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Where Can I Get Start Up Money for a Business

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					Colorado Agriscience Curriculum

Section:               Intro to Agribusiness


Unit:                  Entrepreneurship


Lesson Title:          Acquiring Start Up Money

                        AGB11/12.05 - The student will gain skills in
Colorado Ag             agricultural business operations through practical
Education               experience.
Standards and           Develop an entrepreneurship program.
Competencies
                       English Standard 1: Students read and understand a variety of materials.
Colorado Model
Content                English Standard 4: Students apply thinking skills to their reading, writing,
                       speaking, listening, and viewing
Standard(s):
                       English Standard 5: Students read to locate, select, and make use of relevant
                       information from a variety of media, reference, and technological sources.

Student Learning       Upon completion of this lesson, the student will be able to:
Objectives:               1. Students will understand seed money and venture capital.
                          2. Students will learn sources of financial support
                          3. Students will identify specific sources of start-up money in Colorado for
                              those in agriculture.

Time:                  50 Minutes

                       http://sbinfocanada.about.com/od/financing/a/startupmoney.htm
Resource(s):           http://venture-capital-guide.com/venture_capital.aspx
                       http://www.premieraca.com/documents/Ybs.pdf

                       Italicized words are instructions to the teacher. Normal style text is
Instructions, Tools,   suggested script.
Equipment, and         Note-taking materials for each student
                       Poster or drawing paper and markers, one set per student
Supplies:
                       Projector and Whiteboard
                       One copy, per student, assessment
                       One copy, per student, A Study of an Agricultural Lending Agency
                       Project slides 1-3, with the most time being spent on slide 2. Start by asking
Interest Approach:     students if they know who Milton Hershey is. Then ask them what they think this
                       story is about. Give them three minutes to read it.

                       Today we have a special guest. Mr. Milton Hershey You may not know him, but
                       he is responsible for something that we all probably enjoy. How many of you know
                       who he is? What is he known for? Why do you think that we would choose to
                       discuss him today? I’m going to give you a brief biography about Milton. You have
                       three minutes to read it and then we will discuss it. You may begin.

                                Born in September 1857, in the heart of Pennsylvania Dutch country,
                                                             Unit 9, Lesson 1: Acquiring Start Up Money 1
               Milton Hershey began life thinking about candy. His first job was an apprenticeship
               to the local printer who shortly dismissed him. His mother suggested that candy
               was the trade for Milton, and sent him to learn about the confectionery business.
               Later, Milton moved to Philadelphia where he founded his first candy shop.
               Yet with all his hard work the business failed.
                         Milton moved to Denver. He found work with a candy manufacturer. He
               learned about fine quality caramels made with fresh milk. Fresh milk, Milton
               learned, allowed the candies to stay sweet and fresh.
                         After borrowing money from his mother’s family, Milton moved on to New
               York City to open a new candy shop. Again the business failed. This time his
               creditors also lost money. Milton vowed
               he would pay his remaining debt.
                         One more time Milton opened a confectionery business. This time he
               made fine caramels. By focusing on a specialty item, Milton’s business quickly
               grew. He paid back his creditors, and later sold the business for one million dollars.
                         Milton Hershey still dreamed of making chocolate. In 1894, he started the
               Hershey Chocolate Company in Lancaster, Pennsylvania, as a subsidiary of the
               Lancaster Caramel Company. Later, he set up business in the small town later
               known as Hershey, Pennsylvania. He built a large factory and housing for his
               workers close to dairy farms. His greatest pride was Hershey Industrial School for
               orphan boys.
                         During the Great Depression he added buildings to his town at a time
               when money was scarce. No man went without wages. When World War II
               erupted, Hershey developed a chocolate bar for soldiers to carry as emergency
               food. The U.S. government honored Hershey for his contribution.
                         Milton Hershey died in 1945 at the age of 88. The town of Hershey
               continues not only as a world-class manufacturing town, but also as a tourist
               attraction. The pride of Milton Hershey also lives on as the Milton Hershey School
               educates thousands of children.

