ENTREPRENEURS: THE SWEET SUCCESS
OF MILTON HERSHEY
The following link is to the student version of this lesson for students to follow
online:http://econedlink.org/1069
Looking for a lesson that ties Common Core Standards in Reading Informational Text
with Economics? This lesson spotlights the life of Milton S. Hershey and allows students
to learn about the risks and rewards of entrepreneurship through a biographical sketch
of one who experienced many bitter disappointments and sweet successes.
KEY CONCEPTS
Benefit, Business, Capital, Costs, Entrepreneur, Entrepreneurship, Profit,Risk
STUDENTS WILL

Describe an entrepreneur.

Identify benefits, costs, risks and rewards involved with entrepreneurship.

Reflect on the life of Milton S. Hershey and use this reflection to identify the successes, failures, risks and
rewards of entrepreneurship.
INTRODUCTION
Hershey's Kiss, a Reese's Peanut Butter
Cup, or a Hershey's Milk Chocolate Bar? While enjoying it, did you stop to
think about the successes and failures of the clever entrepreneur who made it
possible to buy those yummy treats? This lesson will introduce you to the
economics of entrepreneurship through the story of Milton S. Hershey.
Can you remember to the last time you ate a
RESOURCES

Discover Hershey: Milton S.Hershey
www.thehersheycompany.com/about-hershey/our-story/milton.aspx
(Optional: The story will be provided in the "Process" section of the lesson.)

A&E Biography of Hershey: Runtime 45 min
www.biography.com/people/milton-hershey-9337133

