Foundations 1 Instructor Notes, Week 4Updated: 4/9/2014

Please note: This is a critical lesson. Please read notes at bottom of page: It’s important that you follow the methodology and that everyone in the room understands sales units at the end of class.

Time / Min / Content / Outcome / Methodology
5 / Announcements
15 / Warm Up/Bravo / Write on board: 1. I made a mistake, 2. I don’t know, 3. I need help.
Please get in partners, someone you have not yet worked with. Choose one of these phrases, that, if you were to say more often, would make a positive difference in your life.
Discuss as group that entrepreneurs can’t be everything, that it’s a tendency of entrepreneurs to want to do everything themselves, which is not always practical.
20 / Review Quiz / Cemented knowledge on overhead costs, target market, FGs. / Per usual, in TG, discuss your answers. This is the first time we will not discuss as whole group.
Ask:
Are there any questions you want to discuss as a group?
5 / Review Spending Tracker / Ask:
What’s changed for you since using this?
What benefits have you seen since becoming aware of the budget?
10 / Review competition / Students should understand that researching the competition is critical / Please get out completed sheet. Get a partner you have not yet worked with, and tell your partner 3 things you learned or that you will do differently as a result of this research.
Things to emphasize:
  • Competition doesn’t have to be competitive—can be networking, especially at this level
  • Competition research is free
  • Competition research is necessary industry research
Discuss as group.
5 / Review Buckets / Clear definition between start up costs (a one time, finite amount), and Overhead (expenses that must be paid regardless of sales) / We have discussed two cost buckets so far; a one time cost called Start Up, and a recurring cost called Overhead. I want everyone to be very clear on the difference of these costs.
  • Draw on board 2 buckets, labeled Start Up and OH.
  • Discuss the difference. (a one time expense, and an ongoing expense not related to sales)
  • Discuss that there may be some expenses (like rent) on both charts, but Start Up costs are finite, and paid before starting business.

10 / Review Overhead costs / Understand that they must pay expenses regardless of sales / But what if you don’t know enough about your business to fill out the overhead cost sheet?
  • Ask who had trouble with this. Discuss.
  • Ask them to pull out OH completed sheet.
  • Tell them that this is why businesses went under during recession.
  • Some students will say they don’t know enough to fill out.
  • Answer that they need to remember SWAG
  • Answer that getting research, educating guessing, is important.
  • Existing businesses should be filling out expansion plans, or wish lists for their business.
  • Remember they might need a reality list and a wish list
Students should fill out more than one sheet if they are unclear if they’ll be buying an already set up restaurant or starting from scratch, for example.
Many students who are deciding on type of business will be reluctant to do this exercise. Tell them to do 2 different scenarios and costs.
15 / The Triangle
See below for drawing / Limited positioning, not being all things to all customers
Understand the importance of focusing
Understanding what you’re NOT / Draw a triangle on the board. (see below)
Discuss:
  • Businesses can only compete on 1 or 2, but not 3. (price, customer service/time, quality
  • Give examples from Nordstroms, Walmart, Apple.
  • Small businesses probably cannot compete on price, since they’ll need volume to match it.
  • This is what you’re competing on—not what you offer. For example you may not compete on quality, but you still offer better than average quality.
  • A common issue with new business owners is wanting to offer everything to everybody.
For success, focus is needed.
5 / The Triangle, cont / Cement the knowledge / 5 min Ask them to share with partner:
  • 1-2 things they will be competing on
  • What they may have to give up

10 / Break
50 / What is a unit? (They may say - but I have many! Ask them to choose the one that is, on average, the most sold unit.) Explain the use and value of averages as a way to start generating numbers. The averages can be updated and changed as more information comes in. / Begin to forecast sales
Units are gateway to the entire business model
See note below / Write on board:
An average expenditure of an average customer on an average day
Show a product unit first:
What do people usually buy at Starbucks? What is an average expenditure for an average customer on an average day?
Probably one latte, one pastry, estimate the price for these.
Do the same for Voo Doo Doughnuts.
Discuss the importance of the unit, which is for sales forecasting and profit determination, among other things.
Discuss the differences between product and service businesses. Make sure everyone knows which they are (a massage therapist that also sells lotion is a service business).
Now discuss service businesses:
You sell your time. Ask a massage therapist or other service business what is their unit, which will be an hour or hour and half of service.
Service businesses will have trouble with this one. Get them to figure out the # of hours of the average transaction.
  • Instructors mingle, giving assistance.
  • Try to keep the discussion only on content, away from costs (although most people will have a price in mind, which is fine).

10 / Units / Cement it: Make sure everyone understands their own unit / Go around the room, and ask everyone to describe the contents of their unit. There’s only 10 min allotted for this, so move quickly.
15 / Focus groups / Understand value of feedback / Showcase a business that has sent their focus group request form in. The first one needs to be a good example. Make sure:
The business owner has just one concept
The business owner does not defend or explain—just listens
NOTE: If no one has signed up for a FG, use the time to have them do a table group UVP.
5 / Homework preview / See Assignment, below
180 / Total

The Triangle

AssignmentResource

  1. Complete Conducting a Focus Group`Print (from Week 3)
  2. Complete Monthly Spending TrackingPrint (from Week 3)
  3. Choose 4 items from Ideas for Marketing Your BusinessPrint
  4. Read What is a Typical Unit of SalePrint
  5. Complete Target Market WorksheetPrint
  6. Complete Competition ComparisonPrint (from Week 3)
  7. Complete Week 4 ReviewPrint

MCNW Instructor Notes, Week 4Page 1 of 5