ENTREPRENEURSHIP, CONSUMERISM, AND THE ECONOMY: MAKING BUSINESS REAL AND PERSONAL FOR PRIMARY THROUGH SECONDARY STUDENTS Dr. Janet Ratliff College of Business Morehead State University

Dr. Beverly Joyce McCormick College of Business Morehead State University

Paul grew up very poor. When he was in high school, the other kids made fun of his clothes. Paul felt down and trapped. One day he just had enough and decided that he was going to get an education and escape. In a normal economy, that might have meant getting a job with a big company and slowly making the fortune he wanted for his life and the life of his family. But, Paul graduated at a time when jobs were hard to get. That did not stop this young man. He decided to start his own company out of his home. It took lots of sacrifices but after ten years of hard work, Paul now owns a multi-million dollar company. Paul made a good choice. In recent years, small businesses have outperformed large firms in 3 out of the 4 quarters from 1992 to 2010 according to the Small Business Administration. Small businesses employ half of all private sector employees and have generated 65% of the net new jobs over the past 17 years. Small businesses hire 43% of the high tech workers and produce thirteen times more patents per employee than large patenting firms. Like Paul’s business, 52% of small businesses are home-based. (U.S. Small Business Administration, 2012, item 2).

“Many students in the U.S. have entrepreneurial aspirations and energy that could help drive future job creation in the country. Nearly 8 in 10 students (77%) in grades 5 through 12 say they want to be their own boss, 45% say they plan to start their own business, and 42% say they will invent something that changes the world” according to a recent Gallup Poll of 1721 students (Calderson, 2011). Entrepreneurship education can refine and focus this interest for the students and allow these students to indeed change the world. The poll also discovered that “the majority of students also demonstrate persistence and are willing to assume risk -- both of which are qualities typically characteristic of entrepreneurs. Most students say they are not afraid to take risks, even if failure is a possibility (91%), that their mind never stops (91%), and that they never give up (85%), (Calderson, 2011). Our education system needs to take advantage of these qualities by funneling these students into creative programs that teach these students how to be entrepreneurs now and into the future. The poll also shows that only 50% of these students say that their schools offer classes on how to start a business.

The gains from entrepreneurship education are not just economic in nature. The pace of innovation and creativity needed in the current economy means that in addition to the typical skills that are taught in our schools, students need to be motivated to be lifelong learners. “Evaluation studies of high-school-level curricula in youth entrepreneurship report that students increase their occupational aspirations, interest in college, reading, and leadership behavior after participation” (Bell-Rose & Payzant, 2008, para 7). Creativity is a prized quality in today’s economy. The National Advisory Committee on Creative and Cultural Education (1999) has described creativity in an educational setting as “Imaginative activity fashioned so as to produce outcomes that are both original and of value” (item 29). Beghetto (2007) forwards the idea that

1

“creativity” is “the ultimate economic resource and an essential for addressing complex individual and societal issues” (p.1). Entrepreneurship education provides an ideal way to encourage students to be creative while at the same time they are creating something of value: a business.

