So, how do we start this Thinking Like A Manager (or business owner) ?

Another great question!

The assignments and exercises are designed to make you THINK on the levels of managers and supervisors. You must approach all assignments and exercises from a manager's perspective.

Ok, let me put this another way: Imagine you just got promoted to DEPARTMENT MANAGER, starting annual salary $85,000. You have a staff of 10 to 25 employees and subordinates. Your boss says to you, " I know you don't have all the knowledge and skills right now today to perform professionally as a department manager. But if you go to West Los Angeles College and learn all you can in Professor Smith's Management course, you will know what to do as a Manager and I'll increase your salary to $120,000 as soon as you complete the course."

Now, let's make some business models

Follow directions and do all that I require you to do because there is a purpose, a reason, a method, and an objective, that I need you to experience.

For our first THINKING exercise, you will be making financial work sheets for each of the following businesses. (you won't need your book) And don't get flustered about the term Financial Work Sheet. Just take this assignment step by step and you will be fine)

Allow at least 90 minutes for this exercise

1) A helicopter tour company

2) A chimney cleaning service

3) A mobile dog grooming service

STEP 1. The BEST tool of a skillful manager is his or her IMAGINATION. So imagine that you are going to start and operate each of the business models listed above. You goal is to make money.

A) You will need to label three separate sheets of paper, one for EACH company. On the first sheet for each company, you will LIST every physical or material thing you can imagine and visualize that you will need to purchase to conduct and deliver its product or service to a satisfied customer. (for example: desks, vehicles, telephones, computers, copiers, advertising, stationary, insurances, coffee maker, people, uniforms, a building, etc.)

B) Next, assign a price for what you think each item on your list might cost. DO NO RESEARCH OF THE BUSINESSES OR COSTS OF THE ITEMS ON YOUR LIST! Just draw on your own brain, imagination and guess-timate what you think you might have to pay for each item. If you are not sure or dont know the cost, make it up! (Just trust me on this!). AFTER you complete listing your "guess-timates" of what you think an item may cost, THEN you can google to find out what actual real world cost may be for each of your items, compared to what you thought you knew about such costs.

C) Next, TOTAL the costs of the items (add them up). That total represents the minimum investment you would need to start the business.

STEP 2. On a second sheet for EACH business, list as many of the probable expenses the company will have to pay on a monthly basis, to keep the business going (i.e. utilities, phone, insurance, wages, lease, supplies, advertising, etc.,etc, etc). Make this list of monthly expenses as comprehensive as you can. Again, DO NO RESEARCH! If you don't know an amount, guess!

STEP 3. On a third sheet pf paper, for each business, write a short description of how each business works.(This is called a Narrative of the business. For example: "Our helicopter will take you on an hour long tour of _______ where you will see XYZ and provide a souvenir picture.") Include in the narrative, a price or charge for each product or service: How much would a customer pay for a helicopter tour? How much would a chimney cleaning be? How much would a dog grooming be?

STEP 4. On a fourth sheet of paper for each company, make a SALES PROJECTION for one month, for each company. How many helicopter tours, chimneys, or groomings will you SELL per month?

Multiply the prices times the number of sales per month, to get total gross monthly revenue or income, for each business. (Price X Number of Sales = Gross Revenue/Sales)

STEP 5. Next, you will make an Income Statement for each company using your data from your work sheets. Click on the following link and print the sample format for the income statement. This is just a sample format. You will need to add your line item expenses based on your monthly expenses you identified for each of business model.

On completion of the Income Statements, answer the following questions:

1) Did each of the businesses you structured make a profit? or not?

2) Compare the Income Statements. What items did the Income Statements have in common?

3) What did you learn, if anything, from listing the physical/material things a business may need to start and operate?