Students put aside books for 'real world' of bills, inventory and customer relations

Dean Davis

Published January 1, 1992  |  January 1992 issue

Dean Froslie, the chief financial officer of Tiger Mart, a grocery store in Rothsay, Minn., has learned the difference between working for a teacher and working for a business.

"In school, if you screw up you may get a lower grade. Now, if I do a lousy job of bookkeeping we could lose the business. And that would impact people in the community," he says.

Froslie is a high school senior, and Rothsay is a town of 500 in northwest Minnesota with a retail sector consisting of a truck stop/restaurant/motel, a bank branch, the Tiger Mart grocery store and a hardware store. While that may sound typical of a small Midwestern town, Rothsay is anything but typical: Its grocery store is owned by a corporation of high school students and the hardware store is owned by the local school district and serves as a teaching aid for students.

At a time when some schools are attempting to bring the "real world" to their classrooms through partnerships with businesses, Rothsay students have jumped head first into the business world in a way that local officials say not only enhances their curriculum, but also benefits the local economy.

Two birds with one stone

About three years ago, at a time when the Rothsay school was in need of space for its vo-tech classes, a member of the Rothsay school board was walking past the recently closed hardware store in town. That's when the idea came: why not buy the store? In addition to vo-tech classes in the lumberyard, the store could be reopened and serve as a business laboratory for the students.

The idea got a receptive hearing from school officials, and when Gary Zirbes, Rothsay secondary principal, announced in spring 1988 that the school was going to buy the store, he got some skeptical looks. "Some of the staff thought the elevator wasn't going to the top floor," he says with a laugh.

Zirbes says the school district bought the hardware store "for a song" ($19,000), received a $30,000 grant for inventory from the West Central Minnesota Initiative Fund, and has since built the inventory to nearly $45,000. The Small Business Administration provided initial analysis of the plan, along with market analysis from a special economic outreach program sponsored by a foundation of Abbott Northwestern Hospital in the Twin Cities, and Zirbes says the store is now running profitably. For example, the store earned a net profit of $561.99 in September 1991; all profits are turned back into the store, because the school district is not allowed to earn a profit from the store's operation.

Zirbes says there are four factors that allow the school to successfully operate an otherwise failed business: It receives tax breaks as a school district, the community supports the business because of its relationship to the school and students, the willingness of workers to earn less than the going rate (along with students who work to earn school credit), and the fact that there is no competing business. Indeed, the school district would not be allowed to open the business if it were competing with another privately owned store.

No book like the real thing

Business and community economics aside, the primary benefit of the hardware store, called the Store Front, is the educational opportunities for students, according to Randy Balken, Rothsay's business teacher. "There's no book in the world that can teach the human relations skills that a student can learn here," Balken says.

Zirbes agrees: "Public relations is not just a term you memorize for a test," he says about the students at the Store Front. "It's something you do when a customer walks in the store."

Balken, who holds three hours of classes each weekday morning at the Store Front (two hours for 14 Rothsay students and one hour for five students from nearby Barnesville), says he acts primarily as a supervisor and lets the students handle the day-to-day responsibilities of operating a business. "When you give them a real-life situation—including phone calls, bills, managing inventory and even simply making change—it adds meaning to the students," he says.

Interest in the Store Front business courses is so great that participation is limited through career counseling, Balken says, with the classes limited to seven students per hour.

Can't get milk from a paper cow

One day an area farmer asked Tom Fosse what was going on with the local grocery store—were kids really running it? Fosse, a business/education liaison who spearheaded the Tiger Mart venture for the students, explained that it was just as much an educational venture as a business one, that the students would probably learn more about business if they actually owned and operated one than if they just studied from a book. That makes sense, replied the farmer, "If I was going to teach a kid to milk a cow, I wouldn't take him to a classroom."

The students' venture began as an offshoot of a local revitalization effort. Like many other communities and regions in the rural Midwest that have fallen on hard times in recent years, Rothsay decided to do something about it: They formed a strategic planning team. While some in the community were skeptical of such an endeavor, the planning team created a mission that, among other things, called on Rothsay residents to be "visionaries of educational entrepreneurship." One of their strategies: "We will cultivate visionary approaches to all areas of education."

Fosse was one of those residents who was initially unexcited about the planning team, but after further investigation he realized that the team's recommendations were "not a survival manual, but a blueprint on how to excel."