Introduction to a Business Experience for Primary and Intermediate Students The original program involves coordination and cooperation of two classes simultaneously. One primary class (kindergarten or 1st grade) listens to a story about spending and saving, Berenstain Bears’ Dollars and Sense (Berenstain S., & Berenstain J., 2001). Students in the primary class earn an income by answering questions about the book and related core content. One intermediate class (4th or 5th grade) actively engages in establishing businesses. These intermediate students also answer questions to learn about business concepts, and then break into teams to form businesses. The primary class uses their income to purchase items from the intermediate class. The intermediate class borrows money from a bank and signs a promissory note and pledges personal collateral (i.e. their personal computer, Xbox, iPod, among other items) to secure repayment of a loan. This process is conducted in order to obtain the needed inventory to start their businesses within the classroom. Discussions and debriefing in each class complete the program. This program can introduce students to a large amount of economic content in a relatively short period of time. This program can be expanded by reviewing the core content for Kentucky and combining it with other lesson plans already in use. Use as little or as much of the core content as is needed with the time, money, and space restrictions available. This program could be easily expanded so that it could be adapted to cover middle and high school social studies/economics, practical living and vocational core content which will be discussed later. Primary Preparation (Kindergarten or 1st Grade) Preparation for this activity is fairly simple regardless of grade level taught. The teacher will need to cooperatively plan a day for the program in conjunction with an intermediate class or classes. The primary teacher will need several dollars in play money (generally three one dollar bills for each student); he or she will also need a copy of the Berenstain Bears’ Dollars and Sense (Berenstain S. & Berenstain J., 2001). A pre-established listing of questions should be prepared from this book and related core content (this could include questions based on previous activities and discussions regarding economics), so that students can answer questions throughout the book as it is being read aloud and earn money for answering related questions. Supplies—A copy of Berenstain Bears’ Dollars and Sense (Berenstain S. & Berenstain J., 2001), play money (at least three one dollar bills per child), and a list of questions prepared from the book and related core content. Primary Vocabulary Checks, Bank, Banker, Spending, Saving, Wants, Needs, Opportunity Cost, Scarcity, Resources, Money, Allowance, among other terms.

2

Primary Questions In the beginning of the program, primary students should answer questions that pertain to the Berenstain Bears’ Dollars and Sense (Berenstain S. & Berenstain J., 2001) and related economic core content. Later, primary students can answer questions related to the activity that they took part in when they visited the intermediate students’ businesses. Primary students should be asked about their shopping experiences with intermediate students’ businesses and how this relates to shopping experiences in real life with their respective families. The following questions can be asked by primary teachers in order to stimulate economic thinking: What is the difference between wants and needs? How did the bears deal with these issues? When brother and sister bear visited the businesses, what did they need or what did they want? Was there a difference to brother and sister bear between needs and wants? Consumers have to make the best decisions possible every day. When a person gives up something to get something else then that person experiences an opportunity cost. Do parents sometimes tell their children that they don’t need that new game or new toy? Instead, mom and dad say that new game or new toy is something that their children wanted. That same game or toy was not a need. What did mom and dad mean by saying that game and toy was a want not a need? What are some real examples of this for children? Do we sometimes have to make tough decisions about our money because we don’t have enough to have everything we want? We have a scarcity of resources (limited resources) and unlimited wants. What can we do to improve the way we manage our resources and wants and needs? How did each student receive money to shop? How do people receive money to buy the items that they buy? What is work? How did brother and sister bear earn money (an allowance)? What does earn an allowance mean? What did the businesses offer? Were items in the different businesses expensive or cheap? Were all of the items good ones for the price? Why or why not? Please explain and be specific. Here students will more than likely talk about products tearing up, discuss consumers rights to return the item for a refund, new item or repair. Also, a teacher should explain that these businesses were designed to help students understand the importance of using their money wisely. Sometimes bad decisions are made. The items sold by the intermediate businesses might not be well made thus, more than likely they could tear up quickly. A teacher could remind students that actually the items were free because the money was play money. Primary Extensions This lesson can be used in conjunction with any lesson involving social studies/economics- markets, scarcity, production, distribution or consumption. This program can also be used with any lessons involving practical living/vocational studies-financial literacy, and/or consumerism. Please read through the content information at the end of this handout. The teacher may expand or restrict the depth of this program depending on time and capabilities within the classroom. Additional books may also be included with this program.

