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Building a Business

  • Lesson
  • 1
  • 2
3-5
2
Number and Operations
Caitlin LeBlanc Dankanich
Chester Springs, PA

In the first lesson (of two), students start a business from the ground up! Students collaborate to develop a product and are given a $1000 budget in which to start their business. Students participate in a live auction of real estate locations within the classroom, determine the wholesale prices of various products, and work together to develop an advertising campaign all to prepare for the big day- selling day!

Before You Begin 

Groups of 3–5 students work best for this activity. Depending on your class, you may want to make groups ahead of time or you may have students choose their own groups. Arrange the student desks so your room is conducive to group work. Create 8 sections in your room that will be used as store locations in the final phase of the product. Make Section 1 the most desirable because it has the highest rent (of $500), while Section 8 is least desirable (at $50). Here are some examples of areas you may want to consider:

Section Cost Description 
Section 1$500Includes large table and two chairs, with wall behind it for posting signs/advertisements
Section 2$375Back of the room wall area with 2 student desks with 2 chairs & wall space for posting signs/advertisements
Section 3$325Counter area with wall space for posting signs/advertisements
Section 4$300Circular table with 4 chairs and no wall space
Section 5$225Group of 4–5 student desks with chairs and no wall space, closest to front door
Section 6$205Group of 4–5 student desks with chairs and no wall space, middle of the room
Section 7$150One student desk and chair- where there is room (in corner of room farthest from door)
Section 8$50Floor in back of room (5'×5' space) (no desks or chairs or walls)

Starting the Lesson3247-Pic-Builder 

Introduce the premise of the project. Tell students they will be working in small groups to develop a business that sells one product of their choosing. Explain that as a class, they will be brainstorming a list of 10 possible products. Give students some examples of products such as: mp3 players, pencils, etc. Each group will be given $1,000 play money to buy the product of their choosing to sell, to rent a location in the room to set up their store, and to advertise. Once the businesses are completely set up, each student will be given a $200 debit card that they will use to spend at businesses other than their own. Lastly, any money that is left over on the debit cards will be collected and divided evenly among all the groups.

Have students break into groups and come up with 3–5 product choices. Allow students time to choose their choices using the following criteria:

  • Products must be specific. Instead of general board games, Twister or Monopoly would be more appropriate.
  • Products can be original (not made yet) but should be realistic (a magical genie who grants wishes unfortunately isn't an option to sell).
  • Products should appeal to both genders.
  • Products shouldn't be too expensive (remember students only have $200 to spend in the end; therefore, students shouldn't be selling Lamborghinis as their products).

Give students 5–10 minutes to brainstorm possible products. Have one representative from each group put their group's ideas on the board. Tell the class that you have the authority to erase any options that are duplicates of other ideas, too general, too expensive, or inappropriate for school. If you are left with a list that is greater than 10 products at this point, have students vote on the remaining products by allowing each students to vote for their two favorite products. Have students determine how many votes there should be in total [If there are 20 students in your class there should be a total of 40 votes tallied, because 2 × 20 = 40].

Once students have narrowed the list down to 10 products, it is a good idea to organize the products from cheapest to produce to most expensive to produce. For example, a pencil would be cheaper than an mp3 player. This will help students during the wholesale pricing process. Lead this activity in the beginning, and then, let students organize the rest of the products. Choose a student to rewrite the list on the board and call on other students who are raising their hands for ideas.

After you have organized the product list, hand out the Money Maker Activity Sheet. Have students write down the list of 10 products you created as a class. To develop wholesale prices, have students research the current retail value of each product, and assume that the wholesale price is 30% of the retail value. Have students calculate the wholesale prices by multiplying the retail price by 0.30; if you have not taught multiplication with decimals you will want to have students use calculators.

pdficon Money Maker Activity Sheet 

Give students time to work in groups and choose the product they want to use. Have students complete question two on the Money Maker Activity Sheet.

Have a representative from each group explain to the class which product they will be selling and why they think it will be a successful product to sell.

Students Choose Their Business Locations 

After you have explained to students that part of their budget includes renting a location for their business, share the eight sections you have designated to be auctioned off. Allow students to conference with their groups about what section they want the most and how much more than the starting bid they are willing to pay. Give each group a different number card. Have each group designate one student who will hold up their group's number card to bid on a price stated by the auctioneer.

Start the auction with the most expensive location (or you can start with the section generating the most interest in students). For the most expensive location an example of what you could say is: "Bids start at $400, do I hear $400? $400 to Group 1. Do I hear $410? $410 to Group 2. Do I hear $420? $420 going once, twice, sold to Group 2 for $410." Be sure to write down the selling price and group number once each auction has concluded.

Students Create their Advertising Budget & Price their Products 

On page three of the Money Maker Activity Sheet, students will work on their budgets which include buying their products from vendors and advertising their products. After students have determined how many products they want to order to sell in their stores, they will determine how much money they have left for advertising. The following items will be available for purchase (see page three of the Money Maker activity sheet):

  • 8.5"×11" piece of lined paper: $25
  • 8.5"×11" piece of white paper: $50
  • 8.5"×11" piece of colored paper: $60
  • 1 piece of poster board: $150
  • Marker, 1 color: $10
  • Markers, 3 colors $25
  • 12" of tape (for hanging posters): $5
  • 15 seconds of commercial time: $100
  • 30 seconds of commercial time: $190

Students will prepare their budget and turn it in one from each group to be checked. Once the budget has been approved, the advertising items will be delivered to each group.

Once students have received their advertising materials, they should begin to work on creating enticing advertisements to promote their products. When you see students are finishing up their advertising, announce when the commercials will be shown for groups who bought commercial time. If your school has video equipment available, students may actually tape their commercials; otherwise, students can act out their commercials in class.

