How to Teach Entrepreneurship
by Kerry Cordy
Entrepreneurship is the activity of setting up a business and taking on financial risks in the hope of profit. Every business around the world started with one or more entrepreneurs who saw a need and found an opportunity to fill it. But how do you teach entrepreneurship? It is as much a mindset as a set of skills and knowledge. If you plan to teach the Entrepreneur badge, use the following ten steps to get you started.
1. Think Like an Entrepreneur
Entrepreneurs think differently than most people. They embrace risk, seek success, and are not afraid of failure. The entrepreneurial mindset is one that sees opportunities everywhere. They are creative problem solvers who find unique solutions. An entrepreneur understands that they may invest a lot of time and money into a project only to see it fail, but they are comfortable with the risk and do everything they can to succeed. An entrepreneur must have confidence in their abilities. Self doubt will cause you to fail before you even begin. A true entrepreneur knows that their failures are as valuable as their successes. Thomas Edison, while inventing the lightbulb, is famous for saying, “I have not failed. I’ve just found 10,000 ways that won’t work.”
To Do: Create a Failure Resume. Have kids make a list of things they have failed at. Next to each item, write down what they learned from that failure and how it has helped them become a better person. Teach them to embrace failure as a necessary part of learning instead of as something to be shunned.
2. Solve a Problem
Many people think that entrepreneurs simply sell a product or a service, but what they are really selling is the solution to a problem. True entrepreneurs do not create a product first and then find a problem it solves. They find a problem first and then create a product to solve it.
To Do: Have kids think of different groups of people they interact with. This could be people from their church, their sports team, or their drama club. Entrepreneurs are more successful when they are passionate about the people they help so starting with groups of people near to you gives you a head start in regards to being passionate about your business. Brainstorm a list of problems each group might have. For example your church may struggle with getting information out to its congregation. Your sports team may struggle with an efficient way to get their gear from location to location or to get their uniforms cleaned effectively. Your drama club may not have enough money for proper sets. What opportunities do you see to solve these problems? How can these solutions create a profit? For example you might create and sell a calendar app specifically designed for churches. Maybe you realize that the pressure washer at the do-it-yourself car wash gets stains out of baseball uniforms and you want to create a portable fabric power washer. There is no right or wrong answers here so brainstorm as many ideas as you can, no matter how crazy they may seem. The idea is to simply see opportunities.
3. Create a Store
One of the best ways to teach entrepreneurship is to act it out either in play or in real life. Creating a simple store introduces kids to the basics of running a business such as marketing, salesmanship, and the exchange of money.
To Do: For younger kids, have them create a pretend store and play with friends. Use stuffed animals to create a pet shop, or canned goods from the kitchen to open a grocery store. Use play money and a box as a cash register. Don’t forget to make signs and price tags. For older kids, have them actually count money and change to work on their math skills as they play. Discuss what types of jobs might need to get done in the store you set up. For example, if you have a pet store, you will need to feed and clean up after your animals.
For kids at the junior high or older level, encourage them to actually open a small sales booth of some type. This could be anything from a traditional lemonade stand to a craft booth at a fair. Make sure to have them follow all local laws. Have them think through everything they will need to get set up such as equipment, displays, signage and of course the actual product they will sell. How will they get the product and supplies? How much will it cost them? Will they need to purchase other supplies such as cups or bags? Explain that entrepreneurs only make money if the money they take in selling their product is greater than all of their combined costs. This is called profit. Have them figure out their break even point. How much do they have to sell before they have paid off all their costs? Once that amount is earned, the rest is profit.
Computer games like Lemonade Stand or Gazillinaire are also great ways to learn about running a business.
4. Time Verses Money
Most people understand the value of money, but many do not understand the value of time and how the two interconnect. For those in an hourly job, the relationship is fairly cut and dried. Work 8 hours for $20 per hour and receive $160. Entrepreneurs however do not get paid by the hour. The money they make is what is left over after all the bills have been paid regardless of how many hours they have worked. To get a business up and running is costly. For those with plenty of money to get started, they conserve their time and pay others to help with the process. For example, if you plan to open a restaurant and can afford it, you could buy brand new tables and chairs, hire someone to remodel the interior, and a janitor to keep it clean. These costs would come out of your profits though meaning you will make less money for yourself. For those without the funds to pay for help, time and energy become the method of payment to get the things you need. Instead of buying tables and chairs brand new, you may get some cheap ones from a thrift store and refurbish them yourself. Instead of hiring a painter, you may find yourself painting your own walls or even installing your own flooring. There is a common saying among new entrepreneurs, “I have more time than money to spend.” The advantage to spending time instead of money is that you get to keep more money in profits.
To Do: Develop a skill that would help you use your time instead of money in starting a business. In the example above, learn to refinish a piece of furniture that might be used in a store or restaurant. Learn how to use Canva or other software and to create your own labels for your products so you don’t have to hire a graphic designer. You could even learn to properly clean a bathroom and unclog sinks and toilets.