Intermediate Preparation

3

An intermediate teacher will need to: cooperatively plan a day for the program in conjunction with a primary class or classes and create enough stores to split the class into groups of 4 or 5 students per group (a CEO, Money Handler, Advertiser, and Customer Service Rep, among others as needed). A few examples of stores/businesses are: stationary, jewelry, tattoos & stickers. A teacher will need to have inventory for the each store/business, depending on the what the teacher decides to include in his/her classroom economy (in most cases, inventory at this level comes from an inexpensive novelty company). A teacher will also need to have supplies for the students to market their businesses and respective products sold there (poster board, markers, construction papers, et cetera). Students will need some introduction to the vocabulary and real life examples of business activity (i.e. and interview with an entrepreneur, a guest speaker from a local business or a trip to a local business, so that everyone could relate). Students should be asked what the difference is between revenues, expenses, profits, and losses. How do people get the money to start a business? Although some have personal capital (money of their own), others have to borrow money or take out a loan from someone or some group (i.e. mom, dad, or a bank) for that money; the lender wants capital to secure the loan (something of value that will be available to the bank in the event that the loan isn’t paid). Therefore, if students are going to borrow money for their businesses so that they can buy the inventory needed to open their business, then they will have to use something as collateral. This means that some asset (those items owned that have value) will have to secure the loan. Ask for examples (i.e. Wii game system, bicycle, toys, et cetera). Each student should have something that is given up on the contract in the event that the student cannot pay the loan back for the inventory. Please anticipate pricing for the items within the businesses. It is important to make items in dollar amounts because only paper money is used (2 for $1 instead of $.50 each). Also, some items desirable or in a limited quantity should be priced high to illustrate supply and demand. A scarcity or a surplus can result if pricing is inaccurate. Help students with this or allow them to experience this on their own, but they will need some basic information to plan for these types of situations. Supplies/Materials—Each group needs the following: art supplies (i.e. markers, poster board, tape, paper, pencils, envelope for money, et cetera), play money, loan contract, and items to be sold in businesses. Items for businesses may be acquired from the following: students could bring items from home with the same theme and dollar limit; classroom money could be used to buy large bulk items (share with other classrooms); and parents could be asked to contribute. Intermediate Vocabulary Business, Loan, Ethics, Profit, Sales/Revenue, Expenses, Collateral, Capital, Money, Scarcity, Surplus, Job Duties, among other terms.

Intermediate Questions What is a Business? What Does a Business Do? How do people start businesses? How do people gain the money necessary to establish a business? What is a loan? What enables a business or a person to pay a loan back? What are revenues? What are profits? What are expenses?

4

What is Ethics? Would a business sell a defective toy? Would a business discard a defective toy, discount it, or give it away? Intermediate Extensions This lesson can be used in conjunction with any social studies/economics lesson involving scarcity, markets, and practical living/vocational studies involving consumerism, and financial literacy, among other items. Entrepreneurs could be interviewed from a local community to expand the knowledge learned in this program. Adaptation of Program for Middle and High School Students Although this program was initially developed for the purpose of teaching economics to primary and intermediate students, the same program may be used to enable middle and high school students to review previous core content and further develop and expand content knowledge. Essentially, middle and high school students could create their own mini businesses in teams by taking on the full responsibility for all of the related business activity (creation, marketing, and selling). This could be done by allowing students to work within the parameters of a budget. Profits received from businesses could be donated to worthy nonprofits within local communities, thus reinforcing the value of social responsibility. Comparisons of similarities and differences within student created businesses and their own economy as compared to real life businesses and the economy within the United States and abroad would assist in providing students with a better understanding of related core content. Middle & High School Preparation, Supplies and Materials In the beginning, as in the intermediate grades, students may need to review business core content from the previous grades; therefore, teachers may review previous vocabulary and real life examples of business activity (allow students to research their favorite or most frequented business). Students should understand the following terms: revenues, expenses, profits. Students should also understand that they will be responsible for acquiring necessary funds to obtain the inventory, materials to market the product and cash on hand to make change for customer purchases. Although some have personal capital (money of their own), others may have to borrow money or take out a loan from someone or some group (i.e. mom, dad or a bank); the lender wants capital to secure the loan (some item of value that can be taken by the bank in the event that the loan cannot be repaid). For a middle school or high school adaptation of this program, the teacher will need to decide what parameters need to be set for student success. At the point that a student enters middle or high school, creativity and a willingness to foster competition, would open the door for teams to create their own businesses to sell goods (i.e. necklaces, friendship bracelets, tie dyed t-shirts, home-made candy, cookies, carved items, among other items) or services (i.e. car cleaning, washing, or waxing; advertising or providing print materials for others’ businesses; providing items to support other businesses such as bags or wrapping). Student teams of five or six should have a set amount of money that can be spent on supplies (every team should have the same budget for spending). Additional money is needed in each business so that business owners can provide change for customers when items are purchased; this money should be included as part of the budget. However, teachers should approve all business ideas and items to be sold within