So Fosse hatched the idea to have the local high school students form an independent corporation, wholly separated from the school or any other institution. And the corporation, known as Tiger Inc. (named after the school's mascot and an acronym for Teenage Innovative Group Entrepreneurs of Rothsay) is truly student-owned. Member students must invest $5, which is returned to them on their 19th birthday, when they must mandatorily resign from the corporation. Officers are elected by members of the corporation and all proposals are put to a member vote.

Fosse serves only as an adviser, and he is reluctant to even be interviewed about the endeavor because he wants the students to speak for themselves.

Formed for fun, now running a store

"The corporation was formed with the idea to promote fun things to do," says senior Heather Balken, president of Tiger Inc. Its first action was to hold a dance last spring where members had to secure a facility, arrange for music and collect admissions. What made the dance unusual from typical school dances—and somewhat controversial—is that it was not a school dance: It was not held at the school, chaperoned by the school and did not raise funds for school groups. The dance was run by the students for the benefit of Tiger Inc., but not for profit. Tiger Inc. is a non-profit entity; however, members have control over how profits are used and the students are considering the formation of scholarship funds.

Two months after Tiger Inc. was formed, the local grocery store closed and Tiger Inc. suddenly found itself debating the merits of buying and reopening the store. Soon the students were consulting with their lawyer and negotiating a $15,000 loan from the Rothsay Focus Fund, which is administered by the West Central Minnesota Initiative Fund (part of the McKnight Foundation). With the money in tow, and two months of free electricity from Otter Tail Power Co., two months of free city services from Rothsay, the guidance of a retired butcher, a donated computer from the local bank and the support and enthusiasm of vendors, the students opened for business in July. As Fosse quips, quoting an African proverb: "It takes a whole village to teach a child."

During the first week, one customer entered the store, quickly surveyed the meager inventory of the 3,000 square-foot building, and exited laughing. Four months later the inventory had expanded and Mark Paler, the store's manager and a high school senior, was planning Tiger Mart's Thanksgiving marketing. His plan: Offer deep discounts on turkey but require a minimum purchase that would make up the difference. Ultimately, Froslie hopes to attract regular customers beyond the elderly residents of Rothsay who like the convenience of a locally operated grocery store. He wants those customers who routinely travel to Fergus Falls and other neighboring communities to do their shopping in Rothsay.

Through October, Tiger Mart was averaging sales of $300,000 on an annual basis. The goal is to reach about $500,000, which would clear about $20,000 for a scholarship fund and keep the store well-stocked. "All our bills are paid and we're paying off our loan," says Emilie Amundson, vice president of Tiger Inc., "It's going really well." Tiger Inc. pays rent for the building and the store's equipment.

Again, for the same reasons the hardware Store Front has succeeded, so has the Tiger Mart: students' willingness and enthusiasm, support from the community, grant money and inexpensive labor from students (important advice comes from the store's cashier, Debbie Jorgenson, a long-time employee the students retained after they acquired the business).

And also, like the Store Front, the educational benefits are obvious, the students say. "We're proving we're learning a lot more than we did from books," according to Heather Balken. Her colleague, Tiger Inc. board member Jessica Ward agrees: "It makes such a big difference when you're making the decisions."

Some students also earn class credit for their work at the store. For example, Froslie's bookkeeping responsibilities at Tiger Mart equal his Accounting II requirement. And another student is receiving vocational credits for his instruction as a butcher.

Tradition vs. change

Robert Black, superintendent of the Fergus Falls School District who last July became Rothsay's superintendent on a shared basis, waxes philosophical when he talks about Rothsay's adventures in business and education. "I've always said that a school should own a manufacturing company so they can see what the world's about," he says.

Black says he's impressed with how the Rothsay staff has come to accept the changes at Rothsay, and he believes Rothsay's efforts are reproducible in other communities. "The only thing to hold us back is our own creativity. We have gone so long with classrooms that are five wide and six deep ... we get our teaching models confused sometimes."

Craig Molstad, program specialist for the West Central Minnesota Initiative Fund, who worked with Tiger Inc. on its $15,000 loan, says he would encourage other communities to investigate similar opportunities. He did add, however, that Tiger Mart is a model project, and the West Central Minnesota Initiative Fund—like many others—is waiting to see how the store manages in the long run.