Six fledgling companies made up of students at the University of Missouri-Rolla recently pitched business ideas to representatives from Phelps County Bank, but only three of the student companies came away with start-up loans.
Welcome to the real world. Sort of.
The students are enrolled in a senior-level capstone course that is required for graduation by UMR’s School of Management and Information Systems. At the start of the current semester, the students formed the six companies. They decided on business ideas as groups, and then worked on loan proposals for the bank.
The three surviving companies will sell board games, make photograph-based videos and market discount cards. Any profits they earn will be donated to student-selected charities at the end of the semester.
Students from the companies that didn’t get loans will now go to work for the funded firms or go to work as interns elsewhere on campus.
This is the third year the capstone course has been offered. In previous years, all of the companies were given loans.
“Most people learn more by failures than successes,” says Dr. Lance Gentry, an assistant professor of business administration who is teaching the class. “In previous semesters all of our firms have repaid the loans and had money left over for charities. But it’s important to note that only two of those companies would have turned a profit if they counted labor costs. Our new format allows students to experience both success and failure.”
The largest loan extended to one of the student companies this semester, by far, went to the playfully named Bored Busters. The group has received $8,000 to purchase Monopoly-like games that will feature local businesses as board destinations. Bored Busters will generate revenue from advertisers and game sales.
Another company, the Blue Rail Co., borrowed $1,000 and will offer a discount card, which will also feature area businesses.
The remaining company, Miner Creations, only required a $500 start-up loan. The company will create videos from customer photos. For instance, during their loan presentation, the company showed a video that was put together using photos of a newborn baby.
“We had a product to show off to the bank representatives, which really helped our presentation,” says Lindsey Woessner, a member of Miner Creations.
Sporting activities, people and pets, vacations, graduations and reunions are some of the other events that Miner Creations can document for customers, according to Woessner, a junior in business and management systems from St. James, Mo.
Customers will provide background music for Miner Creations videos. Four-minute videos will be sold for $50 on a compact disc that can be played in most DVD players. The company is also thinking about offering a photo restoration service, says Woessner.
This year, each capstone company has its own bank account. Signatures from two company members will be required to access an account.
Each of the three companies must make monthly loan payments, according to Gentry, who says the students will have to work hard to make the firms successful by the end of the semester.
Gentry says UMR is also starting a Business 200 class at mid-semester. Underclassmen may sign up for the class and go to work for one of the senior-led firms. Students enrolled in the Business 200 class will receive one UMR credit hour for working five hours per week for one of the capstone companies.
At the end of the semester, a banquet will be scheduled to announce the results from the capstone course. At that time, the students will donate any company profits to charity.