5 those businesses. In addition, teachers should decide whether the items will be sold to one another in one class or among classes or be made available to the whole school because this decision will impact individual business budgets. Each student should have a specific job/career opportunity within each business (CEO, customer service representative, marketing manager, accountant, among others). At this point students should also be made aware of differences in income levels and education requirements for each of the job/career options). Students should also be made aware of the varying levels of responsibilities associated with each job/career. Students can research various occupations in the Occupational Outlook Handbook (http://www.bls.gov). If helpful, other teachers in other disciplines, such as math or English, may become involved in this program. For instance, some students may want to conduct research to determine any or all of the following: identify potential customers, identify what to sell (product offering), determine how to price, decide on the best approach to business delivery (i.e. selling on-line or on site), among other items. If this is the case, a math teacher could assist with the statistical analysis of the research and the English teacher could assist students in writing the results of the research. Students need to also understand that in the beginning, when a business just gets started, most businesses do not make a profit quickly, especially if the owners pay themselves. Therefore, in this mock situation, students will not be able to pay themselves. Students are really going to only be focused on the expense of supplies related to creating and marketing the product. However, students need to be able to identify all real expenses related to business activity. This includes the time and money to create (i.e. production of the product), to market (i.e. advertise, deliver, package), and to sell (i.e. location, lighting, shelf space, set up, labor) the items within their businesses. Due to limited expenses, students may end up with what they see as a profit (even though in reality after careful review of expenses there would be little to no profit); students may elect to keep the profit, split the profit among themselves, or use the profit in a socially responsible way by contributing to a greater cause (a worthy nonprofit within their local community). Students need to also determine how they will use technology within their businesses to create the product (assembly line, specialization, customization, et cetera), market the product (decide where and how to advertise using Facebook or texting, opportunities in classes, announcing over intercom system, et cetera), and sell the product (in person, in class or cafeteria, take orders in person, via phone, on-line, et cetera). Teachers will also need to have supplies for the students to market their businesses and respective products sold or include this in the expense that students must cover when developing and staying within project budgets (poster board, markers, construction papers, et cetera).

Middle and High School Vocabulary Profit, Sales/Revenue, Expenses, Competition, Comparative and Competitive Advantages, Job/Career, Demand and Supply, Pricing, Technology Use (specialization, assembly line, customization), Economy (Traditional, Command, Market, Mixed), Essential Economic Questions (what should be made, how should it be made, and for whom should it be made), Interdependence and Global Market, among other terms.

6

Middle and High School Questions It would be a very good idea to review economic intermediate core content with students using questions from the previous section (intermediate vocabulary and questions). However, at this point it would be appropriate to ask students more advanced questions to develop knowledge in related economic core content that is grade appropriate. How does the United States’ economy differ from other countries? How do businesses compete in the economy? How do businesses differentiate their products (i.e. what makes a hamburger from one restaurant any better or worse than a hamburger from a competing restaurant)? What basic economic questions should be answered (what should be made, how should it be made, and for whom should it be made)? How does a business determine at what price to sell its products (i.e. businesses must take into consideration demand and supply, the price a customer is willing to pay for the product, how that price can be used to express a market value on a particular good and/or service). In essence, a teacher could at this point discuss e-bay and use students’ familiarity of this successful business to help students better understands pricing, demand and supply. How has new knowledge been created over time in terms of technology, tools, and specialization? What can be done to further develop these efforts? How have these opportunities changed business and the economy over time? What technological advancements can be traced through time and what changes have these advancements brought to business and consumerism as a direct or indirect result? Are these changes good or bad for the economy?

