Post University associate faculty member Karen Hinds came up with an innovative way to teach her class all the ins and outs of owning, marketing, and selling their own business products.
Hinds knows all about owning her own business. She is the owner of Workplace Success Group LLC, which is an employee development firm that works to instill professionalism from top to bottom in an organization.
Hinds had the students close their textbook and turn on the television in an effort to show students entrepreneurial best practices.
For one month she turned her management class, MGT 221 -Entrepreneurship, Innovation and Creativity, into the popular ABC reality television show, “Shark Tank”
On the show, inventors pitch their products to four billionaire “sharks,” as they seek to get them to invest financially in their idea and business for a percentage of the profits.
Hinds divided the classroom into two groups and gave them a month to develop, market, and sell their product. The goal was to have students learn exactly how difficult it is to be an entrepreneur.
The project didn’t disappoint as students said they had no idea it would be so challenging to turn a profit.
One group’s invention was to have a jar and everything needed inside to make chocolate chip cookies minus the eggs. Students sold the product for $10.
The second group was tasked with selling smartphone/iPhone retractable battery chargers for $7.
Investors a.k.a. “sharks” agreed to pay $50 to fund the experiment along with a 10 percent cut of the profit.
At the end of the month, the lessons learned were plentiful.
Lessons Learned from the cookie team:
1. Test the product: The cookie team tested the mix with their friends and family prior to launch and realized they didn’t have that right amount of butter in their mix. Fortunately, this important first step allowed them to remedy the problem before any jars were sold.
2. Examine the pricing: It originally cost them $3.97 for the jar and mix, which ensured a $6 profit per order. Although this sounded good, they decided to explore ways to further increase their margin.
3. Finding cost savings: The cookie team found a cheaper jar increasing profits to $7.40 per unit. Saving a $1.40 per glass jar may not sound like a lot, but when purchasing 1,000 jars means an increase in profit margin by $1,400, it’s a big deal.
4. The bottom line: The cookie group sold $300 worth of their product and ended with a net profit of $69.40 after paying the sharks the original investment of $50 and a 10 percent of the profits.
Lessons learned from the chargers team:
1. Plan for the unknown: The chargers were only available in Europe, which eliminated two weeks of sales opportunity as they waited for them to arrive in the U.S. Plans to sell the devices at sporting events was nixed because the university did not want it to appear that it endorsed the sale of the items. It’s always necessary to have a contingency plan.
2. Manage inventory closely: The team ordered 25 chargers and ended up only selling 11, which left them with 14 unsold devices and a much smaller profit margin.
3. Keep an eye on the bottom line: Since they didn’t manage their inventory as well as they could have, the chargers team ended up with just a $9 profit.
At the conclusion of the exercise, the teams suggested that next year the teams should include people with different majors in order to have a broader base of skills contributing to the project.
Students learned although revenue is important, profit margin is the key to a successful venture. It’s possible to sell a lot of a product, but if revenue barely covers costs, the business is destined to fail.
Student George Fernandes, whose team sold the cookies, said taking part in the reality television project made learning fun. He said he had no idea how many responsibilities a small business owner had.
Angel Esposito, whose team sold the chargers, said his team was hurt by not being able to sell the chargers at sporting events and that really put a dent into their profit margin. He said this project taught him that you must always be ready for anything unexpected that comes up.
Angel added he also learned that as a small business owner you have to do everything on your own, and be skilled at numerous tasks including marketing and selling the products.
Professor Hinds said she plans to offer a “Shark Tank” course next semester because it clearly was an educational success.
“This takes students from theory to practice in a very meaningful and memorable way,” Hinds said. “My goal was to give students an opportunity to feel what it’s like to be a business owner and all of the challenges that go with that responsibility.”
What do you think is the most important lesson the students learned from “Shark Tank”?