static.moneysmart.gov.au€¦ · web viewteaching notes and resource booklet. contents....

Ho can Istar m own

business?Teaching notes and resource

booklet

www.teaching . moneysmart.gov . au

http://teaching.moneysmart.gov.au/

ContentsIntroduction 5

Section 1: Experience and ask

Section 2: Search (60 mins)

8

11

Section 3: Examine and analyse (60 mins)

Section 4: Trading as a business (up to 4 weeks)

17

23

Section 5: Share and reflect 52

u 3© ASIC 2012 all rights reserved

http://www.teaching.moneysmart.gov.au/

4 vwwv.te achingmoneysmart.gov.au

©ASIC 2012 all rights reserved

IntroductionDoes business benefit my community?Students investigate local economic systems and use their findings to develop apersuasive argument.

Students explore the local economic system through identification of local producers and consumers and how new economic opportunities can bring in extra revenue to a community. They plan and operate a local business. Students investigate how to set up a business and predict if their idea is viable. They runtheir business and keep financial records while the business is run. They are then required to reflect on their business venture and report back to the class.

Within this unit of consumer and financial literacy, students communicate,justify, predict, explore concepts, develop strategies, and analyse the viability of running a business. This is done by making short and long term financial goals, investigating the amount of profit generated, budgeting for profit and loss, and maintaining balance sheets and cash flow statements.

Links to National Consumer and Financial Literacy FrameworkYear 10

Knowledge and understanding:X Identify and explain strategies to manage personal finances

X Identify types of consumer and financial risks to individuals, families and community and ways of managing them.

Competence:

X Use a range of methods and tools to keep financial records in real-life contexts

X Create simple budgets and financial records to achieve specific financial goals,now and in the future

X Analyse relevant information to make informed choices when purchasing goodsand services and/or resolve consumer choices

X Evaluate marketing claims, for example in advertising and social media, toinfluence consumers to purchase a range of goods and services

Responsibility and enterprise:

X Explore the economic cost of individual and collective consumer decisions onthe broader community and environment

X Apply informed and assertive consumer decision making in a range of ‘real-life’contexts



X Research and discuss the legal and ethical rights and responsibilities ofbusiness in providing goods and services to consumers

X Apply consumer and financial knowledge and skills in relevant class and/orschool activities such as student investigations, charity fundraising, product design and development, business ventures and special events

X Exercise a range of enterprising behaviours through participation in relevantclass and/or school activities

X Demonstrate awareness that family, community and socio-cultural values andcustoms can influence consumer behaviour and financial decision making.

PreparingConsider these points before implementing student learning.X Identify the local business community. What are the sources of economic

benefit to the community? Consider the Federal/State Government as part ofthe local econonic system.

X Contact any local business owners who may wish to assist with surveys and/orbe a guest speaker.

X Organise access to a range of relevant information sources to supportstudents’ planning their business, running their business and writingarguments.

X Consider students’ prior knowledge and experience

X Hold discussion around how different community members make a living.

ImplementationConsider these points when implementing the teaching and learning.X Organise with the school administration a suitable budget to allow students to

create or offer goods or services to the school community.

X Find a suitable schedule of when the students will be trading as an activebusiness. How long will they trade for? When are they allowed to trade? (e.g. Before/After School, during breaks)

X Organise a suitable area for students to operate their businesses.

X Decide on the mode(s) for presentation of students’ final argument – this maybe written, oral, or some form of media, e.g. slide show or web page. Decide also whether students will all use the same mode or select from a range of options.

6 u © ASIC 2012 all rights reserved


X Decide how to use the Student worksheets and adapt to suit local needs ifnecessary. You may decide to use notebooks or scrap paper for some activities instead of printing all the pages.

X Organise students to develop a business in small groups or as individuals.Decide on the timeline to plan and develop their business and determine the period in which they will be actively running their business.

X Provide opportunities for students to write their business financial plan and toperform related calculations.

X Provide opportunities for students to pose questions to small business owners

X Provide opportunities for students to making recommendations, justificationsand strategies

X Allow students to report on their findings on how viable their business venturewill be.

Giving feedback to studentsInvolve students in the feedback process. Give students opportunities to ask follow-up questions and share their learning observations or experiences.

Focus feedback on the student’s personal progress. Emphasise continuousprogress relative to their previous achievement and to the learning expectations— avoid comparing a student with their classmates.

X

Highlight the students’ inquiry process and their work throughout the tasks, notjust the final argument.

X



Section 1: Experience and askOnline activity: Matching

Online activity: Ranking

Student worksheet 1: Employment agency

X

X

X

language and interpersonal skills


Teaching and learning Evidence of achievementYear 9

Explore and discuss how and why people work.

X Discuss employment agencies:

X What service do they provide?

X Who can access these services?

X Who runs employment agencies?

X Do some agencies make a profit? If so, how do they make a profit?

Students engage with the Smart Money Website Section 1 and complete Student worksheet 1: Employment agency.

Read the following scenario to the class.

Ellie would like to be carpenter. She has just read an advertisement offering an apprenticeship and would like to apply. Ellie is concerned that it may be difficult for her to find work as a carpenter because most carpenters are male.

Students could work in groups, discussing the following questions, then report their answers back to the class.

X Are some jobs gender-stereotyped?

X Should gender be a reason to pursueor not pursue a job or career?

X What are some valid reasons for pursuing or not pursuing a job or career?

X In a class discussion, consider appropriate reasons that a person might be considered suitable or unsuitable for a job.

Identify Humanities and Social Science curriculum references specific to state or territory as applicable.

Language: Language for interaction

Understand that roles and relationships are developed and challenged through

(ACELA1551)


Student worksheet 1: Employment AgencyYou are working in an employment agency and you have been asked to investigate the employment situation in your suburb or town and write a report for your manager.

Search the Positions Vacant in the local newspaper, community noticeboardsand the internet for 1 week.

