Active learning ideas
Financial planning is often the most challenging but rewarding part of the venture plan. Students learn to estimate start-up costs (one-time expenses) and operating costs (ongoing expenses). They create cash flow projections to ensure the business doesn't run out of money and calculate the 'break-even point' to see how much they need to sell to cover their costs.
Activity 01
Show students items needed for a business (e.g., a commercial espresso machine, a month of retail rent in Toronto, business insurance). Students must guess the cost. This builds 'market reality' before they start their own budgets.
How do entrepreneurs estimate start-up costs?
Activity 02
Give groups a set of fixed costs and a variable cost per unit. They must use a spreadsheet or whiteboards to calculate how many units they need to sell at different price points to break even. They then discuss which price point is most 'realistic' for the market.
What is a cash flow projection?
Activity 03
Students look at their 'Start-up Costs' list and identify three items they could 'bootstrap' (get for free, rent, or buy used). They pair up to share their ideas and see if their partner can find even more ways to save money without sacrificing quality.
How do we determine the break-even point for a new product?
A few notes on teaching this unit
Watch Out for These Misconceptions
Profit and Cash Flow are the same thing.
A business can be profitable on paper but still go bankrupt if it runs out of cash. Active 'Cash Flow Simulations' show students how timing (when bills are paid vs. when customers pay) is everything in business.
I don't need to pay myself a salary in the beginning.
While common, an entrepreneur's time has value (opportunity cost). Teaching students to include a 'fair wage' for themselves in their projections leads to a more sustainable and realistic business model.
Methods used in this brief
Operational Planning and Resource Management
Students determine the physical, human, and technological resources required to launch their venture. They will also review the legal requirements for starting a business in Canada.
8 methodologies
Pitching the Venture
Students synthesize their venture plan into a compelling business pitch. They will present their ideas to an audience and incorporate feedback to refine their strategy.
8 methodologies