5. Teaching Business Ethics
All business are required to follow local laws, but running your business ethically so that it does not harm others or the environment is also part of being a good business owner. Just because something is legal does not make it ethical. Ethical issues a business might face include their impact on the environment, how they treat their employees, adherence to copyright laws, customer safety, etc. Discuss why some businesses may not do the right thing?
To Do: Right down a series of ethical dilemmas a business might face on a stack of index cards. Shuffle the cards and have the kids pick one and tell what they think the right thing to do would be. Here are a few examples to get you started:
- You need to make a label for your new soap you plan to sell, but you don’t have any artistic ability. You find a perfect image on the Internet, but you do not have a license to use it. Do you download and use it anyway?
- You run a restaurant and have the choice to use plastic straws or paper. Which do you use?
- The step ladder in your store room is missing a screw and has become rickety, but still works. Do you allow employees to use it or replace it?
- You run a coffee company and have a choice between several suppliers. Some suppliers use children workers or do not keep their workers safe and paid a decent wage, but have the cheapest prices. Do you buy from them?
- You remodel your store and have a load of garbage that will cost a lot of money to take to the dump. There is a creek down the road that is always filled with trash. Do you just dump it there instead?
6. What is B2B?
When you think of businesses you usually think of businesses that sell directly to consumers known as B2C, business to consumer. But many business sell only to other businesses. These are known as B2B, business to business.
To Do. Visit a local business and make a list of other businesses that may ell things to the business you are visiting. For example, if you visit an office supply store, other businesses that may be involved might be some of the following:
- A paper mill
- A sign maker
- Heating and air-conditioning repair
- Janitorial services
- Temporary employee agency
- Office supply wholesaler
- Retail fixture sales
- Paint Store or Painter
- Carpet Store
- Landscaper (to maintain outside landscaping)
Discuss how many different businesses it might take to keep this one store in business. As an entrepreneur, can you think of problems this store may have that could be solved by a new business or product?
7. Find a Role Model
The easiest way to learn entrepreneurship is to study other successful entrepreneurs. Age doesn’t matter as successful entrepreneurs range from young children to advanced seniors. What can you learn from their failures and successes? What mindset did they have?
To Do: Research one or more specific entrepreneurs and how they got started. Here are a few kid entrepreneurs to give you ideas.
- Cameron Johnson – Greeting Cards, Beanie Babies and Online Enterprises
- Leanna Archer – Hair Inc.
- Jason O’Neill – Pencil Bugs
8. What is Marketing?
In order for a business to succeed, they have to find a way to let people know they are in business and reach the people that want their products. This is called marketing. The idea behind marketing is to get as many people as possible to buy your product. Most people think of logos, branding, and advertisements when they think of marketing. But things like store location, pricing, and product quality also play a role in a good marketing plan. Emails, giveaways, and connecting via social media with customers are even more ways to connect with people and get them to buy your wares.
To Do: Explore marketing by doing one or more of the following:
- Survey 20 people and ask them what their favorite flavor of ice cream is. Graph your results and be able to explain which flavor you would choose to sell if you were in business and why.
- Design a name and logo for a business you might run. How does your name and logo reflect your business? Why do some businesses chose to have a slogan?
- Create a video commercial for a product. How can you convince people to buy your product in less than 30 seconds?
9. Financing a Business
Starting a new business takes money. If you don’t have cash up front you will need to either borrow the money or pour in what is known as sweat equity, your time and effort. While paying cash or using your own time and effort will help you get started and keep you out of debt, it is also much more difficult to start a successful business on a shoestring budget. Borrowing money has its own pitfalls however. Loans must be repaid with interest. What if you don’t make enough money in time to pay them back? If you take out a $10,000 loan at 10% interest for 5 years you would have to make sure your could pay $212 every month. At the end of your 5 years in addition to the principle amount you borrowed, you would have also paid $2,748 in interest.
To Do: Choose an imaginary business to open. Discuss the pros and cons of getting a business loan to start your business. How would you ensure you could make your payments? What would happen if you didn’t? Would you be able to avoid the loan by using sweat equity or would you still need at least some money up front to get started?
10. Laws and Regulations
Every entrepreneur has to learn all the local, state and federal laws that they need to obey and they are numerous. From gaining necessary licenses, permits and certificates to filing taxes and keeping their employees safe, there is an entire maze of legal requirements to navigate.
To Do: Try to find a copy of the business zoning map for your city. This will show which types of businesses can operate in each section. If you can’t find one for your city, review the one for Redding, CA. Discuss why you think they placed the zones where they did.
To Do: Every state has its own labor laws, but all states must also obey federal labor laws. Learn about the federal labor laws that all businesses in the United States must abide by.
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