X Also think what other jobs may be available in your community

Complete this table, providing detail about 10 available jobs.

X

X

In the report for you manager cover points such as: what jobs are available,the number of full time versus part time or casual jobs and whether you think people in your community have the skills needed for the jobs advertised.

X


Occupation FulltimePart-time Casual employment

Employer requirements

Skill/ Qualification


You have also been asked to prepare a poster for a display at the EmploymentAgency’s Open Day. Choose one of the following topics:

School to Work Pathways – Identify and illustrate possible school to workpathways that students can follow.

X

Range of Occupations - showing description of jobs available, personalrequirements, changes over time, pay, working conditions, education and training requirements, skills required, career path

X

Stereotyping of Occupations – Oppose stereotypes of employment patternsin your community

X

Community Volunteer work - organisations seeking volunteers in yourcommunity e.g. Meals in Wheels, what they do, what they need, employment related skills that are developed.

X



Section 2: Search (60 mins)1. Student worksheet 2: How does money come into our community?2. Student worksheet 3: Small business survey

3. Online activity: Expenses and revenue4. Online activity: Profit and loss



change

are developed and challenged through



Money is a limited resource in all communities. To increase the financial wellbeing of a community ways of increasing money that comes into the community can be explored.

The money that is available outside the wider community can be brought into the local community through strategic business strategies. This may initiallybe through increased individual income, which is then spent in other business in the local community, which increases the income of these local businesses.

Students engage with Smart MoneyWebsite Section 2

Identify producers and consumers in the community. Students complete worksheet 2: How does money comeinto our community?

Brainstorm and list the local businesses in the community. Students complete worksheet 3: Small business survey.

Discuss as a class the students’ findingsin worksheet 3. What successful business practices did they learn about? Consider as a class the characteristics of a successful business.

Prompt students to think of products or services that are new to the community and that could benefit the community. Consider where the knowledge and culture of the local community can be utilised in a business venture such asharvesting and germinating bush seeds to supply tube stock for bush regeneration projects; developing skin care products based on the properties of indigenous plants.

Carry out the online Expenses and revenue as well as the Profit and loss activities. Explore further using examples relevant to the local community.


Language: Language variation and

Understand that S t a n da r d Aus tr alian E n gl i sh is a living language within which the creation and loss of words and the evolution of usage is ongoing ( A C E L A 1 55 0 )

Language: Language for interactionUnderstand that roles and relationships

language and interpersonal skills(ACELA1551)

http://www.australiancurriculum.edu.au/Curriculum/ContentDescription/ACELA1550

http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=Standard%20Australian%20English




Student worksheet 2: How does money come into ourcommunity?Draw a diagram with your community in a circle in the centre and all the



Enhancing the local communityMoney in the community is a limited resource. To improve the ‘wealth’ of the community additional money needs to be sourced by providing goods and services that are paid for by people who live in other places. Businessopportunities that bring extra money into the community should be considered. Increasing the money coming into the community through greater diversity goods and services; and using good business practise enhances the local economyand increases the financial means of the whole community. This means that the money going being paid out for goods and services required by people in the community needs to be less than the money that comes in.



Student worksheet 3: Small Business SurveyChoose a small business in your community to explore the issues that smallbusinesses face:What is the name of the business and what products or services do they offer?

.............................................................................................................................

X

.............................................................................................................................

What resources do they use?

.............................................................................................................................

X

.............................................................................................................................

What are their practices?

.............................................................................................................................

X

.............................................................................................................................

Who are their targeted audience?

.............................................................................................................................

X

.............................................................................................................................

Have they ever made a loss? For how long did they make a loss?

.............................................................................................................................

X

.............................................................................................................................

What can you learn from them? What advice can they give you for running abusiness?

.............................................................................................................................

X

.............................................................................................................................

How long have they been in business for?

.............................................................................................................................

X



X Survey your local business to find how they target their audience.

X List other ways that they reach their audience.

Draw a map of your community and plot all the businesses on it.


How do you target your audience?

Yes No UnsurePamphlets

DVD

Advertisement

Local paper

Flyers

Television

Internet


Section 3: Examine and analyse (60

mins)Student worksheet 4: What we hope to

doX

Student worksheet 5: Fish tank business game

X



Lead a discussion on what the roles of different business are in the community and the role of each student within the local economic system.

Students work through Section 3 of theSmart Money Website

How to come up with a product?

Begin the lesson by working togetheras a class to list the existing businessesin the local area. Students can refer to their local business survey. Are there opportunities to provide goods and services to the local and wider community?

Ask students to consider the needs that are not currently being met by existing businesses.

If students will be working in groups to develop and run their business, organise them into groups of no more than 4.

Instruct each student or group to identify needs in their local area, find business ideas that will address each of these needs and create a profile of the consumers for each of these business ideas. Student worksheet 4: What we hope to do, provides a starting point for discussing these questions.


English

Language: Language for interaction Understand that roles and relationships are developed and challenged through language and interpersonal skills (ACELA1551)

Mathematics

Number and Algebra: Real numbers

Solve problems involving direct proportion. Explore the relationship between graphs and equations corresponding to simple rate problems (ACMNA208)




Although students may be tempted to pursue the first idea that they think of, it is a worthwhile to general several ideas and then compare and contrast these ideas. Emphasise the importance to studentsof generating several ideas at this stage. It’s quite acceptable that at this stage some of their ideas will be rough and underdeveloped. Students could consider both businesses that provide servicesand businesses that provide products.

Invite local small business owners to address your students about the considerations needed when developing a business idea.

