Teachers also struggle with this part of the plan. We are mostly educators by training, not financial analysts. So as an educator, I reflected on what I had done over the course of the semester and what I could improve. I realized my mistake was jumping in and trying to teach the calculations before giving my students the tools and the background they needed. I had assumed too much, and as a result, my students were confused and disengaged. Their business plans reflected that confusion.
I eventually found a better way — going farther by taking a step backward first. With that in mind, here are a few tips for helping your students through the Business Financials slides as they prepare for competitions.
- Never assume anything. Math is a language of its own, and many of our students don’t arrive fully literate in the language. Take a little time to review math basics, such as how to translate monthly expenses to yearly amounts, how to calculate percentages and how to convert from decimals to percents. I usually break down the word percent to its components to show how percent just means “Divided by 100”.
- Emphasize “why” over “how”. Students won’t care about how to calculate Return on Investment (ROI) until they understand that investors and banks use ROI to compare how profitable a business is and to decide whether to invest or lend money. When students understand how margins and financial ratios translate into whether they get that loan or not, they’re much more likely to take an interest in doing the math. From there, they learn how to maximize profit.
- Ask questions to provoke thought. Don’t just show students how to get the answers. I spend most of my time in class talking with students about their individual businesses and asking questions about how the business operates, what supplies they need, what things cost, what happens if something goes wrong, etc. If they can think through the process, they can find the answers. But first they need to understand how the business works and what drives it. I learn as much as my students this way.
- Focus on understanding the concepts behind financial ratios, not having students memorize the formulas. Knowing what your breakeven point is, for example, helps you understand day-by-day whether you’re on track to make a profit or not. If you’re keeping track and you know your break-even, you can be more nimble and make needed adjustments early. If you don’t know your numbers, you don’t know your business, and you won’t know how to adjust.
- Most importantly, make math fun. Use technology to engage students in polls and surveys. Use the results to teach math-based concepts like statistical analysis and market research. Conduct in-class surveys on things like favorite candy brands or favorite snacks. Have taste tests and let students rate snacks in order of preference. Relate the results to how marketers decide what to include in variety packs or how to merchandise their stores. Use Legos and the Product Innovation activity to teach students about Variable Costs and how to calculate Contribution Margins.
As with anything, the key is to keep it hands on. Keep students active. Keep them engaged. Point out the math all around us and let them experience it on their own. You’ll be surprised at what they learn when they understand how it affects their lives.
David Fralix is an Entrepreneurship teacher at Wando High School and a member of the YESCarolina Council of Educators. He can be reached at firstname.lastname@example.org.