               Let students read the article. Once they are done, question students about why
               they think his first attempts failed and why he was able to become successful.

               How did Hershey find the money to start his business? Who believed in him?
               How did he prove good on his loans? Do you have an idea for a great product or
               service, but no money to begin on your endeavor?
               Students will understand seed money and venture capital.
Objective 1:   After a business person has designed their business and created their business
               plan, finding a source for funding is usually the next step. This can be tricky
               because mom and dad can only be hit up for loans so many times before they
               dread seeing you! As I project these notes, please capture them in your notebook.

               Project slides 4

               What is Seed Money (start-up money)?

                   •    Seed money is typically used to pay for such preliminary operations as
                        market research and product development.

                   •    Investors are often the business founders themselves, using savings,
                        mortgage money, or funds borrowed from family and friends. They may
                        also be outside angel investors, venture capitalists or accredited investors
                        who are acquainted in some way with the founders.

                   •    Seed capital is not necessarily a large amount of money. Many people
                        start up new business ventures with $10,000 or less.

                   Project Slide 5


                                                       Unit 9, Lesson 1: Acquiring Start Up Money 2
               What is Venture Capital?

                   •    Seed money can be distinguished from venture capital in that venture
                        capital investment tends to involve significantly more money, an arm's
                        length transaction, and much greater complexity in the contracts and
                        corporate structure that accompany the investment.

               Students will learn sources of financial support
Objective 2:
               During this section, students are going to develop a list of potential places where
               they can attain start-up money. Though a traditional loan through a lending
               agency is still the most common method, ask students to think outside the box to
               develop a more accurate list. Give each student a pencil and paper/poster. You
               will use the hieroglyphics e-moment to have students “illustrate” different sources
               of finances.

               We have established that we don’t have the money to start a business and that we
               will need to get some. Where do we start? Well, today we’re going to discover a
               few places where you and I could walk in to try to get money. The first place we
               can get money is the bank, so everyone draw a picture of your bank on your
               paper. Now that you have the idea, draw pictures on you paper to illustrate other
               places to obtain money. (Your own pockets, Line of Credit, A start up business
               loan from a business-related or government sponsored organization, family and
               bank loans).

               Allow students to share their pictures, explaining their sources for funding. Project
               slide 6.

               Great job on your pictures. You mentioned many sources of funding, but as I
               project these notes on the board, capture them in your notebooks.
               Project slide 6.
               Sources of Start-up Money
                   1. Your own pockets

                   2. Family and Friends

                   3. A line of credit through a local bank/banker.

                   4. A start-up business loan from a bank.

                   5. A start up business loan from a business-related or government
                      sponsored organization.

                   ___________________, what product would you like to market? Where
                   are you going to get the start-up money? Which option makes the most
                   sense to you?

               Students will identify specific sources of start-up money in Colorado for
Objective 3:   those in production agriculture.

               Let’s say that __________, sitting here in class; wants to start his/her own cow/calf
               operation. He/She has experience with cattle at home, but he/she is ready to
               strike out on their own. We are going to spend a few minutes discovering options
               to find venture capital to start a new operation. Specifically, we are going to look at
               the options available from Premier Farm Credit.

               Hand out “A Study of an Agricultural Lending Agency.” Allow students 10
               minutes to read the text and answer the questions. This activity should make
               getting a production loan realistic to them as they will have an instant contact

                                                        Unit 9, Lesson 1: Acquiring Start Up Money 3
                      in the agriculture lending world.

                      As I hand out the worksheet, begin reading the text and answering the questions at
                      the bottom. We will go over them in 10 minutes. Remember that we are looking at
                      this company in-depth in order to help you find a contact in the agriculture lending
                      world.

