Can you rememberto 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.
Do you like to take risks?
Do you like the thought of being your own boss?
Do you like the idea of owning your own business?
Do you like to solve problems by developing new ideas and products?
If so, you might be an entrepreneur when you get older.
This lesson will introduce you to a very important entrepreneur, Milton S. Hershey. You will learn about his life, his interests, and the risks and rewards he experienced as an entrepreneur.
When you have finished the lesson, you will be able to identify characteristics of an entrepreneur and the benefits and costs of entrepreneurship.
Get ready to learn about a very important entrepreneur by reading his biography...sealed with an economic kiss!
The goal of this "Spotlighting Entrepreneurs" lesson is to help you learn the economics of being an entrepreneur and introduce you to the life of a famous American.
Describe an entrepreneur.
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.
Have you ever thought of starting your own business, like a lemonade stand?
Why would someone want to start his or her own business?
Do you think it is easy or hard to start a business? Why?
Today you 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 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.
Hershey's company was experiencing great success; however, he did not 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.
One of Milton Hershey's greatest economic contributions was the Milton Hershey School
, which was also formed in 1909, and is a beneficiary of the The Hershey Trust Company
. The school for orphan boys, is a product of the love Milton Hershey and his wife, Catherine, shared for children. Unable to have children of their own, the couple developed a profound and deeply felt concern for the well-being of all children, especially those less fortunate. Wanting their good fortune to make a lasting positive difference, Milton and Catherine Hershey decided to found the School and fund its operations.
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. 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!
Now, let's review what we can learn about entrepreneurs from Milton Hershey:
Milton Hershey was the first American to develop a formula for manufacturing milk chocolate, introducing the molded milk chocolate bar we know today in 1900. It was affordable, tasted good and remained fresh for a long time. No wonder it was an immediate sensationWhatMMilton
This lesson provided us with the 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 marketpla
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.
Interview a local entrepreneur.
Find out the risks and rewards associated with starting a business. Discover when and why the entrepreneur decided to start his or her own business.
If I Were an Entrepreneur
Develop a plan for a business you would like to start. Identify the product you would provide in your business, your target market, and "how" you would get started in business. What possible risks and rewards do you think you might encounter?
Investigate Hershey Chocolate Company.
Find out more about Hershey's Chocolate .