"Show Me the Money" Introduction
Financing helps small businesses grow into thriving corporations. In
this lesson, students will search the Internet for the financing options
available as they imagine they are small business owners. Lesson Description
Students will imagine they are small business owners and use information
from the Entrepreneur Magazine Web site to learn about the financing
resources for the small business owner that are accessible over the
Internet. They can browse the site to collect information from several
categories. Students will answer four questions and then use what they
have learned to create home pages for their business's Web site. It
will be used to inform potential investors of their businesses and
financing needs. Previous Knowledge Expected
entrepreneur: person who organizes, manages, and assumes the risks
of a business in order to gain profits.
stock: share of ownership in a corporation that entitles the buyer
to a certain part of the future profits and assets of the corporation
capital: tools, equipment, and factories used in the production
of goods and services; one of four factors of production Applied Content Standards (from the Council for Economic
Education)Standard 14: Entrepreneurs are people who take
the risks of organizing productive resources to make goods and services.
Profit is an important incentive that leads entrepreneurs to accept
the risks of business failure. Instructional Objectives
- Students will be able to recognize the different methods of financing
available to the small business owner.
- Students will be able to understand how the small business owner
can use the Internet to find information needed to make business decisions.
- Students will be able to use this information to imagine they are
entrepreneurs and create Web sites for their businesses, explaining
their financial needs and attracting investors.
Student Web Activity Answers
- "SBA" stands for Small Business Association, a government entity. The SBA provides loan guaranties to banks who lend to small businesses
- A line-of-credit loan is a short-term loan that is usually deposited into a business checking account on an as-needed basis.
- With equity financing, an entrepreneur gets partners who actually contribute capital and share ownership of the company. With debt financing, an entrepreneur gets creditors who are lending funds to the business.
- The price of money is the cost of borrowing—in other words, the interest rate on the loan. An entrepreneur should have expectations that the business will generate enough revenue to cover the interest and still earn a profit for investors.
- Answers will vary but may include whether to borrow from friends or family, whether to pursue debt or equity financing or both, how long the loan will be necessary (the maturity date), the monthly payments that are affordable.
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