small bus esl sw_excerpt

AN INTRODUCTION

TO SMALL BUSINESS

An English Language and Civics, Business Education Workbook for English Language Learners

STUDENT WORKBOOK

Written by Michelle Y. Walker-Wade (formerly Riley)

2003

Introduction to Small Business for ELL

AN INTRODUCTION TO SMALL BUSINESS

An English Language and Civics, Business Education Workbook for English Language Learners

Statistics show that the American immigrant population is finding the key to economic

freedom in entrepreneurship. Likewise academia is experiencing a surge in opportunities

for Vocational ESL training. What better response could we have, than to unite English-as-a-Second- Language education with Business Education?

This workbook has been developed to help further the English Language Learner’s desire

to speak and excel in the world of business. It has been quite an ambitious journey, but well worth the effort. The lessons are developed for the Intermediate/Advanced to

Advanced ESL student. Due to the number of complex business terms and concepts, this

book is a great “next step” for the students who are reaching the top of the ESL ladder. This workbook and course do more than teach Civics, English and Business; it teaches

students a little bit about, American business culture and how they fit into it, community building, goal setting, sales tax, how to read a receipt, mathematics, problem-solving

and planning, and so much more.

The format of the workbook is one that will enhance the students reading and vocabulary skills. Furthermore, the suggested classroom activities (see the appendix) are great for

increasing the student’s speaking and listening skills.

TABLE OF CONTENTS

Page

Unit 1: Getting Down to Business

Lesson 1:Where Do I start? ............................................................1-6

Lesson 2: I Think I Want to be an Entrepreneur..............................7-11

Lesson 3: It’s Time to Start Planning..............................................12-16

Unit 2: Making Your Business Legal

Lesson 4: Making Your Business Legal.........................................17-19

Lesson 5: Business Licenses in the State of California...................20-22

Lesson 6: Zoning Clearances.........................................................23-26

Lesson 7: Fictitious Business Names .............................................27-29

Lesson 8: Seller’s Permits .............................................................30-34

Lesson 9: Business Ownership Structures......................................35-40

Unit 3: Your Business Plans

Lesson 10 :Introduction to Business Plans ......................................41-44

Lesson 11: Elements of a Business Plan .........................................45-49

Unit 4: Pricing Your Products

Lesson 13: Three Pricing Strategies................................................50-53

Lesson 14: Simple Mathematics .....................................................54-58

Lesson 15: Operating Costs............................................................59-62

Appendix

Vocabulary.....................................................................................64-67

Exercises Key ................................................................................68-70

Data & Evaluation Forms ...............................................................71-72


Written by: Michelle Y. Riley for New Haven Adult School – EL Civics & Business Education: 2003 Property of: New Haven Adult School

Reading 12 - "Pricing Strategies” Have you ever wondered how businesses determine the price of their products? Pricing is a very

important part of having a successful business. Not only does it determine how profitable your

company will be, it will also affect your customer’s demands and expectations. There are

several factors to be considered when determining prices. These factors are summed up into

three basic pricing strategies: Above Market pricing, Competitive Market pricing, and Below

Market pricing. A detailed explanation of each strategy is below.

3 Pricing Strategies If…Then…

Above market

~ This means that… ~

When compared to other businesses selling the same or

similar products, these prices are a bit higher.

This is called “High-end Pricing”

If you want to attract customers who are willing to pay higher prices in exchange for premium service, then above market prices are good for you.

If you want to attract customers who are willing to pay higher prices in exchange for elegant environments, then above market prices are good for you.

If you are opening your business in a fancy neighborhood or some other location where there are few competitors, then above market prices are good for you.

If you want to grow your business on quality, rather than quantity, then above market prices are good for you.

Competitive market



similar products, your prices are about the same.

This is called “Medium Pricing”

If your business sells a product customers can easily obtain from another business, then competitive prices are good for you.

If your business sells a variety of products, then competitive prices are good for you.

If you want to attract customers who look for average quality, name-brand products at good prices, then competitive prices are good for you.

If your business is located in a primary commercial zone, then competitive prices are good for you.

Below market



similar products, your prices are lower.

This is called “Low-end Pricing”

If you want to attract customers who are willing to sacrifice quality for lower prices, then below market prices are good for you.

If you want to sell off-season products, then below market prices are good for you.

If you want to sell a small variety of products in large quantities, then below market prices are good for you.

If your business is for enjoyment rather than for high profits, then below market prices are good for you.

Exercise 12.1: Working with New Words and Phrases

� Compare(d) � Quality � Premium � Quantity � Strategy / Strategies

Based on the definitions from the previous lesson and usage of your vocabulary list, deduce which of the above words is best for each scenario. ______________________1. Paula found two white blouses she liked. One was made of

100% cotton and had simple buttons up the front. The other was 100% linen with short sleeves. The blouses cost $19.99 and $16.99.

______________________2. Sarah was sure she wanted to work for a university or college. She made a list of all the universities and colleges in her area, and made it a point to check each ones job postings at least three days a week.