MathematicsResource:

X F i sh t ank busin e s s g a m e at h t t p : / / ww w . s c o o tl e . e d u . a u / e c / p i n / D G P M Q V ? u s e r i d =38 9 6 7

X Use Student worksheet 5: Fish tank business game, to record results of the business game.

http://www.scootle.edu.au/ec/pin/DGPMQV?userid=38967







Student worksheet 4: What we hope to do – Think Pair ShareBefore starting a business you will need to come up with a business idea. Your teacher will tell you whether you are going to be working on your own or in a small group of no more than 4 students. Then investigate the business idea

1.

2.

Do the activities - think, pair, and share.

After ‘pair’ present your ideas to the whole class and decide on the bestresponses




Think

Think by yourself for three minutes and come up with atleast three responses

1. ............................................................................

2. ............................................................................

3. ............................................................................

1. ............................................................................

2. ............................................................................

3. ............................................................................

1. ............................................................................

2. ............................................................................

3. ............................................................................

What is needed in yourarea?

What ideas can you comeup with?

Who are your customersand what would they want?

Pair

Think with a partner and come up with the best three responses

1. ............................................................................

2. ............................................................................

3. ............................................................................

1. ............................................................................

2. ............................................................................

3. ............................................................................

1. ............................................................................

2. ............................................................................

3. ............................................................................

What is needed in yourarea?

What ideas can you comeup with?

Who are your customersand what would they want?


Student worksheet 5: Fish tank business game1. First play the game for just a few minutes. Notice how to buy and sell

fish.Explain the goal of the game............................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

2. Click on “Start again” and click on “Yes”. Quickly look over the summary thatappears.

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

Before you start the game again, and play all the way through, think of some strategies you could use to help you do well in the game? What information could you record during the game that could help you win?

3.

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

4. Play the game but take note of three trades where you made a profit or loss.Record the type of fish, the amount of money that you paid for it, and what you sold it for,

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................



5. For each of the three trades you recorded in question 4, calculate the profit orloss and also calculate the profit or loss as a percentage of the cost price.For example:

Suppose Jill bought a scarper fish for $30 and sold it for $40.

40 – 30 = 10

Jill’s profit is $1010 100

x40 1

1= x 100

4

= 25

Jill’s profit is 25% of the cost price.

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

Tom bought a scarper fish for $30 and sold it for $25 find his loss as percentage of the cost price.

6.

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

7.

Mindi made a 12% profit when she sold one of her fish for $66. How much didMindi pay for the fish?

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................



Section 4: Trading as a business(up to 4 weeks)Students willX analyse the short and long-term benefits of financial decisions usingX predict long term profit using data analysis and calculations

X Reflect on the accuracy of their business projections using mathematicalknowledge and understanding.

1. Student worksheet 6: Market analysis

2.

3.

Student worksheet 7a: Production / operations plan

Student worksheet 7b: Services operations plan4.

5.

Student worksheet 8: Setting goals for a business

Student worksheet 9: Calculating a break-even point

6.

7.

Student worksheet 10: Using a spreadsheet to calculate a break-even point

Student worksheet 11 : A business financial plan8.

9.

Student worksheet 12 : A Business management plan

Student worksheet 13: Completing a simple balance sheet

10. Student worksheet 14 : Daily record keeping

11. Student worksheet 15 Weekly record keeping12. Student worksheet 16: Reflection



which the creation and loss of words

)

Understand that roles and relationships

language and interpersonal skills

representation and interpretation

involving at least one numerical and at

data directly from secondary sources



In this section, it is important to emphasise to students the need for careful planning. This includes financial planning and pre-empting issues related to the management and practicalities of running a business.

Students work through Section 4 of theSmart Money Website

Market Analysis

Support students to complete Student worksheet 6: Market Analysis

Students could also use survey sheets to ask other students or community members what they would pay for if it was available in the community.

Planning operations

Teacher to lead discussion on:

X What else would you need to considerbefore starting a business?

X What other financial documents do you need to use to run a business?

Student’s complete Student worksheet 7a: Productions / operations plan or Student worksheet 7b: Services operations plan depending if their business is providing goods or services.

Assist student to identify any government regulations relating to the proposed economic activity.


English

Language: Language variation and change

Understand that S t a n da r d Aus tr alian E n gl i sh is a living language within

and the evolution of usage is ongoing

Language: Language for interaction

are developed and challenged through

(ACELA1551)

Literacy: Interpreting, analysing,evaluating

Apply an expanding vocabulary to r e ad increasingly complex t e x t s with fluency and comprehension ( A C E L Y 1 7 4 3 )

Mathematics

Statistics and probability: Data

Identify everyday questions and issues

least one categorical variable, and collect

(ACMSP228)

Number and Algebra: Real numbers

Solve problems involving direct proportion. Explore the relationship between graphs and equations corresponding to simple rate problems (ACMNA208)

http://www.australiancurriculum.edu.au/Curriculum/ContentDescription/ACELY1743

http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=text

http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=read




http://www.australiancurriculum.edu.au/Curriculum/ContentDescription/ACELA1550



MathematicsB usin e s s C al c ul a tio ns

Revise the following terminology withstudents:

X Cost

X Profit

X Loss

X Revenue

X Asset

X Liability

Ensure that students develop a clear understanding of financial terms and the context in which they are used as they arise during the business task.

S e t t i n g ini t ial busin e s s go al s :

Lead a discussion on why a business would need short and long term goals.

Pose questions:

X Why would a business worry about thefuture?

X What are short and long term goals?

X How realistic do the goals need to be?

Explain to students that at this stage they are going to set some initial goals for their business. Later on they will do some more complex calculations and more detailed considerations that will enable them to refine these goals.

Ensure that students understand terms and the way they are used in context, such as revenue, cost, profit, earnings.

X Support students to complete worksheet 8: Setting goals for your business.




Break-even point

Remind students that so far they have not taken the start-ups costs of their businesses into account.

Student’s complete worksheet 9: Calculating a break-even point and worksheet 10: Using a spreadsheet to find a break-even point.

Prompt students to consider how they would change their goals based on their break-even point analysis.

