Earning money 9.03

Earning money 9.03

I will be able to

define tax

define profit, saving, renting, income, entrepreneur

identify skills required for different jobs

describe how business owners earn a profit

identify types of properties that can be rented

Early to rise

Jason’s neighbor, Joanne, is an entrepreneur. She started a business to make money. Let’s find out how she started her bakery.

Early to rise

Last year, Joanne had an idea to open a bakery in her community.

She had to do some research about her community. Was there a need for a bakery? Could her community support her bakery?

Early to rise

She found that her community was interested in buying baked goods. It could support a new bakery. She started saving her money.

Joanne had to do some planning, like finding a good location for her business and ordering equipment. She had to look into laws about selling food.

Early to rise

Once the bakery was ready, Joanne placed ads in the local papers and online to announce the grand opening.

Opening a business comes with risks

Opening a business is a lot of work, and there are many risks to consider when starting.

Investment

Entrepreneurs invest their personal time and money. Because they must work long hours, they have less time to spend with friends and family. They must be careful with their personal budget.

Sales

Entrepreneurs depend on sales for money that will pay the bills.

Interest

Will enough people in the community want to spend their money at the business? If there is not enough interest from the community, it will be difficult to succeed.

Employees

A business needs to make enough money to hire employees who can help run the business

Making a profit

For Joanne to have a successful business, she needs to make a profit. This means that after all her expenses are paid, she must be left with some money.

Gene lives in Joanne and Jason’s neighborhood, too. Let’s see how he makes a profit with his lemonade stand.

https://lti.flvsgl.com/flvs-cat-content/mc9qgsipft1ba7h7nku857g7gt/flvs-cat-session/educator_socstudg4nat_v17_gs/module09/lesson03/09_03_03.htm#

Employees

Now Joanne is ready to be an employer, someone who pays other people to do work. She decides it is time to hire someone to work in the storefront of the bakery while she does the baking. She needs this person because the bakery now has many regular customers. She needs to keep up with demand to satisfy her customers and continue making a profit.

Employees

Joanne places an ad for the job online and in the papers. She interviews many people. Chad is a young man looking for work and has applied for the job. Everyone has their own reasons for working.

Employees

As mentioned, Chad is renting an apartment. This means he pays money to the owner of the building to be able to live in that space. Some people rent townhouses, condos, or houses to live in. Joanne rents the space she uses for her bakery. People can also rent cars, trucks, or tools like those used for construction and gardening.

Employees

The owners of these buildings, vehicles, and tools make money from renting them out. It is another kind of business. For example, an entrepreneur might start a business renting bicycles in a tourist area. Once they have bought the bicycles, the entrepreneur can rent them out to different people for a few hours at a time. The money they make is their profit.  

You're hired

To help the bakery continue to succeed, Joanne decides to hire Chad. He has experience working in a store and in the food industry. He is also friendly, which is important for someone working in the bakery storefront and dealing with customers. Joanne wants her customers to feel comfortable and to come back and buy more.

You're hired

It is important that her goods and customer service are acceptable, as this will help Joanne make a profit.

Joanne must decide how to pay Chad so that he can make an income. This is money that he will earn from working. There are a few ways she can do this.

Hourly wage

When someone is paid an hourly wage, they are paid a certain amount for each hour they work. For example, someone could be paid $10 per hour. If they work five hours in a day, they will be paid $50.

Salary

Someone who draws a salary receives a certain amount for the whole year. They will be paid the same amount each week or two. The total of all these payments will be their salary for the year. For example, someone who receives a salary of $26,000 for the year will be paid $500 each week. 

Commission

Commission is money someone earns when they sell goods or services. It is often a percentage of the price of the product. For example, a realtor, or someone who sells houses, will receive a commission from the sale of a house. 

Joanne chooses to pay Chad an hourly wage because it works better for her business. She will pay him by the hour and decide the number of hours he works per week. This allows her to be more flexible with the hours and money she needs to pay.

Pay day

Chad is happy working at the bakery. He has been suggesting some ideas to add to Joanne’s business, like selling cheese croissants and flavored coffee. He is happy when it is pay day. Joanne pays him by depositing money into his bank account every week. What does Chad do with his money?

Pay day

Part of Chad’s money is paid to the government in the form of taxes.

Taxes

Why does Chad pay taxes? There are different kinds of taxes, including municipal, state, property, and sales taxes. Governments use this money to help pay for roads, schools, hospitals, and other services in the community.

Pay day

Chad pays his apartment rent and all his bills (water, electricity, phone, and internet).

Pay day

Chad needs to eat! He uses some of his money to buy groceries, and sometimes he goes to restaurants.

Pay day

Chad is saving to take a photography course. He makes sure he does not spend all his money at once. He saves some so he will be able to afford the photography course soon.

Pay day

Chad likes hanging out with his friends. They go to concerts and movies, listen to music together, and go out for coffee. He uses some of his money for these fun things.

Summary

Money is a large part of running a business. Entrepreneurs need money to start businesses. They are taking many risks when they do this, including depending on sales to make money. When entrepreneurs sell more than they spend, they make a profit. Then, they can hire employees to work for them. People can spend money on things they need and want and save some to use later. 

Multiple Choice

What is an entrepreneur?

• Manager in a factory

• Person who starts a business

• Person who owns a business

• Child with a bicycle

Multiple Choice

What does saving mean in this context?

• putting money aside to use later

• getting an animals before it is in danger

• rescuing

• putting something in danger

Multiple Choice

What is an employee

• a place that employs people

• someone who is doing all the work themselves

• making enough money fo

• a person who works for someone else or a company to make money

Multiple Choice

Joanne has decided to pay Chad an hourly wage. What does this mean?

• Paid for each good sold

• Paid at the end of the month

• Paid for each hour of work

• Paid for the whole year

Multiple Choice

Which of these is something Chad spends his money on?

• train ride

• car

• rent

• safety glasses

Multiple Choice

What is an entrepreneur?

• a grocer

• a retail worker

• a person who starts a business

• a student

Multiple Choice

What do you call a person who pays other people to do work for them?

• Employer

• Architect

• Worker

• Actor

Multiple Choice

What is one thing a person must consider before starting a business?

• Number of children allowed

• Number of pets allowed

• Color of the sky

• Interest in the community