                      Name:
                      Date:

                                        A Study of an Agricultural Lending Agency
                      Taken from: http://www.premieraca.com/documents/Ybs.pdf

                               Premier Farm Credit is committed to providing constructive credit to
                      young, beginning and small farmers. Premier Farm Credit has developed
                      lending programs that will enhance the ability of someone getting started to
                      obtain financing capital necessary to engage in today’s agriculture. If you are
                      under 35 years old and have been farming or ranching less than 10 years you
                      may qualify for one of Premier Farm Credit Young and Beginning Farmer
                      lending programs. The Association will work with and assist qualifying
                      applicants in all of the state and federal programs such as FSA (Farm Service
                      Agency) loan guarantees, FSA real estate 60/30/10 or 50/50 programs, FSA
                      Interest Assistance, Colorado Rural Rehab, Colorado Agriculture
                      Development Authority, and Colorado Housing and Financing Programs. In
                      addition the Association has a special stocker cattle program, breeding cattle
                      program and crop farming program tailored for applicants that are young or
                      beginning and need start-up capital. If you are interested in learning more on
                      how Premier Farm Credit can help you get started in production agriculture,
                      contact (800) 585-2338.


                          1.   What is the name of this business?
                                  Premier Farm Credit

                          2.   What is the age limit to getting help?
                                  35 years old

                          3.   Who is eligible (two groups of people)?
                                   Farmers and ranchers

                          4.   What does FSA stand for?
                                   Farm Service Agency

                          5.   What two types of cattle producers can be helped by this company?
                                Stocker (feeders) and breeding cattle

Review/Summary:               Use the Go-Get-It E-Moment to enforce the concepts of obtaining
                               start-up money. During this exercise, students will have three minutes
                               to find anything in the room that they can relate to start-up money,
                               and may include a loan application, a credit card, or even a fellow
                               class-member.


Application--
Extended                      Bring in an entrepreneur from the community to discuss ways of obtaining
                               start-up money. Use a successful business that students or their families
Classroom Activity:
                               would commonly utilize.



                                                             Unit 9, Lesson 1: Acquiring Start Up Money 4
Application--FFA          Encourage students to participate in the Marketing Plan CDE,
Activity:                  whereby they can create their own product and create a business
                           plan, complete with start-up money projections.


Application--SAE          Have students fill out a GATES Loan application to expand their SAE.
Activity:
                          Encourage students to fill out the Entrepreneurship Award program, thus
                           making them eligible for $100, which is eligible to each chapter.

                       Using the whiteboard in the classroom, have students list all the possible
Evaluation:            sources of start-up money. They can use words or pictures.
                       1. Your own pockets
Evaluation Answer
Key:                   2. Family and Friends

                       3. A line of credit through a local bank/banker.

                       4. A start-up business loan from a bank.

                    A start up business loan from a business-related or government sponsored
                    organization




                                                          Unit 9, Lesson 1: Acquiring Start Up Money 5
Name:
Date:

                A Study of an Agricultural Lending Agency
Taken from: http://www.premieraca.com/documents/Ybs.pdf

       Premier Farm Credit is committed to providing constructive credit to
young, beginning and small farmers. Premier Farm Credit has developed
lending programs that will enhance the ability of someone getting started to
obtain financing capital necessary to engage in today’s agriculture. If you
are under 35 years old and have been farming or ranching less than 10
years you may qualify for one of Premier Farm Credit Young and Beginning
Farmer lending programs. The Association will work with and assist
qualifying applicants in all of the state and federal programs such as FSA
(Farm Service Agency) loan guarantees, FSA real estate 60/30/10 or 50/50
programs, FSA Interest Assistance, Colorado Rural Rehab, Colorado
Agriculture Development Authority, and Colorado Housing and Financing
Programs. In addition the Association has a special stocker cattle program,
breeding cattle program and crop farming program tailored for applicants
that are young or beginning and need start-up capital. If you are interested
in learning more on how Premier Farm Credit can help you get started in
production agriculture, contact (800) 585-2338.


  5. What is the name of this business?


  6. What is the age limit to getting help?


  7. Who is eligible (two groups of people)?


  8. What does FSA stand for?


  9. What two types of cattle producers can be helped by this company?




                                              Unit 9, Lesson 1: Acquiring Start Up Money 6
Name:
Date:

 Start-Up Money Exploration




                              Unit 9, Lesson 1: Acquiring Start Up Money 7
ing Start Up Money 7

				
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