Junior Achievement Junior Achievement 5.45.4

““The Cost of Doing Business”The Cost of Doing Business”

Let’s review our vocabulary:Let’s review our vocabulary:

► Job Responsibilities:Job Responsibilities:►The specific tasks and duties The specific tasks and duties

associated with a particular job.associated with a particular job.

“ “ Success depends upon Success depends upon previous preparation, previous preparation, and without such and without such preparation there is sure preparation there is sure to be failure.”to be failure.”

- Confucious- Confucious

Do you agree with Do you agree with this statement?this statement?

Why or why not?Why or why not?

How does being prepared for How does being prepared for something help you to do your something help you to do your

very best?very best?

Today you will learn about how Today you will learn about how important it is to be prepared important it is to be prepared for all the costs of operating for all the costs of operating

your business.your business.

So what are the costs of doing So what are the costs of doing business? business? (transparency 5-4a)(transparency 5-4a)

Now that you’ve had a Now that you’ve had a chance to guess, let’s chance to guess, let’s look at some of the look at some of the

costs of doing business :costs of doing business :

Advertising:Advertising:

► The promotion of a The promotion of a product or serviceproduct or service

►Newspaper ads, Newspaper ads, television ads, television ads, radio ads, flyers, radio ads, flyers, billboardsbillboards

Health Care:Health Care:

► The prevention, The prevention, treatment, and treatment, and management of management of illness and the illness and the preservation of preservation of mental and physical mental and physical well being.well being.

►Having your Having your company pay for company pay for part of your part of your doctor’s bills.doctor’s bills.

Philanthropy:Philanthropy:

► The effort to The effort to increase the well-increase the well-being of being of humankind, as by humankind, as by charitable aid or charitable aid or donations.donations.

►Giving money to Giving money to others who need others who need it.it.

Professional Services;Professional Services;

► Services offered by Services offered by licensed licensed professionals to professionals to support business support business operations.operations.

►Getting extra help Getting extra help from someone from someone who is an expert.who is an expert.

Property Tax:Property Tax:

► Tax assessed against Tax assessed against a property by local a property by local governments.governments.

►Money you pay Money you pay your city to take your city to take care things around care things around your building, like your building, like roads and roads and underground pipes underground pipes and lines.and lines.

Recycling:Recycling:

► The act of processing The act of processing used or abandoned used or abandoned materials for use in materials for use in creating new creating new products.products.

►You pay people to You pay people to reuse the things reuse the things your business your business doesn’t want any doesn’t want any more.more.

Rent:Rent:

► Payment for the use Payment for the use of property.of property.

►You pay the You pay the owner of your owner of your building so you building so you can use it for can use it for your business.your business.

Salary:Salary:

► A fixed payment A fixed payment regularly paid for regularly paid for worker services.worker services.

►Money you pay to Money you pay to the people who the people who work at your work at your business. This is business. This is their paycheck.their paycheck.

Supplies:Supplies:

►Materials stored and Materials stored and used when needed.used when needed.

►The things you buy The things you buy to do your job, like to do your job, like tools, and the tools, and the things you buy to things you buy to make and sell a make and sell a product, like beads product, like beads and string to make and string to make necklaces.necklaces.

Utilities:Utilities:

► Businesses that Businesses that provide a public provide a public service, such as service, such as electricity or phone electricity or phone services.services.

►Money you have Money you have to pay to use the to pay to use the phones and phones and power.power.

All these things are All these things are called your “Business called your “Business

Costs”. You need to list Costs”. You need to list them and add them up them and add them up to find out how much to find out how much

money you are going to money you are going to need to run your need to run your

business.business.

Let’s see how much it Let’s see how much it would cost City Hall to would cost City Hall to

run their business.run their business.

Turn to page 77 in your Turn to page 77 in your workbook.workbook.

Now it’s your turn to Now it’s your turn to calculate the costs for calculate the costs for

your business.your business.

Please fill out the Business Please fill out the Business Costs Sheet in your Business Costs Sheet in your Business

Workbook.Workbook.

As you are filling out As you are filling out your Business Costs, your Business Costs, you will need each you will need each

employee’s personal employee’s personal bank account number.bank account number.

Get this from your teacher and Get this from your teacher and record it in the Business Costs record it in the Business Costs

Worksheet.Worksheet.

Now that you know how much Now that you know how much money you need, how are you money you need, how are you

going to get it?going to get it?

Have you ever borrowed money Have you ever borrowed money from a friend or family member?from a friend or family member?

LoanLoan

► In business, In business, borrowing money is borrowing money is called getting a loan.called getting a loan.

► Your business gets Your business gets this loan from a bank this loan from a bank or credit union.or credit union.

► You have to promise You have to promise to pay this money to pay this money back.back.

Your business will apply for and Your business will apply for and receive a loan from one of our receive a loan from one of our banks at the beginning of JA banks at the beginning of JA

BizTown day.BizTown day.

Before the end of the day, you Before the end of the day, you will need to repay your loan, will need to repay your loan,

plus interest, to the bank.plus interest, to the bank.

►Remember what interest is?Remember what interest is?► Interest is the extra percentage that Interest is the extra percentage that

the bank charges to let you use their the bank charges to let you use their money.money.

Knowing how much you need to Knowing how much you need to start your business is preparing start your business is preparing

to succeed. Congratulations! to succeed. Congratulations! You’re on the road to success!You’re on the road to success!

Please complete the Please complete the Word Map on pages 78, Word Map on pages 78,

79, and 80 in your 79, and 80 in your workbook.workbook.