Examine the principles of ‘economy of scale’ where a business can achieve economies of scale by lowering the average cost per unit through increased production since fixed costs are shared over an increased number of goods or services.

Planning

Lead an initial discussion on the organising and writing of a business financial plan.

Pose questions

X Do they think all businesses havefinancial plans?

X What goes into a financial plan?

X Why is it important to have a plan?

Build upon prior knowledge:

Get the students to reflect on their findings and discussions on what they have done.

Is their financial plan viable?

How can they make changes to give theirbusiness a better start?




Students complete student worksheet 11: A business financial plan and Student worksheet 12: A business management plan.

Students undertake Student worksheet 13: Completing a simple balance sheet.

Support students’ business activity.

Provide opportunities for reflection.After each day/week of trade studentsshould complete worksheets 14 and 15: Daily record keeping and Weekly record keeping. Are they meeting their goals and what changes will they make to further business activity?

X Allow students actively to begin to run their business. Class time may needto be allocated to create their product/ service and set a time when they are allowed to trade at school.

X Introduce a learning journal: students can then detail experiences, concerns and hopes for the business. This will be a good resource to use for the persuasive argument.

X Students reflect on the usefulness of all the financial tools given to them asa means to keep records of their day today business transactions.

X Students complete Worksheet 16.Students use the information recorded in worksheets 14 and 15, and the short and long term business trading goals they set to reflect upon the actual business results they achieved afterthe first day of trade. This provides students with the opportunity to consider the reasonableness of their long term goal.


Student worksheet 6: Market Analysis


Target marketX What age group?X What gender?X What price range?X What location?X What needs does it meet?

Competitive advantageX Are other businesses doing it?X How is it different from other businesses in

the market?X Why would consumers choose your

product or service?

CompetitorsX Who else is trying to tap into the market

share?X Who else is providing the same or similar

product?

Location and how we are going to sell the productX Where are you located?X What does your business look like? X How does your business stand out? X How are you different?X Are you professional?

PricingX Are you competitive?X Are your prices reasonable for your target

market?X How are people going to pay?X Do you discount?

PromotionX How are people going to know about you?X Where will you advertise?X How are you going to promote our

business?

Strategy to achieve success in the marketing mixX Conclusion – why is your business going

to be a success?


Student worksheet 7a: Production/Operations Plan(for businesses that sell a product)


What resources do I need to make my product?X What materials are needed to make my

product?

X What quantity of each material will Ineed?

X How many can I reasonably expect tosell each week and overall?

Where do I get my resources?X Where am I going to get the items I

need to make my product?

How do I make my product?X What steps do I need to follow to make

my product?

How long does it take to make my product?X How many hours & minutes does it take

to make my product?

X How many can I make before I start my business?

X How many can I reasonably expectto make each week that my businessoperates?

How do I make sure that my product is always of the same quality?X Are there any guidelines to what my

product should look like, taste like?

X How will I know if I am delivering a quality product?

TrainingX How do I make sure everyone in our

group can make this product?

Strategy to achieve success in the production mixX Conclusion – why is our business going

to be a success?


Student worksheet 7b: Services Operations Plan(For businesses that will sell a service)


What resources do I need to design and offer my service?

X What items will I need to buy?

X What quantity of each item is needed?

X How many customers can I reasonably expect to deliver my service to in a week? Overall?

Where do I get my resources?

X Where am I going to get the items Ineed to design and deliver my service?

How do I design my service?

X What steps do I need to follow to design my service?

How long does it take to prepare and deliver my service?

X How many hours & minutes does it take to deliver my service, including preparation time?

X How many customers can I reasonably expect to deliver my service to in a week? Overall?

How do I make sure that my service is always of the same quality?

X Are there any standards that I willadhere to?

X How will I know if I am delivering a quality service?Training

X How do I make sure everyone in ourgroup can deliver this service?

Strategy to achieve success in the production mix

X Conclusion – why is our business going to be a success?


Student worksheet 8: Setting goals for your businessStart by answering the following questions: (you will be able to review youanswers later.)

How much money do you hope to make on the first day of your business?

................................................... (We will call this your short-term goal)

How much money would you hope to make if your business operated for a year?

................................................... (We will call this your long-term goal)

In order to check if these goals are reasonable, we can produce a cost and revenue breakdown. The calculations that we perform on this worksheet will not be exact because there are other costs to take into account, but they will help check that your goals are on the right track.

The cost is $5 for every 12 cup cakes.This is the price of the packet mix, milk and butter you need to make 12 cup- cakes.

As you can see, setting the costs and therevenue out in a table allows us to see the potential earnings overall.

What is the price of the cup-cakes? Ajudgement about how much you are going to sell the cup-cakes for, needs to be made. The total cost of making one cup- cake is 41 cents. If the selling price is$1.50, there will be a profit of $1.09 cents per cup cake. Is this reasonable price for a cup- cake?

We can write a formula showing therelationship between the Quantity sold(q) and the revenue generated (r).

r = q x 1.5

Let’s check this formula when 12cupcakes are sold.

r = q x 1.5

= 12 x 1.5

= 18

This agrees with our table which shows that when 12 cupcakes are sold, the revenue is $18.

Consider what other costs are involved in making and selling cup-cakes in addition to the ingredients.


Quantity

Sold

Costs Revenue Profit

1 $0.41 $1.50 $1.09

12 $5 $18 $13

24 $10 $36 $26

It will cost $10.00 tomake 24 cup cakes

The potentialrevenue is $36

The potential profit will be $26


1. Jules is starting a fish-tank cleaning business. He needs to complete a costand revenue breakdown.There are special detergents needed to clean a fish tank. It costs about 50 cents for the detergent needed to clean a single fish tank.The detergents cost 50 cents, butJules also need to take into account the time he will take to clean the tank. Hedecides on a selling price of $15.a. What will the profit be when he cleans 1 fish-tank? Write your answer

inthe appropriate box in the table. Complete the table.Calculate the profit that Jules will make if he cleans:

b.c.

i.ii. iii.

