Classroom Business

04/30/2009 05:12 am ET | Updated Nov 17, 2011

For ten years in my elementary classrooms I had real businesses. We made products, sold packaged products, and managed to make enough money to take the entire class to Magic Mountain.

When I discussed my idea of starting a classroom business, I said that we would do it during class-time. We decided to begin by selling popcorn. I said that even though we were going to use items donated by the parents, eventually we would have to be self-sufficient. Parents donated corn poppers, a few bags of popcorn, margarine, small bags, and a hot plate. Over half the class was involved in the initial production.

If the Health Department had been there, we would have been condemned, quarantined, and drawn and quartered. It was mass and mess confusion. Two parents were helping, but we had no idea of order.

We had a general plan and had assigned jobs, but they quickly panicked as we had underestimated the time it would take to get ready, pop the corn, package it, and have it ready to sell during school lunch.

Only one of the popcorn poppers worked. The hot margarine was dangerous and spilled twice and made the floor slippery as several willing hands tried to clean it up. One of the popping crew was eating more than he popped.

By the time a parent went home and got a large pot, it was nine-thirty and we only had five bags ready. Keeping the children who didn't have a job out of trouble and busy made me crazy. I knew better than giving them difficult academic assignments, but the art and games were less interesting than the chaos swirling around them. They were caught in the general pandemonium.

When we finally produced a large amount of popcorn, the
jobs gradually fell into place and my assembly plant began to work. Poppers poured popcorn into large bowls and baggers, using freshly washed hands, stuffed it into small bags. Much was spilled onto the greasy floor. I didn't know it then, but one of the baggers (knew the value of conservation) either ate the floor-flavored popcorn or stuffed it into bags.

Another crew took the bags and lined them up by the room entrance next to the table with the small box we'd created as a cash box.

When lunch started we had about eighty bags ready. The kids descended on us when the lunch bell rang. I kept order outside of the room and parents continued to work the crews. When lunch ended, we had sold one hundred bags at ten cents each.
After lunch I spread the ten dollars on my desk and the real lesson in business and economics began.

"Wow, Mr. Rose, if we make ten dollars a day that means we'll be making two hundred dollars a month. We'll have a thousand dollars in five months. We can buy anything or go on any trip." The class cheered.

"Whoa, wait a minute. First, let's figure out how much profit we made."
"We didn't make ten dollars?"

"I'm afraid not. Remember I said we'd start with borrowed raw materials and equipment, but eventually we'd have to buy our own. If we're going to be a real business we have to run it like one."

One of the parents said, "I'm donating my popcorn machine and the PTA donated the popcorn and . . ." "I appreciate your generosity," I interrupted, "but it's the kids' business. I want them to learn the joys and the hard realities of a real business."They moaned. "OK, we'll accept your loan of the equipment, but we have to eventually buy the other things we need."

I proceeded to put the cost of the margarine, bags, salt, and popcorn on the board. We had botched a few batches and my calculations proved that we had actually LOST one cent on each bag we sold. "And kids, this is without figuring in overhead and payroll."

"We'll work for nothing."

"That's charity, not business. If we had to set up anywhere else we would have to buy or rent the space and that is another large cost. I want you to go into this with your eyes open. We have to decide how we're going to make this business more efficient so we can earn a profit. The workers are going to get a salary."

We eliminated our parent-helpers and had one-fourth the crew. We eliminated the melted margarine by having poppers that had the margarine in the popping process. We poured the popped corn into a large bag, salted it in there, and then two children filled the smaller bags -- but not to the top -- to minimize spillage. We charged fifteen cents a bag. We paid the workers twenty-five cents an hour.

I had them keep track of the money spent for each purchase, wages, and the daily sales. The children rotated through the various jobs of production, sales, bookkeeping, and advertising. It was a crude operation, but it went far beyond a child's lemonade stand.

They became bored with popcorn, so we sold it once a week and sold candy daily. By buying at a discount outlet, we could make more money from candy sales. We ran a market analysis by sending a questionnaire to each class asking what were their favorite candies. We assembled the data and, with our earnings, I invested in several kinds of candies. I also bought bargain items. With some we made money in others we discounted to get rid of them. With candy everything was prepackaged, which saved on labor costs. I took my pay, car expenses and time after school involved in traveling and shopping, with a candy bar. The two kids who sold after school only spent fifteen minutes and usually preferred payment in candy rather than cash. Since the candy was wholesale, it made additional profit for the class.

As the weather got hotter we made snow cones. It turned out to be our biggest seller and the most profitable. This was more labor-intensive and the logistics of preparation were quite tricky, but only once did we get stuck with extra cones and we still made a profit.

We faced and overcame many minor crises, but the major one came when I got greedy. It taught me to have many alternatives ready and always consider the worst case as well as the best scenario.

There was a local movie theatre that most of the families attended. It had a four hundred and fifty seating capacity. At one dollar a seat for two days we could gross nine hundred dollars. I discussed this with them and approached the manager for Saturday and Sunday morning shows. He explained about movie rentals and that he could get us the two films for about three hundred dollars. He would make a profit selling the concessions; we would on the tickets. I gave him a check and we started our advertising campaign. Our E-1 Corporation was going to be rich!

The films we ordered he couldn't get, so we had a choice of withdrawing from our agreement or use the films he had been able to substitute. Later, I realized he got less expensive films on purpose.

It rained both days. With our class, some parents, and a few others we sold eighty tickets in two days. The second day the manager wanted two hundred dollars. I could have given him the eighty dollars, but then we'd be broke. The rest would have to come out of my pocket.

At that time, I personally never made it through the month without borrowing money or by not paying all of my bills. And, I was angry with him because I felt he'd lied to me about the risks. He had not gotten us the movies that would have attracted more people to brave the rain. I didn't pay.

The Superintendent called and said that the manager had complained. I explained the situation and said the district was not involved. Further, I was going to take the manager to Small Claims for breach of contract. He was satisfied as long as it did not affect the district.

I discussed the issue with the class and actually I did file our complaint. I showed the papers to the class and explained all the legal aspects of the process. I was now a hero instead of the real jerk that had been taken by a clever businessman.He called me and threatened me, but I said that even if he was right and honestly thought he had been straight with me, my lawyer (me) stated he had failed to live up to the contract. More importantly, if we went to court, the parents and the press would be there. Could he afford the bad publicity? He dropped the issue and I dropped our Small Claims complaint.

He probably still thinks he got the raw deal and I must share the blame for the fiasco. The children received an education in business (and ethics?) that went beyond learning how to set up a business. I told them that in my enthusiasm to make money, I had not done my homework in assessing the risks. Yet, failing can be a better lesson than a too easy success. We took our eighty dollars and went back to what we were good at -- candy, popcorn, and snow cones. In June we took our three hundred plus dollars profit and spent a day at Magic Mountain.

The next ten years my classes made even more money. We paid for all the children, plus gas and free tickets for the parents who drove. With class permission I also spent money on games and parties.

We think we're teaching children the value of money and it's relationship to their lives through math computation and play money. Meaningless.
According to hundreds of parents, my classroom businesses taught children the work ethic, value of money, and how banks, stores, and other aspects of the real world operate. As they faced real life challenges they learned to respect business and business people.