Better Business: The Benefits of Entrepreneurship, Cooperatives & More
Target Grade Level / Age Range:
- Poster paper
Essential Files (maps, charts, pictures, or documents)
- Entrepreneurship: the activity of setting up a business or businesses, taking on financial risks in the hope of profit
- Entrepreneur: a person who starts a business, often under considerable uncertainty and financial risk.
- Cooperative: a farm, business, or other organization which is owned and run jointly by its members, who share the profits or benefits
- Market: a place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services
- Stock: A partial share in a company.
- Dividends or patronage dividends: Payments made to stockholders by the company that issued the stock.
Background – Agricultural Connections
Entrepreneurship is the endeavor of creating, owning, and commercializing an idea, technology, product, or service, as well as assuming the risks and rewards associated with that enterprise. Entrepreneurs see a need and create a business to fill that need and earn a profit.
- Sole Proprietorship: A sole proprietorship occurs when someone does business activities but doesn’t register as another kind of business. There is no separate business entity, meaning there is no distinction between the business owner’s personal and professional assets and liabilities. Sole proprietorships are simple, easy to start, and one of the most common types of business ownership. They are a good option for someone starting a low-risk business on a trial basis. Also, no additional taxes to pay. However, because there is no formal separation, the business owner will become personally liable for any obligation the business might have.
- Partnership: A partnership very similar to a sole proprietorship, two or more people own the business and have financial risk. It is the simplest type of business ownership when two or more people are involved.
- Limited Liability Company (LLC): A limited liability company (LLC) separates the owner’s personal and professional assets. Meaning if your business gets hit with a lawsuit or goes bankrupt, your house, car, and personal piggy bank are safe. Like sole proprietorships and partnerships, LLCs do not pay additional federal income taxes or those associated with being a corporation. However, depending on their location, they might be subject to other state taxes. Also, LLCs fall under the category of self-employment, so those taxes fall on them as well. An LLC is a good choice for a business owner willing to take a little bit of a bigger risk or one looking to protect their personal assets.
- Corporations: A corporation is its own entity kept separate from its owners. This means they offer the most protection in terms of personal liability. Corporations have an advantage when it comes to funding: stock. A stock is a partial share in a company, so when people buy stock, they are essentially buying ownership and decision-making responsibilities. However, starting a corporation costs more than any other business structure. Not only are they legally required to do keep more records and release more reports, but they also pay income tax. In some cases, there is even double taxation - once on profits, and then again on the dividends distributed to stockholders. With so many different stakeholders contributing to the same business, corporations become solid. If someone leaves, the business remains relatively unaffected. A corporation is a good structure for a business owner looking for a little more risk, good funding options, and the prospect of eventually “going public,” which means the company will eventually sell stock to the public.
- Cooperative: A cooperative is a private business owned and operated by the same people that use its products and or services. The main purpose of a cooperative is to fulfill the needs of the people running it. The profits are distributed among cooperatives member-owners. There is typically an elected board that runs the cooperative, and members can buy shares to be a part of the decision-making processes and share in the profit. Cooperatives are common in almost all sectors of the economy, including the energy, grocery, housing, finance, and telecommunications industries. Some brands that you may be familiar with include Farmers Electric Co-op (energy), Iowa Food Co-op (grocery), Vintage Cooperatives (housing), Community Choice Credit Union (finance), and Farmers Mutual Co-op Telephone (telecommunications). Agricultural co-ops help farmer-members market and process their crops and livestock. This means that they help market or sell the grain to an end user like Quaker Oats, General Mills, or any other company that might use it for human food, livestock feed, or an industrial purpose. Co-ops also help farmers secure needed supplies and services. This might mean that they run a store that carries things like fertilizer, pesticides, seeds, or other needed supplies. Some co-ops only provide products and services to farmers like agronomy consultation, technology services, or other services that will benefit the farm. Other co-ops (like Land O’Lakes for example) process and market food brands (like butter) we find at grocery stores. Earnings of the cooperative business are returned to the farmer-members as dividend payments. The payment that each member receives is based on how much they used the co-op’s services (i.e. amount of product purchased or sold through the co-op).
Interest Approach – Engagement
- Write the words Manufacturing, Banking, Housing, Agricultural, Food, Retail, Healthcare, Recreation, and Service on the board.
- Ask the students to work in pairs and list as many businesses in their community as they can in five minutes. Tell the students to use the words on the board to help them think of different types of business.
- At the end of five minutes, count how many businesses each group has.
- Besides the words listed on the board, are there any other ways they can categorizes the businesses? Ideas may include:
- Small businesses, big businesses,
- Essential, non-essential
- Local, regional, national, international
- Single owner, partnership, multi-owner
- For profit, Non-profit
- f. Chain, stand-alone business
- Explain that business can also be categorized by their type. During the next two days, we will learn about various types of business models.
Activity 1: Entrepreneurship & Business Ownership Structures (1 class period)
- Write “Entrepreneurship” on the board. Ask the students what they think of when they hear the word “Entrepreneurship.” They may list examples in their community or characteristics of entrepreneur-led businesses (Self-started, high risk, high reward, new ideas, self-employed, small business, etc.)