20 fish-tanks?13 fish-tanks?60 fish-tanks?

d. Write a formula showing the relationship between the number of fish-tanks Jules cleans (f) and the revenue generated (r)If Jules cleans a large number of fish tanks then the cost of detergentdecreases because he can buy the detergent in bulk. Suppose he cleans150 fish-tanks and the cost of detergent is only 30 cents per fish-tank. What would his profit be?Explain the risk involved if Jules chooses to buy a large quantity ofdetergent.Can you think of some start-up costs that Jules will encounter when he starts his business?

e.

f.

g.


Fish tanks cleaned

Costs of detergents

Revenue Profit

1 $0.50 $15.00

2 $1.00 $30.00

3 $1.50 $45.00

4

5

6

7

8

9

10


2. Now consider your own business:

Complete the following table.

3. Are any of the costs that you indicated in the table variable? In other words,will the costs sometimes change? If so, explain why the costs might vary and how this will affect your profit.

4. Explain the effect on your profit if you do sell all of the items you make (or ifyou do not provide the number services that you expect to).

Use the information from the first and last columns of the table to draw a graph of the Profit as a function of the Quantity Sold.

5.

Quantity sold


Ear

ning

s $

Quantity(The number of

products or services you sell)

Cost(The costs involved

in creating or providing these

products or services)

Price(What price will you

sell at?)

Revenue

(How much money will you make if you

sell everything?)

Earnings

(How much are you going to make after

paying costs?)

1

5


6. Use the graph to assess the goals you have made for your business.a. How many will you need to sell to meet your short term financial goal?

.....................................................................................................................

b. How many you would have to sell to meet you long term financial goal?.....................................................................................................................

c. Are your short-term and long-term goals reasonable? Explain youranswer. If they are not reasonable, write down some revised short and long-term goals.

.....................................................................................................................

.....................................................................................................................

.....................................................................................................................

.....................................................................................................................

.....................................................................................................................

.....................................................................................................................

7.

Notice that the graph is a straight line through the origin. This tells us thatthe profit and the quantity sold are directly proportional. Search online for the definition of “directly proportional” then explain it in your own words.

Teri runs a large business. She finds that the following formula gives the approximate relationship between the number of items she sells and her profit. This relates to economy of scale.

8.

p = 100q2 where p is the profit in dollars and q is the quantity she sells (inhundreds)

a. Complete this table, filling in the values of p.


p (profit in dollars)q (quantity sold in hundreds)

1 2 3 4 5 6 7 8


b. Using the values in your table, sketch the profit as a function of thequantity sold on the number plane below.

7000

6000

5000

4000

3000

2000

1000

0 1 2 3 4 5 6 7 8Quantity sold (hundreds)

c. Here is how we would calculate the approximate profit per item if Teri sold800 items:If she sells 800 items her approximate profit would be $6400.

Teri’s profit per item would be approximately $8Use this method to calculate Teri’s profit per item if she sellsi. 600 items

ii.

iii.

400 items

200 items

d. Notice that Teri’s profit per item is greater when she sells more items.Search for the meaning of “economy of scale” on the internet. Think of some businesses that make large profits because of economies of scale.


Pro

fits

($)


Student worksheet 9: Calculating a break-even pointExample:Jim has spent $250 on a new lawnmower. He would like to start a small lawnmowing business in his local area.a. Suppose Jim charges $15 to mow a lawn. How many lawns will he need

tomow to make at least $250?

Solution:250 ÷ 15 = 16.67 (to 2 decimal places)

Jim will need to mow 17 lawns to make at least $250.

b. If Jim can mow 3 lawns each week, how many weeks will it take him to earnat least $250?

Solution:17 ÷ 3 = 5 r 2

It will take 6 weeks for Jim to earn at least $250

We say that 6 weeks after starting his business Jim has reached his break-even point. This is the point where he has recovered his initial investment.

c. If Jim mows 3 lawns each week for 20 weeks, what would his profit be?Solution:3 × 15 = 45

Each week Jim will earn $4545 × 20 = 900

Jim will have earnt $900 but he spent $250 on the lawnmower.900 - 250 = 650

Jim’s profit will be $650.

d. Suppose Jim stops his business after 2 weeks. What would his loss be? Arethere any ways that Jim could recover this loss?

Solution:45 × 2 = 90

Jim will have earnt $90 but he spent $250 on the lawnmower.250 - 90 = 160

Jim’s loss will be $160.Jim might be able to sell the lawnmower to recover all or part of this loss.



1. Yash is starting a web design business. It costs her $800 to purchase thesoftware that she needs to design websites for her customers. She is pitching her business at families who would like to have their own website and will charge $150 to create a very simple family web site.

a. How many websites will Yash need to create in order to earn at least$800? (i.e. to reach her break-even point)

If Yash creates 3 websites and then closes her business, what would her loss be?

b.

c. How many websites would she need to create for her business to make aprofit of $400?

2. Natasha has an idea for a bike-repair business. She already has some toolsbut will need to purchase a few more, costing a total of $90. As she repairs bikes she will often need to buy some spare parts. On average, the spare parts needed to repair a bike cost $10. Suppose Natasha charges $50 on average to repair a bike.a. Look for the words “on average” in the paragraph above. Explain what

“onaverage” means.

How much money will Natasha make when she repairs a bike?b.

c. Calculate Natasha’s approximate break-even point. In other words,approximately how many bikes will she need to repair to recover the $90 that she has spent on tools?

Explain why it could take Natasha a bit longer or a bit less time to reachher break-even point.

d.

e. Natasha has estimated the cost of spare parts and the average priceshe will charge her customers. List some ways that Natasha could checkwhether her estimates are appropriate?



