. The printing business was not a good match for Hershey given his likes, skills, and passions.
Hershey's mother helped him find another apprenticeship. It was with a local confectioner or candy maker, named Joseph Royer. Hershey was 14 years old at the time. Soon, it became obvious that he had a natural talent for candy making and he liked what he was learning. Over the next four years, Milton learned the art and science of creating tasty treats.
When Milton Hershey turned 18, he took a risk and started his first candy business in Philadelphia. As an entrepreneur, there are many costs and risks involved in starting a business. Entrepreneurs work long hours to cover payroll, keep abreast of consumers' changing preferences, and need much financial funding from others. After six years, his first business failed.
Did Milton Hershey give up? No! He had a passion for candy making! So he moved to Denver, Colorado, and took a job with a Denver candy maker to learn more about the candy making business. This time, in addition to developing his skills and receiving great training, he developed a new skill making caramels with fresh milk. After a few months of working in Colorado, he traveled to New York City.
New York City was the largest candy market in the world at this time. People from all over the world traveled to and from New York. Hershey decided to start another business given this large market. Even though he tried hard and invested many hours, his business failed.
In 1886, he returned to Lancaster, Pennsylvania. He was 28 years old, penniless, but still the entrepreneurial spirit lingered.
Milton Hershey took another risk and started a company to manufacture caramels using the methods he had learned in Denver. He needed more tools and equipment. Economists call this capital things used to produce something else. He looked for financing. It was difficult given his past failures.
Hershey began to look for backers who valued his business enough to cover his costs, including the value of his labor and skills. He found one. A British importer of US Candy offered to market Milton's candy outside the United States. Milton received a large order to export. With this order, a local bank found Hershey credit worthy and he had the financing he needed to expand his operation. The risks Hershey and his lending institution had taken finally paid off.
In four years, Milton Hershey and the Lancaster Caramel Company became one of the leading manufacturers of caramels in the United States. The company employed over 1,400 workers. Finally, Milton was able to see a profit in his business. Profit is determined after taking total sales and subtracting all expenses. So, for Milton, that meant he calculated the sales of caramels (prices times quantity) and subtracted all the expenses necessary to run a business (ingredients, tools, equipment, wages for workers, salary for Hershey and other supervisors, rental for the factory, taxes, etc.). The money remaining after expenses was the profit.
Milton Hershey and his cousin, Frank Snavely, attended the World's Columbian Exposition of 1893 in Chicago, an event that changed Milton Hershey's life. A German company was showing how chocolate was produced, and Milton was convinced that this was the future of candy making. Hershey took another risk as he purchased an entire assembly line of chocolate making equipment that was on display, had it crated up and shipped back to Lancaster. Milton, as an entrepreneur, was a change agent in the candy business. When he returned home, he installed the machinery in part of his caramel factory and began making chocolate at a lower cost, making it affordable to more people.
Milton named his company Hershey Chocolate Company. At first, he produced sweet chocolate and cocoa for the flavoring and coating on his caramels. Then, Milton began mass producing his candy products and selling them to other candy makers for them to profit.
Milton's company was experiencing great success; however he didn't stop and rest. He considered his production alternatives and determined that his resources could best be used in producing chocolates. So, he sold his caramel company for $1,000,000 and shifted his production focus from caramel to chocolate.
Hershey continued working long hours to develop the best formula for producing milk chocolate. It was a challenge that would take years of trial and error to perfect. For Milton, money was not his only incentive. He wanted the satisfaction of creating the best quality product for the marketplace at the most affordable price to his customers.
In 1900, Milton Hershey became the first American to discover a formula for manufacturing milk chocolate, introducing the molded milk chocolate bar. It was affordable to the masses, tasted good, and remained fresh for a long time. In the past, chocolate had been a luxury, something only very wealthy people could afford.
Hershey knew that many other industries had utilized mass production to increase the production process, and he decided to apply it to the chocolate business. In 1907, the company added Hershey's Kisses to its product line and followed up a year later with Hershey’s milk chocolate bar with almonds. Hershey packaged his candy to sell in grocery stores, newsstands and vending machines.
In the meantime, Hershey had searched for a suitable location to expand his chocolate company. He decided on Derry Township, Pennsylvania as the perfect location since it was convenient to the port cities that could provide cocoa beans and sugar and was surrounded by dairy farms and a hardworking labor force. Later, the town would be named Hershey in honor of the town's founder.