- Explain that entrepreneurship is the activity of setting up a business or businesses. An entrepreneur, the person who starts a business, sees a need and takes on financial risk in the hope fulfilling that need and making a profit.
- Watch Who Even is An Entrepreneur as a class. Instruct the students to take notes while they watch, recording the benefits and drawbacks of entrepreneurship.
- After the video, discuss the benefits and drawbacks as a class. They include:
- Freedom/Flexibility – Entrepreneurs get to be their own boss, set their own hours, work style, etc.
- Defining your own destiny. Create your own company culture.
- Financial gain
- Financial Risk
- Long hours
- Use the Better Business Power Point to introduce the students to various business structures for entrepreneurs. Present the content and check for student understanding throughout. (Slides 2-9) Ask students to take notes on important elements of each business structure.
- Before the next class period, ask students to come up with an idea for a new business and complete the My Business worksheet.
Activity 2: Why Co-ops? (2nd class period)
- Recap what they learned from Activity 1 and have students share their business idea with a partner.
- Explain that today’s lesson is going to focus on one of the business types they were introduced to in the first lesson - cooperatives.
- Review what a cooperative is.
- A cooperative, co-op, is a private business owned and operated by the same people that use its products and or services.
- The main purpose is to fulfill the needs of its members.
- Profits are distributed among co-op member-owners.
- There is typically an elected board that runs the co-op.
- Watch Co-ops 101: How Cooperatives Differ to learn more about co-ops and how they differ from other forms of businesses. While students watch, ask them to take notes on the benefits of cooperatives. Discuss these benefits as a class:
- User owned & controlled – Members have a stake in the company.
- Reliable sources of products and services, often at reduced prices. This reduces the cost of doing business.
- Mitigate risk for members/producers – Example: Belonging to a dairy co-op isn’t as risky as expanding your farm business to include a cheese making or milk processing facility.
- Shared profit - Members share in the profit proportionally with how much they use the co-ops services.
- Next, divide students into groups of 2-3. Assign each group one of the cooperatives listed in the Agriculture Cooperatives List. Each group’s task is to read the company profile and create a poster to promote the business. It should include:
- Name of Cooperative
- Location or service area
- Benefits (What products or services does it does it provide its members?)
- At least three other facts about the co-op
- After the groups are finished, have each group present their poster or do gallery walk to learn about the diverse agricultural cooperatives represented and the member benefits they provide.
Did you know? (Ag facts)
- Most of America’s two million farmers are member-owners in one or more of the almost 3,000 agricultural cooperatives here.
- There are over 31.7 million small businesses in the United States.
- Twenty percent of small businesses fail during their first year.
- Assign students to interview an entrepreneur in their community to learn how and why they started their business, what needs it fills, how the business is structured, etc.
- Invite members of a farmer-owned co-op or a consumer-owned co-op (food co-op, housing co-op, credit union, or electric co-op) to come visit your school. Ask the co-op representative questions about why they started their co-op. What problems did it address? What kinds of goals are the members accomplishing together that they couldn’t if they worked alone?
Suggested Companion Resources
- Agriculture 101: Cooperatives (reading) https://iowaagliteracy.wordpress.com/2021/04/21/agriculture-101-cooperatives/
- Cooperatives 101 (reading): https://www.rd.usda.gov/sites/default/files/publications/CIR55.pdf
- Co-ops 101: How Cooperatives Differ (video) https://www.youtube.com/watch?v=4ih2PidDN8E
- Co-ops 101: Economic Benefits (video) https://www.youtube.com/watch?v=M6HEU-01Diw
- The Seven Most Popular Types of Businesses https://www.volusion.com/blog/business-types/
- 5 types of Business Ownership https://learn.g2.com/types-of-business-ownership
- Agriculture 101: Cooperatives https://iowaagliteracy.wordpress.com/2021/04/21/agriculture-101-cooperatives/
- Cooperatives 101 https://www.rd.usda.gov/sites/default/files/publications/CIR55.pdf
- Iowa Institute of Cooperatives https://www.iowainstitute.coop/resources/co-op-101-videos/
- National Council of Farmer Cooperatives http://ncfc.org/about-ncfc/
- 24 Mind-Bending Entrepreneurship Stats and Facts for 2021 https://capitalcounselor.com/entrepreneurship-stats/
- This lesson was developed with support from AgVA Foundation as well as the National Agriculture in the Classroom Organization and the CHS Foundation Educating Next Generation Agricultural Leaders Grant.
Agriculture Literacy Outcomes
- Describe essential agricultural careers related to production, consumption, and regulation
- Identify farm ownership in relation to processor ownership (e.g., cooperatives, corporations, vertical integration)
Iowa Core Standards
- Social Studies
- SS-Econ.9-12.21. Explain why advancements in technology and investments in capital goods and human capital increase economic growth and standards of living.
- SS-FL.9-12.14. Evaluate entrepreneurship, career choices, and the effect on the standard of living.
- SS-WH.9-12.16. Examine the ways in which trade, commerce, and industrialization affected societies.