Hey! I'm Mathew Georghiou, and the next couple of minutes may forever change how you approach business education and entrepreneurship training. I'm going to demonstrate the amazing power of a business simulation game for training, and I'm going to do it using a simple Lemonade Stand simulation game that you see right here. That's right, this is the simplest of all business games but you're not going to believe the amazing power that this has to teach people about business. It's an amazing learning experience, just give me a couple of minutes and you're going to be amazed at what you discover.
Alright, so here's what we're going to do. We're running out lemonade stand, here's the location of our lemonade stand and we've got to do a couple of things. We have to buy some inventory so let's go ahead and go to the grocery store, we're going to buy some lemons, sugar, some cups, and some water and we can see the cost of those items. Let's go ahead and buy them, so now we've got some inventory. Now we're going to set our recipe based on what we think the ingredients are going to cost. I can do sweet and lemony, which is more expensive to make but customers are going to like it better, or sour and watery which is pretty cheap to make but my customers may not be as happy. Let's start somewhere in the middle here just to see where that gets us, and now we're going to set the price for our lemonade. So let's see, it's going to be a sunny day today, I think I'm going to maybe put the price of a little bit. Let's go to $2.20! Alright so I've priced my lemonade, I've got inventory, I've set my recipe, let's go ahead and open for business!
Alright, here we go we're opening for business and customers are coming. I've actually gotta mix my lemonade. We've got a lot of customers showing up here so I better mix quickly so I don't lose any customers. I can see little icons appearing above my lemonade stand which gives me some sense of customer satisfaction, whether happy or sad or if I'm going to miss some customers because I'm slow mixing my lemonade. So here we go, we're doing alright, we can hear some dings in the background and that happens every time we make a sale! Now look what happened, I've run out of inventory. So I didn't plan properly, and we've got customers coming and I cannot serve them. That's not good, but that's part of the business and that's going to be part of our learning experience. So let's keep this running, so here we go we finished the day. It took about a minute to get through that, we can see we served 13 customers and lost 14 because we ran out of inventory. We sold 13 cups, we can see our salves revenue, our cost of goods, our gross profit and our gross profit margin. We can even see some of our excess inventory even though we ran out of some items, we also had some spoil as well.
So what just happened in that 60 seconds in this very simple business simulation game, what did we just experience? Think about it for a moment. We had to price so we understand pricing, and notice we can choose any price we want and we could see how sales are affected by a higher or lower price. We had to understand consumer profiles because we could actually set up in different parts of the neighborhood where people have different consumer psychographics and demographics. We had to consider product quality through our recipe, so we had to consider high quality = happier customers but it cost more to make. We had to manage our inventory and notice I didn't manage my inventory well because I didn't order enough inventory, now of course I can't order too much inventory because then I'll risk having items reduce in quality or spoil so inventory management is an issue. We had carrying costs potentially so if we have excess inventory again, not only can something spoil or expire but we may have inventory carrying costs. We had supplier management because we have a grocery store but maybe we have multiple grocery stores that we can buy from at different prices and different quality levels. We have to consider revenue and understand terms like revenue. You saw at the end of the day we got a little window which showed us our revenue, our cost of goods, our gross profit, our net profit, our profit margin, and our expenses. And think about all those accounting concepts. If I kept playing I'd actually be able to start multiple lemonade stands and have to hire and manage employees, so right now we've got HR management.
All this just happened in literally 60 seconds. Right? 60 seconds, now compare this experience to anything else regarding learning about business. Reading a book, watching a video, sitting through a lecture, going on a field trip, or having a presentation from your favorite entrepreneur. Nothing! Nothing could ever compare to the power of this learning experience! Literally in one minute what could you get through a book, or a lecture, or a video? In one minute? Now extrapolate this out to a few hours, even a few and now you're getting even deeper. Compare that to any other learning experience. Let me explain this: this was very important for you to see. Business concepts are easy to understand. Think for a moment, business is not complex. It's not math or physics, right? I'm actually an engineer/math guy/physics guy and I can tell you those concepts are very complex but I'm also an entrepreneur that started multiple businesses and here is what is difficult about business: even though the concepts are easy, the hard part is that there is no right answers. There are no clear paths. This is what's different about math or physics and concepts like that. They're difficult to understand but once you understand them, you've the the formulas down. You know the right answers, right? And you can always get the right answer. Business has no right answers. Business has no clear paths. That's why it becomes so complex. You have so many competing priorities, and so many competing information. You just never know the right answer, even when you're successful! You actually don't even know if that's as much of a success as you could have found. Maybe had you made some tweaks to your decisions, you could have been even more successful. And, of course, we know most businesses fail, so that's the other end of that.
I'll leave you with this: this is why you cannot learn about business until you run a business. Let me say that again: you cannot truly learn business until you actually run a business and that's what a game like this does and that's why I've actually dedicated my career to designing games exactly like this one. I work with business educators and entrepreneurship trainers in schools, universities, corporations and Fortune 500 companies around the world to apply concepts like this. To enhance learning of business and leadership training, and this is a simple Lemonade Stand game. I work with people where we provide super complex experiences like global head-to-head multiplayer experiences for students of all ages to learn. Thanks for watching. Again, I'm Mathew Georghiou. If I can help you in some way, please hit me up on LinkedIn or visit GoVenture.net Thanks!