NOTE: This website may be difficult for students to understand. Please use it as a resource. Post on
Entrepreneurship from the Library of Economics and Liberty.
www.econlib.org/library/Enc/Entrepreneurship.html
PROCESS
Tell students that the goal of this "Spotlighting Entrepreneurs"
lesson is to help them learn the economics of being an
entrepreneur by introducing them to a famous American.
Ask students to describe an entrepreneur. (Allow time for
students to share thoughts.) Explain an entrepreneur is a person
who accepts the risk of business failure and success. This
person discovers new ways to combine resources to provide
goods and services that others value in profitable ways.
Ask students if they have ever thought of starting their own
business like a lemonade stand. (Allow students an opportunity to share.)
Continue the discussion by asking why someone would want to start his or her
own business. (Encourage students to share. Responses may include they: see
opportunities to help others, like being their own boss, want to earn profits, like
being creative, want to introduce new goods in the marketplace, and want to
find ways to reduce costs.) Ask students if they think it is easy or hard to
start a business and explain why. (Allow students to share but many will
probably feel it is hard or challenging. Entrepreneurs do not know if (1) they
will be successful or fail, (2) they do not know if consumers will value their
product, (3) they do not know if others will help them finance their business to
produce/provide goods and services, pay expenses, etc.)
Tell students that today they will learn the economics of entrepreneurship by
researching the background of a gentleman who overcame many obstacles and
persevered, "kept on keeping on," becoming a successful entrepreneur.
Milton Hershey was born September 13, 1857, in Lancaster, Pennsylvania. As
a child, his family moved a lot as his father started several businesses across the
United States. In eight years, he attended seven different schools.
In the 1800's, young boys were often trained to develop skills for a particular
job or trade. The training was called an apprenticeship. An apprenticeship
allowed boys to learn by watching and practicing a craft. Eventually they
would grow into a job they would have throughout their lifetime.
In 1871, Hershey was apprenticed to a local printer who published a GermanEnglish newspaper. The printing business was not a good match for Hershey's
given his likes, skills, and passions.
Hershey's mother helped him find another apprenticeship. It was with a local
confectioner or candy maker, named Joseph Royer. Hershey was 14 years old
at the time. Soon, it became obvious that he had a natural talent for candy
making and he liked what he was learning. Over the next four years, Milton
learned the art and science of creating tasty treats.
When Milton Hershey turned 18, he took a risk and started his first candy
business in Philadelphia. As an entrepreneur, there are many costs and risks
involved in starting a business. Entrepreneurs work long hours to cover payroll,
keep abreast of consumers' changing preferences, and need much
financial funding from others. After six years, his first business failed.
Did Milton Hershey give up? No! He had a passion for candy making! So he
moved to Denver, Colorado, and took a job with a Denver candy maker to learn
more about the candy making business. This time, in addition to developing his
skills and receiving great training, he developed a new skill making caramels
with fresh milk. After a few months of working in Colorado, he traveled
to New York City.
New York City was the largest candy market in the world at this time. People
from all over the world traveled to and from New York. Hershey decided to
start another business given this large market. Even though he tried hard and
invested many hours, his business failed.
In 1886, he returned to Lancaster, Pennsylvania. He was 28 years old,
penniless, but still the entrepreneurial spirit lingered.
Milton Hershey took another risk and started a company to manufacture
caramels using the methods he had learned in Denver. He needed more tools
and equipment. Economists call this capital things used to produce something
else. He looked for financing. It was difficult given his past failures.
Hershey began to look for backers who valued his business enough to cover his
costs, including the value of his labor and skills. He found one. A British
importer of US Candy offered to market Milton's candy outside the United
States. Milton received a large order to export. With this order, a local bank
found Hershey credit worthy and he had the financing he needed to expand his
operation.The risks Hershey and his lending institution had taken finally paid
off.
In four years, Milton Hershey and the Lancaster Caramel Company became one
of the leading manufacturers of caramels in the United States. The company
employed over 1,400 workers. Finally, Milton was able to see a profit in his
business. Profit is determined after taking total sales and subtracting all
expenses. So, for Milton, that meant he calculated the sales of caramels (prices
times quantity) and subtracted all the expenses necessary to run a business
(ingredients, tools, equipment, wages for workers, salary for Hershey and other
supervisors, rental for the factory, taxes, etc.). The money remaining after
expenses was the profit.
Milton Hershey and his cousin, Frank Snavely, attended the World's
Columbian Exposition of 1893 in Chicago, an event that changed Milton
Hershey's life. A German company was showing how chocolate was produced,
and Milton was convinced that this was the future of candy making. Hershey
took another risk as he purchased an entire assembly line of chocolate making
equipment that was on display, had it crated up and shipped back to Lancaster.
Milton, as an entrepreneur, was a change agent in the candy business. When he
returned home, he installed the machinery in part of his caramel factory and
began making chocolate at a lower cost, making it affordable to more people.
Milton named his company Hershey Chocolate Company. At first,
he produced sweet chocolate and cocoa for the flavoring and coating on his
caramels. Then, Milton began mass producing his candy products and selling
them to other candy makers for them to profit.
Milton's company was experiencing great success; however he didn't stop and
rest. He considered his production alternatives and determined that his
resources could best be used in producing chocolates. So, he sold his caramel
company for $1,000,000 and shifted his production focus from caramel to
chocolate.
Hershey continued working long hours to develop the best formula for
producing milk chocolate. It was a challenge that would take years of trial and
error to perfect. For Milton, money was not his only incentive. He wanted the
satisfaction of creating the best quality product for the marketplace at the most
affordable price to his customers.
In 1900, Milton Hershey became the first American to discover a formula for
manufacturing milk chocolate, introducing the molded milk chocolate bar. It
was affordable to the masses, tasted good, and remained fresh for a long time.
In the past, chocolate had been a luxury, something only very wealthy people
could afford.
Hershey knew that many other industries had utilized mass production to
increase the production process, and he decided to apply it to the chocolate
business. In 1907, the company added Hershey's Kisses to its product line and
followed up a year later with Hershey’s milk chocolate bar with almonds.
Hershey packaged his candy to sell in grocery stores, newsstands and vending
machines.
In the meantime, Hershey had searched for a suitable location to expand his
chocolate company. He decided on Derry Township, Pennsylvania as the
perfect location since it was convenient to the port cities that could provide
cocoa beans and sugar and was surrounded by dairy farms and a hardworking
labor force. Later, the town would be named Hershey in honor of the town's
founder.
Hoping to provide for the quality workers he wished to employ and their well
being, Milton built the Cocoa House, in the town center which included a store,
bank, post office, boarding rooms and a lunchroom. He also provided for a
laundry, a blacksmith shop, a printing plant, a café, a department store and a
barber shop. Companies were started to supply water, electric power, sewage
and telephone service. In 1909, Hershey even launched a weekly newspaper,
the Hershey Press.
Now, let's review what we can learn about entrepreneurs from Milton Hershey:
Earlier we learned that an entrepreneur is "one who draws upon his or her skills
and initiative to launch a new business venture with the aim of making a profit.
Often a risk-taker, this person is inclined to see opportunity when others do
not."
Questions
1. What special skills and initiative did Milton Hershey have?
2. What risks did Hershey encounter as an entrepreneur?
3. Entrepreneurs aim at making a profit. Earlier in the lesson, we learned that profit
is the money left over after expenses have been subtracted from sales. Did
Milton always earn a profit? How do you know?
4. How was Milton Hershey successful?
5. I f Milton Hershey had not taken the risks to become an entrepreneur, how
might your life be different?