3. Marty started a business where he makes and sells kites. The materials tomake a kite cost him $25, but he can sell each kite for $35, so he makes a profit of $10 for each kite he sells. When he started his business he spent$200 on advertising, but it took some time for his business to grow. In the first week of his business Marty only sold 3 kites. But each week, for 8 weeks, Marty increased his sales by an average of 4 more kites.

a. Complete the following table:

b. Calculate Marty’s break-even point. In other words, in which week did herecover the $200 that he spent on advertising?

c. After 8 weeks Marty faced a problem. His business had grown and hedidn’t have enough time to make all of the kites that his customers were asking for. How could Marty continue to grow his business?


Week Number of kites sold

Income for that week

Income so far

1 3 $30

2 7

3

4

5

6

7

8


Student worksheet 10: Using a spreadsheet to calculate abreak-even point.

1. Open the spreadsheet: Break_even_point.xlsx found in Section 4 on thewebsite.

Click on “sheet 1” at the bottom right of the screen, to make sure that firstsheet is open.

2.

3. Read the following situation:

4. Adam’s initial start-up cost is $300. Enter this value into the spreadsheet. (Youwill see some numbers appear – don’t worry!)

5. Each week Adam expects his business to make $40. Enter this value into thespreadsheet.

Why are some of the values in the spreadsheet negative?6.

...........................................................................................................................

According to the spreadsheet what is Adam’s break-even point? In other words how many weeks will it take Adam to stop operating his business at a loss?

7.

...........................................................................................................................

Suppose Adam’s business doesn’t earn as much money as he thought. Suppose it only makes $35 each week. How will this affect Adam’s break- even point?

8.

...........................................................................................................................

Find the expected break-even point for Mary’s business if she spends $100 setting her business up and expects to make $30 per week

9.

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10. Suppose Scott spends $900 starting his business and would like to reach a break-even point in 4 weeks. Use the spreadsheet to find out how much money his business would need to make each week.

...........................................................................................................................


Adam will need to pay $300 to buy the materials he needs to start his business, but he expects his business to make $40 each week.


11. Click on “sheet 2” at the bottom of the screen.12. Read the following situation:

13. Enter Daniel’s start-up cost into the spreadsheet.14. Daniel expects to make $30 in his first week. Enter this value into the

spreadsheet.

15. Daniel expects his weekly profit to increase by $5 each week. Enter this value

into the spreadsheet.16. Notice that the money Daniel’s business makes increases each week.

17. If Daniel’s expectations are correct, what is his break-even point?...........................................................................................................................

18. What are some reasons that Daniel’s expectations might not be correct?For example, can you think of some reasons why the weekly profit of some businesses might sometimes decrease?

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Daniel’s business cost him $450 to start up. Daniel knows that it will take some time for his business to grow. He expects his business to make $30 in its first week but hopes that it will make an extra $5 per week from then on.


Student worksheet 11: A business financial plan

Set-up costs

business are:

each.

cost of $35

business loan.

$8 per week.

repay her loan over 4 months, with weekly

library so that her students can learn songs that

this will cost an average of $1 per week.


Calculate the start-up costs for yourbusiness.

Make sure you consider:

• The cost of any materials or equipment that you need to start your business

• Any other start-up costs such as connection costs for electricity or gas, initialadvertising, the establishment fee for a business loan

Running costs for the start-up period of the business, that are required to be paid before revenue is stable and able to cover running costs.

Michelle starts a business where she will give a weekly guitar lesson to a small group of children.

The materials that she will need to start her

• 4 second-hand guitars at an average cost of $40 each

• 2 guitar music books at a cost of $15 each

• 2 second-hand music stands at a cost of $8

• Initial advertising in the local paper at a

• A $10 loan establishment fee for a small

4 × 40 + 2 × 15 + 2 × 8 + 35 + 10

= 160 + 30 + 16 + 35 + 10

= 249

It will cost Michelle exactly $249 to start her business. She will put $49 of her own money into her business and will need a loan of $200.

Running costsCalculate the total weekly runningcosts for your business.


• The cost of materials, or equipment needed to run your business from week to week

• Any weekly costs for electricityor gas

• The weekly cost of hiring a space to sell your product or service

• Any regular repayments that you need to make if you have borrowed money to start your business

Michelle has arranged to hire a small room at the back of her local community hall where she can conduct her classes. The room will cost her

Michelle has arranged with the bank to

repayments of $15.

Occasionally Michelle would like to photocopysome songs from guitar music books at the

are not in her guitar books. She estimates that

8 + 15 + 1 = 24

Michelle’s weekly running costs (for the first 4 months) will be $24.

Worked example


business until she has saved more money. She

she can afford them.


Prices• How much will you charge for

your product or service? Explain how you have decided thisprice.

Michelle has spoken to some music teachers and some parents in her local area. She has decided that she will charge each student $15 for each weekly lesson.

Break-even pointCalculate the break-even point for your business. Make sure that you explain the costs you are including. It is a good idea to calculate the break-even point for a range of scenarios. You may need to review your start-up costs, running costs and price of the goods or serviceif you are not satisfied with your break-even point.

Michelle would like to teach 4 students per week, but at this stage she only knows of 3 students who would like guitar lessons. She knows that even when she advertises andfinds another, there will be some weeks when a student is sick or unable to come to the lesson. For this reason she calculates her break-even point based on having three students per week.

3 × 15 = 45

With three students, Michelle would earn $45per week.

45 - 24 =2 1

After paying her weekly expenses, her weekly revenue would be $21.

To arrive at her break-even point she will need to recover her $249 start-up costs.

249 ÷ 21 = 11.86 to 2 dec pl.

It will take Michelle 12 weeks to reach herbreak-even point.