______________________3. Costco and Smart-n-Final are popular stores in this area. Customers can save money shopping there if they are willing to buy in bulk.

______________________4. Joe does not like to buy his coffee in cans at the local grocery store. He’d rather buy a few fresh coffee beans from a coffee bean roster every couple of days.

______________________5. Jim loves his Rose-Royce. He uses nothing but the best gasoline he can buy.



1

Exercise 12.2 Complete the chart by naming a business that fits each pricing strategy.

Type of Business Above Average Pricing

Competitive Market Pricing

Below Market Pricing

Groceries

Clothing

Automobiles

Restaurants

Exercise 12.3 We will look at the websites of the businesses below. Decide if you think the business’ pricing strategy will be above market, competitive, or below market. Then, explain why you selected each one

Business Name and Web address Select a Pricing Design

Explain why

Hotel Deanza

http://www.hoteldeanza.com/

� Above Market

� Competitive

� Below Market

Castro Valley Comfort Suites”

http://www.cscastrovalley.com/

� Above Market

� Competitive

� Below Market

DeJardenia Living Floral Design

http://www.dejardenia.com/

� Above Market

� Competitive

� Below Market

Gerry’s Country Rose

http://www.gerrysflorist.com/

� Above Market

� Competitive

� Below Market

Crate and Barrel

http://www.crateandbarrel.com/

� Above Market

� Competitive

� Below Market

Bed Bay & Beyond”

http://www.bedbathandbeyond.com/

� Above Market

� Competitive

� Below Market



Introduction to Product Pricing – Important Phrases

� Invoice price The price a business pays a manufacturer or supplier when they purchase products for resell.

� Selling price The customer’s purchasing price for a product.

� Markup Amount The difference between the selling price and the invoice price in DOLLARS. (Selling Price – Invoice Price = Markup Amount)

� Operating Costs All the expenses created in order to run a business

Reading 13 - "Introduction to Pricing PRODUCTS: Simple Mathematics” American manufacturers often suggest the prices for which they believe their products should

sell. This price, called the “Manufacturers Suggested Retail Price” (MSRP), is based on the

average American business’ operating costs. The MSRP, however, is only a suggestion and

business cannot be forced to use it. If a business owner decides to use the MSRP, (s)he must use

mathematics to make sure the suggested price is right for them.

When businesses price their products, they are generally concerned with two figures: the cost of

the merchandise (called the “invoice price”) and the price they will charge customers (called the

“selling price”). The difference between these two amounts is called the “markup amount”. So,

for example, if the invoice price of a toy is $12.00 per item, and the customer is charged $19.00

per item, then the markup amount is $7.00 per item.

Selling Price – Invoice Price = Markup Amount $19.00 – $12.00 = $7.00

The amount of money gained in the markup must be enough to cover the businesses operating

costs, plus make a profit. For this reason, determining the Markup Amount is the most important

step in product pricing.

The simplest way to calculate a products lowest possible markup amount, and thus the lowest

possible selling price, involves a three–step process.

1. Add up all of your operating costs for one month of business, making

estimates for those expenses whose exact dollar amounts are not available.

This is called the Monthly Operating Costs.

2. Estimate the quantity of products you hope to sell in one month (base this

estimate on your future sales expectations). This is called the Target Sales.

3. Divide the Monthly Operating Costs by the Target Sales. This will give you

the Operating Costs per unit – also called the minimum Markup Amount.

Monthly Operating Costs ÷ Target Sales = Operating Costs per unit

Once the Operating Cost per unit is calculated, it can be added to the invoice price. The end

result is the product’s minimum selling price. Using the same example of the toy with a $12.00

invoice price per item, lets assume that the seller’s Monthly Operating Cost was $420.00, and

their Target Sales were 60 toys a month.

We can calculate the Operating Costs per unit as:

Monthly Operating Costs ÷ Target Sales = Operating Costs Per Unit

$420.00 ÷ 60 = $7.00

Then, add the $7.00 to the $12.00 invoice price, thus obtaining our selling price of $19.00:

Operating Costs Per Unit + Invoice price = Selling Price

$7.00 + $12.00 = $19.00

Although this process is probably the most accurate way to price products, it can be very time-

consuming if there are a lot of products being sold. Thus, many businesses use the Markup Rate

method instead. With this method, businesses select a percentage rate, and simply markup their

products by that percentage. For example, suppose a store decided to markup all toys at a rate of

50%. The toy with the $12.00 invoice price would end up with an $18.00 selling priced:

Invoice Price + Markup Rate = Selling Price $12.00 + 50% = $18.00

This selling price is slightly below the $19.00 calculation we previously made, so consequently it

does not fully cover the operating expenses. The business will usually make up for this

difference on the other products it sells.



Exercise 13.1 Answer the following questions

1. What does the acronym MSRP mean? ____________________________________________

___________________________________________________________________________

2. Is the seller required by law to use the MSRP? _____________________________________

3. There is a simple way to calculate the minimum Markup Amount. How many steps are in

this process? __________________________

4. These steps are to:

First: Add up all the _________________ _____________________ _______________

Second: Estimate the ______________________ __________________________

Third: Calculate the minimum Markup Amount by ____________________ these two

numbers.