At this point in the project, groups should be able to work independently. You can either devote an entire class period to this process, or you can follow your regular curriculum and allow students to work with their group members during any "free time" students may have, such as following a lesson or after a test, and so on. The second lesson in this unit, Savvy Sellers and Spenders, provides closure for the project; students sell their products, and practice addition and subtracting with decimals. In addition, students continue their math learning by becoming consumers with $200 to spend at the different stores.

If you decide not to use the Savvy Sellers and Spenders lesson, provide closure by having students use the prices they brainstormed on the activity sheet in questions twelve and fourteen and answer the following questions:

  • If you sold your products at the price you listed in question twelve, how many products would you need to sell to break even? (Keep in mind the money you spend on buying products, real estate and advertising.) How many products would you need to sell to make a profit?
  • If you sold your products at your "special price" in question fourteen, how many products would you need to sell to break even? How many products would you need to sell to make a profit?
  • After answering questions one and two, would you keep the amount of products you ordered the same or change it? Why?
  • 8.5"×11" lined paper
  • 8.5"×11" white paper
  • 8.5"×11" colored paper
  • Poster board
  • Markers of various colors
  • Tape (any type)
  • Number cards (one per group)
  • Computers
  • Money Makers Activity Sheet 
 

Assessment Options

  1. Bring in clothing store catalog. Give students a budget of $100. Have students choose a complete outfit (top, bottoms, shoes, accessories). Students can buy each item for a 40% discount off the regular price in the catalog but must stay below $100. Have students make a quick sketch of their outfit (or cut out the pieces) and then label the outfit with its original prices and discounted prices, and a total price at the bottom.
  2. Pose questions, such as the ones in the Questions for Students section, to assess students' understanding of the mathematical concepts involved in this lesson. You may ask students to provide their responses in writing and collect their written responses.

Extensions 

  1. Have students create the products they will give to customers by creating three dimensional figures out of paper that contain their product name. Depending on their product, students may design nets for cubes, rectangular prisms, or other figures of their choosing.
  2. Have students write a journal entry on how realistic this project is. What was similar to reality and what wasn't? For example, students may realize that on top of having to rent their space, they will have additional expenses in real life, such as utilities.
  3. Move on to the next lesson, Savvy Sellers and Spenders.
 

Questions for Students 

1. What did you learn about retail prices compared to wholesale prices?

    [Answers may vary. Sample answers: wholesale prices are only a fraction of retail prices, companies make a profit by making retail prices more than wholesale prices, etc.]

    2. When developing your budget what was the most challenging part?

    [Answers may vary. Sample answers: figuring out how many products to buy, doing the actual math to see if we were staying within the budget, working together to agree on a budget, etc.]

    3. How did you develop the price for your product? Do you think your price will attract buyers? Why or why not?

    [Answers may vary. Sample answers: made price similar to research price, made price lower than researched price which will attract buyers, made price a bit higher so it increases our profit per product sold, our product is so cool the price won't matter, etc.]

    4. If you had 500 more dollars in your budget, where would you want to use it?

    [Answers may vary. Sample answers: towards buying more products, towards more advertising materials, towards a better location, etc.] 

Teacher Reflection 
  • What were some of the ways that students illustrated that they were actively engaged while preparing their business? Did students seem more actively engaged in other parts of the preparation than others? Why do you think this occurred?
  • How was your classroom management of the groups during the project? Were students dependent upon you throughout the project, or were they able to work independently much of the time?
  • Did you find it necessary to make adjustments to the project while students were working in groups? If so, what adjustments, and were these adjustments effective?
Unit Icon
Number and Operations

Money Makers

3-5
Refine your number sense and problem solving strategies as groups compete for the title "Money Makers!"
3258icon
Number and Operations

Savvy Sellers and Spenders

3-5
This second lesson places students in the shoes of a real business owner. Students have chosen the products they want to sell, rented locations, and prepared advertising; now they get to experience the thrill of the sell as they spend their $200 on stores' merchandise(s). Students experience real-world applications of adding and subtracting decimals while learning what it means to be a smart consumer.

Learning Objectives

Students will:

  • Apply previous learning involving pricing a product, creating an advertising campaign, and selling a product.
  • Apply and adapt a variety of appropriate strategies to solve problems.
  • Use problem solving skills and number sense to become smart consumers.
  • Monitor and reflect on the process of mathematical problem solving.
  • Develop number sense.
 

NCTM Standards and Expectations

  • Develop and use strategies to estimate the results of whole-number computations and to judge the reasonableness of such results.
  • Develop and use strategies to estimate the results of whole-number computations and to judge the reasonableness of such results.
  • Select appropriate methods and tools for computing with whole numbers from among mental computation, estimation, calculators, and paper and pencil according to the context and nature of the computation and use the selected method or tools.

Common Core State Standards – Mathematics

Grade 4, Measurement & Data

  • CCSS.Math.Content.4.MD.A.2
    Use the four operations to solve word problems involving distances, intervals of time, liquid volumes, masses of objects, and money, including problems involving simple fractions or decimals, and problems that require expressing measurements given in a larger unit in terms of a smaller unit. Represent measurement quantities using diagrams such as number line diagrams that feature a measurement scale.

Common Core State Standards – Practice

  • CCSS.Math.Practice.MP1
    Make sense of problems and persevere in solving them.
  • CCSS.Math.Practice.MP4
    Model with mathematics.
  • CCSS.Math.Practice.MP5
    Use appropriate tools strategically.
  • CCSS.Math.Practice.MP7
    Look for and make use of structure.