Owning and Operating a Small Business

 

Process

 

Towards the end of each lesson, under Project Connection, you will be prompted to complete a part of the Module 2 Project. You can access the entire project here at any time.

 

Make sure to save all your work from each Project Connection in your course folder. You will submit your Module 2 Project to your teacher at the end of Lesson 3. Check with your teacher about how you should submit your project work before you begin the project.

 

It is estimated that this project will take four hours in total to complete. To help you successfully manage the project and your time, you will be directed to parts of the project throughout the lessons as you learn the necessary concepts. You are encouraged to take the time to complete each part of the project as you complete the lessons.

 

Presentation

 

The most important part of your project presentation is clearly explaining and supporting your reasoning with relevant visuals and calculations. Make sure to show all your work.

 

Review the Project Rubric to ensure you understand how you will be assessed on this project.

 

The final presentation for this project will be in a business plan format, including all the necessary additional research and calculations.

 

Project Introduction

 

Have you considered becoming a business owner? In this project, you will plan a small business for your region. You will present a short business plan (a document that outlines the goals of a business, describes how the goals will be achieved, and outlines the projected financial performance) that describes your business, lists what is needed to start your business, and includes financial estimates. Note that the more complex a business is, the more detailed its business plan needs to be.

 

You will also look at buying or leasing a vehicle for your business and you will create a puzzle to be solved by a customer.

 

Part 1: Choosing a Business

 

Start-up

 

To begin the project, consider what business opportunities there are in your region.

• Is there an area with food concessions and stands selling local crafts?
• Have you ever attended a farmers’ market, flea market, garage or yard sale, or trade fair where businesses showcase their products?
• Are there food concessions on the streets of your town or city during the summer?
• Are there services that are specific to your region?
• Do you have a special skill that might become the basis of a business?

Pick an option that interests you and begin developing your plan by stating the purpose of your business in one or two sentences and describing what service or goods it will offer. This statement is often called a mission statement (a statement in a business plan that describes the goals and operating principles of the business) in a business plan.

 

Start choosing some options.

• Where will your business be? Will it be stationary (like a kiosk) or movable (like a hot-dog cart)?
• Who will your customers be? Will they be adults, teenagers, or children?
• What will the name of your business be?
• Will you need to hire employees?
• Will you need some sort of transportation to and from your customers?

Make some sketches of a business logo and think of a motto or slogan that describes your business idea concisely.

 

Estimating Business Expenses

 

Now that you have decided on the type of business you want, the next step is to plan and estimate the different expenses you will have.

 

You may find it helpful to keep the business costs organized in a spreadsheet program. You could enter all of your costs on one page, or you might find it helpful to have several spreadsheet pages—one main page with a summary, and separate sheets for start-up costs and operating expenses.

 

Start by creating a list of items you will need to purchase to open your business. Will you need to

• buy any special equipment, like safety gear, tools, or a computer?
• make any signage for your business to advertise?
• purchase a business licence?

Once you have completed your list, research the cost of each item and record it in a table or spreadsheet under “Start-up Costs.”

 

Operating Costs and Breaking Even

 

Now that you have worked out the initial cost of your business, you can estimate how much it costs to operate your business from month to month. If you used a spreadsheet in the previous section, continue to use it to record this information.

1. Create a list of the monthly expenses you expect for your business. For each expense, state whether the expense is variable or fixed. Research the estimated value of each expense and record the value in your spreadsheet.
2. In order to price your goods or services so that you can earn a profit, you need to calculate your break-even point. If you are selling more than one item or service, average the cost of making the items to determine an amount to use in your calculation. Estimate how many sales you will make in a month. Use that value and your estimated expenses to calculate the price you should charge for your items in order to break even. To include your annual expenses, divide them so that an equal portion is absorbed into your expenses each month. Remember that your business might only operate in the summer months or could operate all year long. Consider busy times and slow times.
3. What is your goal for a profit? Based on your goal for a profit, calculate the selling price of your product and/or service. Ask a friend, parent, or teacher if he or she feels that the price you have set for your product is realistic.

Part 2: Business Vehicle

 

Buying or Leasing a Business Vehicle

 

Assume that a vehicle is a mandatory component of your business. You now need to decide whether to purchase or lease a vehicle for the business. Pick a vehicle that would be appropriate to use with your business and research buying and leasing that vehicle. Use information from newspapers, television, radio, or Internet advertisements. Choose one buying or leasing option and justify why this is the best option for your business. Include a copy of the two advertisements chosen and provide a mathematical explanation of why you chose one option over the other.

 

Costs of Operating a Vehicle

 

There are many costs associated with operating a vehicle. Make a list of the other costs you need to consider when operating a vehicle and estimate the costs of each.

 

Part 3: Skill-Testing Puzzle

 

To help advertise your new business you plan to hold a contest, so potential customers can win a prize from your new business. Canadian law requires that the winners of your contest must answer a skill-testing question. Your task is to create a mathematical puzzle that potential customers can solve in order to enter your contest and win a prize from your new business.

 

Your puzzle must be related to the theme of your business. For example, if you were opening a clothing store, you could use a hat puzzle similar to the Prisoners and Hats problem from Lesson 3. You may want to create a brand new puzzle. Alternatively, you might modify a puzzle you’ve seen on the Internet or in this module to make it relate to the theme of your business. Be sure to include a solution to your puzzle and explain why it works.

 

Submit a copy of your puzzle along with a full solution.

 

Part 4: Business Plan

 

Now that you have completed your research and calculations, it is time to compile all the information into a business plan. Your business plan should include

• your mission statement
• the name, motto or slogan, location, target market, and staffing plan for your business
• your start-up costs and operating costs
• your calculations indicating your break-even point
• the final price(s) of your product(s)
• calculations showing your expected profits
• the vehicle you would buy or lease for your business, and why you chose the option to buy or lease the vehicle
• the costs of operating the vehicle
• the puzzle you created and an explanation of how to solve the puzzle
• a summary paragraph explaining whether you expect your business to be successful

Remember to submit all your calculations and additional research with your business plan.

 

Project Assessment

 

Your Module 2 Project will be evaluated by your teacher using the evaluation guidelines in the Project Rubric. Read the rubric carefully. Make sure you are aware of how you will be assessed. You can print or save a digital copy of the Project Rubric as a guide to help you complete your project.

 

Don’t forget to submit your completed Module 2 Project to your teacher at the end of Module 2.

 

Adapted from MathWorks 12 Student Book/Teacher Guide. (Vancouver: Pacific Educational Press, 2011.)