Starting pointHow much money do you have right now to start your business? Do you have enough money to cover the start-up cost and the initial running costs? If not then consider:

• Ways to obtain more money in order to start your business

• Ways to reduce your start-upcosts and running costs

• Delaying the start of your business so that you have sufficient capital saved

Michelle has some of the money she requires, but not all of it, which is why she has arranged her small business loan.

Michelle could consider delaying the start of her

could look at her personal budget to see where she can save the initial start-up costs. She can also purchase the capital items gradually as


to teach

able to repair guitars and will charge Michelle a

events occurs, Michelle’s break-even point

her business for at least six months.


Assumptions• What assumptions have you

made in this business plan?

• Are your costs going to be thesame every week?

• Are you going to sell everythingyou make each week?

• What is the risk if sales are lower than expected?

• What can you do to managethis risk?


• What can you do to managethis risk?

• Identify any other risks to the finances of your business.

Michelle has assumed that she will have at least 3 students per week and that she will be able to teach for at least 12 weeks.

Michelle has identified the following risks:

• Students leaving her class

• Guitars requiring repair

• If Michelle becomes sick, she won’t be able

Michelle’s friend Brenda has offered to teach her classes if Michelle is sick. Brenda is also

reasonable price for doing so. If either of these

will take a bit longer to achieve. Michelle iscomfortable with this because she is able to run

Michelle has surveyed the parents in her local area and is confident that if any of her students leave her class she will be able to find other students who are interested in joining.


Now create your own business financial plan:


Start-up costs:

Calculate the start-up costs for yourbusiness.


• The cost of any materials or equipment that you need to start your business

• Any other start-up costs such as connection costs for electricity or gas, initial advertising, the establishment fee for a business loan

• Running costs for the start-up periodof the business, that are required to be paid before revenue is stable and able to cover running costs

• Consideration also needs to be given to the ongoing running costs of the business and the impact these have on the cash flow of the business.

Running costs:

Calculate the total weekly running costsfor your business.


• The cost of materials, or equipment needed to run your business from week to week

• Any weekly costs for electricity or gas

• The weekly cost of hiring a space tosell your product or service

• Any regular repayments that you need to make if you have borrowed money to start your business

Prices

How much will you charge for your product or service? Explain how you have decided this price.



Break-even point

Calculate the break-even point for your business. Make sure that you explain the costs you are including. It is a good idea to calculate the break-even point for a range of scenarios. You may need to reviewyour start-up costs, running costs and price of the goods or service if you are not satisfied with your break-even point.

Starting point:

How much money do you have rightnow to start your business? Do you have enough money to cover the start-up cost and the initial running costs? If not then consider:

• Ways to obtain more money in order to start your business

• Ways to reduce your start-up costsand running costs

• Delaying the start of your business so that you have sufficient capital saved

Assumptions:

• What assumptions have you made inthis business plan?

• Are your costs going to be the sameevery week?

• Are you going to sell everything youmake each week?


• What can you do to manage this risk?


• What can you do to manage this risk?

• Identify any other risks to the finances of your business.


Student worksheet 12: A Business management plan


Name of the business

Why did you come up with that name?

What does the name mean?

Who are the participants of thebusiness

What agreements did you need tomake?

As a business you will need to make several different agreements with different investment people

What are the features of the business

Why did you choosethis business idea?

Products / service provided

Statement of purpose

What is a statement that uniquelyidentifies your business?

Objectives

These objectives support thestatement of purpose.

How much to you think you’ll make?

What are the benefits for theconsumers?

Do you intend to be in business for a long time?

If so do you intend to expand the business?


Student worksheet 13: Completing a simple balance sheetFollow the steps below to complete this balance sheet for Jim’s lawn mowing business. A balance sheet should be completed regularly, at least once a month. As the number of transactions increase so too does the need to

1. When Jim started his business (18 months ago) he needed to buy alawnmower costing $350. He borrowed this money from the bank. The loan was taken out over a period of 2 years with a simple interest rate of 6%.

a. Calculate the amount of interest that Jim was charged in the first year.(Hint: what is 6% of $350?)

b. Calculate the amount of interest that Jim was charged over the period ofthe loan. (Hint: in each year of loan, Jim will be charged 6% of $350 as interest)

Calculate the total amount that Jim must repay the bank. (Hint: he must repay the principal: $350 and also the interest that you calculated in part b)

c.

d.

e.

Calculate Jim’s monthly repayments

Jim has now made 18 of these monthly repayments. Find how muchmoney he still needs to pay the bank and write it on the balance sheet.

2. Jim recently had his lawnmower serviced. He was sent an invoice of $40for this and this fee is due at the end of this month. This is his only account payable. Add this figure to the balance sheet.

When Jim had his lawnmower serviced, he found out that because his lawnmower is now second hand, and has some wear and tear, it is now worth about $150. Add this figure to the balance sheet.

3.


Balance sheet Date:12/8/2012

Assets Liabilities

Cash: Current Loan:

Accounts receivable: Accounts payable:

Lawn mower:

Total liabilities:

Equity

Total assets: Total Liabilities and Equity:


4. Jim’s customers usually pay him on the day he mows the lawn, but one familyis on holiday and will pay Jim when they return. They owe Jim $45. This is anaccount receivable. Add it to the balance sheet.

5. Jim’s business currently has $750 in its business bank account. Add thisfigure to the balance sheet.

Examine your balance sheet, and think about what each number means. What is the difference between an asset and a liability?

6.

7.

8.

Calculate Jim’s total assets and Jim’s total liabilities.

Equity is what is left when we deduct all of the business’ liabilities from its assets. Calculate the equity of Jim’s business and add it to the balance sheet.

9. Calculate the total liabilities and equity and add it to the balance sheet.Explain why this number must always be the same as the total assets.

10. Now consider your own business. What assets and liabilities are you likelyto have as you run your business? Create a balance sheet for your business that you will fill out every week. Make sure that you leave some space for unexpected assets and liabilities.