Hoping to provide for the quality workers he wished to employ and their well being, Milton built the Cocoa House, in the town center which included a store, bank, post office, boarding rooms, and a lunchroom. He also provided for a laundry, a blacksmith shop, a printing plant, a café, a department store, and a barber shop. Companies were started to supply water, electric power, sewage, and telephone service. In 1909, Hershey even launched a weekly newspaper, the Hershey Press.
Now, let's review what we can learn about entrepreneurs from Milton Hershey:
Earlier we learned that an entrepreneur is "one who draws upon his or her skills and initiative to launch a new business venture with the aim of making a profit. Often a risk-taker, this person is inclined to see opportunity when others do not."
(1) What special skills and initiative did Milton Hershey have? [He had a special talent and much experience in candy making and was determined to create the best products for the market. Candy making was his passion. He invested many long hours and persevered through many challenging times.]
(2) What risks did Hershey encounter as an entrepreneur? [He worked long, hard hours. He invested his personal money and financial backing into each business he started. He didn't know if his product would be in demand.]
(3) Entrepreneurs aim at making a profit. Earlier in the lesson, we learned that profit is the money remaining after expenses have been subtracted from sales. Did Hershey always earn a profit? How do you know? [No, several businesses he started suffered financial losses, which caused him to close those businesses. He did earn a profit in the Lancaster Caramel Company and Hershey Chocolate Company.]
(4) How was Milton Hershey successful? [He earned a profit in his last businesses. He developed a quality product that was affordable to many consumers. He shared his success with his employees. He spent his life doing something he loved.]
(5) If Milton Hershey had not taken the risks to become an entrepreneur, how might your life be different? [We might not have the chocolate products we have today. His long hours and vision made chocolate affordable for us today and provided consumers with a quality product.]
Milton Hershey is a wonderful example of an entrepreneur. He was a very creative man who was driven to succeed. Even though he faced great challenges, he considered the risks worth the rewards of entrepreneurship. We, as consumers, are the sweet recipients of his hard work. Thank you, Mr. Hershey!
This lesson provided us with an opportunity to look at the life of an entrepreneur and learn about the risks and rewards of entrepreneurship. An entrepreneur is a person willing to take a risk to start a business, hoping to make a profit. The rewards of creating new products, recognizing a profit and being successful, tend to outweigh the costs of long hours, responsibility, stress, and the potential of financial loss that an entrepreneur faces when starting a business.Milton Hershey was a man who loved candy making and was sure he could create a product that the average consumer could afford.It was worth the risks and the costs to produce his product for the marketplace. Milton Hershey was a man who loved candy making and was sure he could create a product that the average consumer could afford.It was worth the risks and the costs to produce his product for the marketplac
Milton Hershey was a man who loved candy making and was sure he could create a product that the average consumer could afford. It was worth the risks and the costs to produce his product for the marketplace.
(1) If someone asked you the meaning of the word entrepreneur, what would you say? [An entrepreneur is a person who takes the risks to start a business. This person likes the risks and rewards of being the boss and the opportunities to develop new products for the market.]
(2) What were some of the risks Milton Hershey took as he became an entrepreneur? [Hershey risked his own money and the financial backing of others. He worked many long hours . He had to do a lot of work using his own resources before being able to make his products available in the marketplace.]
(3) What were some of the rewards Hershey experienced? [He created a quality chocolate product for the marketplace. Milton provided chocolate that was affordable for all consumers. He worked for himself and challenged himself. Milton established a town to support his workers through the profit he earned.]
(4) Milton Hershey failed in business several times before he became a successful entrepreneur. In order to be successful, an entrepreneur must earn a profit. What does that mean? [Profit is determined once you know the total sales and the total expenses. An entrepreneur would subtract the expenses from the sales and that shows whether there has been a profit or loss. In order to stay in business, an entrepreneur needs to earn a profit to maintain the equipment, pay employees, pay the costs associated with producing the product, and earning an income.]
(5) What entrepreneurial characteristic do you admire most about Milton Hershey? [Answer may vary. He loved what he did. He provided a quality product for the marketplace. He persevered through many hard times. He was kind to his employees.]
Interview a local entrepreneur.
Each student will interview an entrepreneur and find out the risks and rewards associated with starting a business. Challenge students to find out when and why the entrepreneur decided to start his or her own business. (If it is not easy for students to find entrepreneurs to interview on their own time, invite one to class.)
If I Were an Entrepreneur
Challenge students to develop a plan for a business they would like to start. Have them identify the product they would provide in their business, their target market, and "how" they would get started in business.
Investigate Hershey Chocolate Company.
Find out more about Hershey's Chocolate .
Be the first to review this lesson!Add a Review