5. However, many businesses use the ________________ ______________ method to price

their products because it is easier and less time consuming.

Exercise 13.2

Fill in the blanks.

� If the invoice price of a camera is $32.00 per item, and the selling price

charged to customers is $59.00 per item, then the __________________

________________ is $27.00 per item.

� If the _________________ _________________ of a book is $6.00 per item,

and the selling price charged to customers is $16.00 per item, then the markup

amount is $10.00 per item.

� If the invoice price of a TV is $49.00 per item, and the ______________

_______________ charged to customers is $65.00 per item, then the markup

amount is $16.00 per item.

� If the invoice price of a necklace is $8.00 per item, and the selling price

charged to customers is $15.00 per item, then the markup amount is

$______________ per item.

� If the invoice price of a gold ring is $125.00 per item, and the markup amount

is $78.00 per item, then the selling price charged to customers is $

_____________ per item.

� If the invoice price of a EZ-chair is $59.00, and the business applies a 30%

markup rate to it, then the selling price charged to customers is

$_________________.

� If the shoe store applies a 45% markup rate to sandals, then the selling prices

of a sandal whose invoice price is$12.80 would be

$_______________________.



Exercise 13.3 Using these formulas, calculate the minimum Markup Amount and Selling Price for each

Monthly Operating Costs ÷÷÷÷ Target Sales = Operating Costs per unit

Invoice Price + Markup Amount = Selling Price *** Remember: the Operating Costs per unit is also the minimum Markup Amount

Details provided: What is the minimum Markup Amount per item?

What is the minimum Selling Price per item?

The Monthly Operating costs is: $300.00

The Target Sales is: 100

The per item Invoice price is: $9.00






The per item Invoice price is: 100.00

Using Markup Rates, calculate the Selling Price for each

Details provided: What is the selling price

The Markup rate: 20%






APPENDIX

SMALL BUSINESS

RESOURCES


Written by: Michelle Y. Riley for New Haven Adult School – EL Civics & Business Education: 2003 Property of: New Haven Adult School Page 18

Vocabulary Lesson Write the Definitions below

Acronym 7

Advertisement 1

Assessed 8

Brief 11

Business contact 3

Business industry 3

Business Plan 10

Business Services /Business Products

3

Business Startup 3

Commercial Zone 6

Compare 12

Compete 3

Complex 11

Comply 4

Database 7

DBA 7

Demand 3

Entrepreneur 1

Exempt 7

Vocabulary Lesson Write the Definitions below

Residential Zone 6

Sacrifice 2

Sacrifice personal comforts 2

Sales Taxes 8

Self-disciplined 2

Self-managed 1

Self-motivated 2

Self-starter 2

Selling price 13

Shareholder 9

Simple 11

Strategy/Strategies 12

Structure 9

Surname 7

Tangible Goods 8

Taxable items 8

Unincorporated cities 5

Venture 2

Violate 5

How well do you understand the following topics about Small Business Ownership?

Circle the number that best corresponds 1 = I have never heard of this topic 2 = I’ve heard about it, but I don’t know anything about it 3 = I know a little about it 4 = I know about it well enough 5 = I know about this topic pretty well

The Personality Traits of an Entrepreneur

1 2 3 4 5 One who is innovative, creative, a risk-taker, organized, self-disciplined…

Networking

1 2 3 4 5 Talking to other business people, attending Networking Events…

Legal Requirements

1 2 3 4 5 Business licenses

1 2 3 4 5 Zoning clearances

1 2 3 4 5 Fictitious Business Names

1 2 3 4 5 Seller’s Permits

Ownership Structures

1 2 3 4 5 Sole proprietorships

1 2 3 4 5 General partnerships

1 2 3 4 5 Limited Liability partnerships

1 2 3 4 5 Corporations

Business Plans

1 2 3 4 5 Coversheets

1 2 3 4 5 Business Descriptions

1 2 3 4 5 What makes up a business plan (the elements of a business plan)

Product Pricing

1 2 3 4 5 Pricing strategies: Above market, completive market, below market

1 2 3 4 5 Calculating operating cost

1 2 3 4 5 Target sales

1 2 3 4 5 Invoice prices and Selling prices

1 2 3 4 5 Markup Amount and Markup Rate


Written by: Michelle Y. Riley for New Haven Adult School – EL Civics & Business Education: 2003 Property of: New Haven Adult School Page 26

Course Final Questionnaire

During the course of this class… 1. What new word and phrased did you learn?

2. What new ideas did you gain?

3. What information did you find most interesting and helpful?

4. What information did you find least interesting and helpful?

5. What did you learn about starting a Small Business?

6. What do you think about the legal requirements of owning a business in California?

7. What math skills did you learn?

8. What math lesson was most helpful?

9. What math lesson was least helpful?

10. What new ideas do you have about customer services?

11. What did you learn about working in teams?

12. What would you like to learn about next?

13. What did you like about the class?

14. What did you dislike?