Student worksheet 14: Daily account keeping


Date Expenses(list each expense and caluculate the total of the expenses for the day)

Number of sales

Revenues from sales

Notes


Student worksheet 15: Weekly account keeping


Week starting date

Profit or loss at the start of the week

Revenue raised during the week

Expenses incurred during the week

Profit or loss at the end of the week


Student worksheet 16: ReflectionUsing the data from you graph and table, and your short and long term goals answer the following questions.

Compare the result from your first day of trading with your short-term goal:

.................................................................................................................................

Was it a reasonable goal? (Reasonable: did the money you earn provide areasonable hourly rate of pay for the time you spent on the business?) Justifyyour answer:.................................................................................................................................

.................................................................................................................................

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Is your business viable to meet your long term goal? Why or Why not? Justifyyour answer..................................................................................................................................

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Section 5: Share and reflect1. Student worksheet 17: Does business benefit my

community?2.

3.

Student worksheet 18: Business evaluation

Student worksheet 19: Present an argument

4. Student worksheet 20: Can you see how your business benefited thecommunity?

Student worksheet 21: Reflection5.



persuasive t e x t s that present a po i n t o f

including t e x t s that integrate visual, print

se nt e n c e structure, vocabulary and audio/



Students complete Worksheet 17: Does business benefit my community? What are ‘my’ experiences? And Worksheet 18: Business evaluation.

Discuss the experiences of students between groups and individuals. Following the discussion students complete Worksheet 18: Business evaluation.

Use the Argument outline provided in Worksheet 19: Present and argument to develop a justified argument with multiple points of evidence.

X Explain the selected mode for presentation of students’ final argument– this may be written, oral, or some form of media, e.g. slide show or web page.

X Smart Money Website Section 5 Share & Reflect Assessment

X Explain the criteria for the argument included in Worksheet 19, included in the Peer Evaluation checklist

X Model the way students can use the templates in Worksheet 20: Can you see how your business benefited the community? to sort their evidence and sequence it into a structured argument.

X Examine the use emotive language in writing a persuasive argument.

Use Worksheet 21: Reflection, to develop a sense of whether students are more/ less willing to undertake a business venture in the future.

Model how students reflect upon theirlearning experiences.


Literacy: Creating texts

Cr e at e imaginative, informative and

vi e w and advance or illustrate arguments,

and/or audio features ( A C E L Y1 7 4 6 )


Review and edit students’ own and others’ t e x t s to improve clarity and control over content, organisation, paragraphing,

vi sual f e a tur e s ( A C E L Y1 7 4 7)


Use a range of software, includingword processing programs, flexibly andimaginatively to publish t e x t s ( A C E L Y 1 7 4 8 )

Literacy: Interacting with others

Use interaction skills to present and discuss an idea and to influence and engage an a u d ie n c e by selecting persuasive language, varying v oi c e tone, pitch, and pace, and using elements such as music and sound effects ( A C E L Y 18 1 1 )


http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=voice

http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=audience




http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=visual%20features



http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=point%20of%20view

http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=create


http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=sentence


http://www.australiancurriculum.edu.au/Glossary?a=12d44a4d-a36c-41c1-b84c-9e4600a2a39b&t=point%20of%20view


Student worksheet 17: Does business benefit my community?Reflect on your personal experiences of running a business and consider if

You will:

Reflect upon the task of running a business

Use your opinions backed up by facts to present an argument.

.................................................................................................................................

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Student worksheet 18: Business EvaluationYou will need to evaluate your experiences in the business in the following table.


Impa

ct o

n M

y te

am(D

id w

e al

l wor

k to

geth

er o

n th

e…)

Impa

ct o

n M

e(A

m I

conf

iden

t eno

ugh

to

part

icip

ate…

?)

Impa

ct o

n th

e Co

mm

unity

(How

doe

s it

bene

fit th

e co

mm

unity

…?)

Eval

uate

the:

Gro

up p

roce

sses

X G

roup

dyn

amic

s

X P

artic

ipat

ion

X E

ffici

ency

Pro

duct

ion

proc

ess

X E

nviro

nmen

tal i

mpa

ct?

X E

ffici

ency

of p

rodu

ctio

n?

Pro

duct

des

ign

X S

uita

bilit

y

X Ta

rget

aud

ienc

e?


Student worksheet 19: Present an argumentEvidence from your investigation may agree or disagree with the statement – My community benefitted from my business. List some key points for each side.

Use evidence from your investigation to make a persuasive argument about thatstatement.‘My community benefitted from my business – what’s the evidence?’


Your argument will:

X present your ‘thesis’ by saying why you agree or disagree with thestatement

X have at least three key points

X give evidence for each point, and explain source of evidence

X sum up your argument in a conclusion

X Persuade others to agree with your thesis.

Agree DisagreeX

X

X

X

X

X

X

X


Thesis (why you agree or disagree with the statement):

First key point: ...............................................................................................................

Evidence:

Second key point: ..........................................................................................................

Evidence:

Third key point: ..............................................................................................................

Evidence:

(attach extra pages if you need more space)


Argument outline: ‘My community benefitted from my business’


Student worksheet 20: Can you see how your businessbenefited the community?1. Did your business benefit the community?

...........................................................................................................................

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...........................................................................................................................

2. Describe how your business has benefited the community.

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List the ways your business benefited the community?3.

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4. What would you do differently with the business from a communityperspective?

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How can the community help your business?5.

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Student worksheet 21: ReflectionWould you do it again? Managing a business is not a simple task and making that business successful takes a lot of work.

Answer the following questions based on your own personal reflection.

1. Why would you do this business again?

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What would you change about the business?2.

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3. Is there any part of the process / procedure that you would change?

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Was doing this unit of work easy or hard to participate in?4.

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5. Would you think about starting your own business after leaving school? If sowhat would it be?

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