Middle and High School Extensions This lesson can be used in conjunction with any social studies/economics lesson involving middle and high school core content and could be enhanced by coordination and timing of coverage of other curriculum that complements this particular core content. In addition, students could relate their personal business experience to news reports, domestic and foreign, by keeping a journal to follow related world issues and events. This would enable students to better understand higher level core content. Teachers could use classroom discussions and debriefing of items in the journal to assist students with understanding and retention of related content.

Content Notice: This program addresses core content that exists in the state of Kentucky. Although all states are slightly different in the content covered in each subject area, some content remains the same throughout the United States because all content is based on National Standards. The information in the link that follows can be used to identify how this program addresses some of the content expected to be covered in the state of Kentucky in the areas of social studies and/or practical living and vocational studies. The following link will allow you to view the core content for Social Studies and Practical Living/Vocational Studies for Elementary (end of primary, 4th and 5th). http://www.education.ky.gov/KDE/Instructional+Resources/Curriculum+Documents+and+Reso urces/Core+Content+for+Assessment/Core+Content+for+Assessment+4.1/

7

Specific Core Content Included in this program Social Studies 2.18- Students understand economic principles and are able to make economic decisions that have consequences in daily living. Economics Economics includes the study of production, distribution and consumption of goods and services. Students need to understand how their economic decisions affect them, others, the nation and the world. The purpose of economic education is to enable individuals to function effectively both in their own personal lives and as citizens and participants in an increasingly connected world economy. Students need to understand the benefits and costs of economic interaction and interdependence among people, societies and governments.

Practical Living/Vocational Studies Practical Living 2.30-Students evaluate consumer products and services and make effective consumer decisions. Vocational Studies 2.37-Students demonstrate skills and work habits that lead to success in future schooling and work.

Consumerism Consumer skills are essential for individuals and families due to the availability of numerous products and services on the market, multiple advertising techniques, the need to make responsible financial management decisions, and to utilize resources impacting the community and environment. These skills can provide a foundation for becoming consumer literate and responsible citizens. Vocational Studies Awareness of careers starts in the primary grades and progresses at the middle level to more specific exploration of careers. The total experience through high school allows students to determine a career path that matches their interests, aptitude and abilities, while providing strategies to prepare for a career. The basic skills, knowledge and positive work habits for successful transition from school to postsecondary experiences and to life are addressed throughout a student’s educational experience.

8

References Berenstain S., & Berenstain J. (2001). The Berenstain bears: Dollars and sense. New York:

Random House.

Beghetto, R. A. (2007) Does cretivity have a place in classroom discussions? Perspective

teachers’ response preferences. Thinking Skills and Creativity, 2(1), 1-9.

Bell-Rose, S., & Payzant T. W. (2008). The case for entrepreneurship education. Retrieved

March 19, 2012 from http://www.edweek.org/ew/articles/2008/08/13/45payzant.h27.html

Calderson, V. J. (2011). U.S. students’ entrepreneurial energy waiting to be tapped. Retrieved

March 19, 2012 from http://www.gallup.com/poll/150077/students-entrepreneurial-

energy-waiting-tapped.aspx

NACCCE (National Advisory Committee on Creative and Cultural Education). (1999). All our

futures: Creativity, culture and education. London: DfEE.

U.S. Small Business Administration: Advocacy small business statistics and research. (2012).

Retrieved March 26, 2012 from http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24

9