Lesson plan · Understanding Businesses · Lesson 10
Business Risk
Competition, debt, concentration, and other things that go wrong.
- 45 minutes
- Grades 9–12
- Intermediate
- Activity: small groups
Objectives
Students will be able to:
- Identify common risks a business faces
- Explain how debt (leverage) magnifies results
- Recognize concentration risk
Materials
- Slide deck and a projector
- Worksheet (one per student)
- Exit ticket slips (bottom of the worksheet)
Standards
- National Standards for Personal Financial Education (2021)
- Investing
- Texas TEKS §113.76 Personal Financial Literacy and Economics
- (1) The student understands the fundamental concepts of economics.
Topic-level alignment by FLC. How we map standards
Key vocabulary
- Leverage
- Using borrowed money. Debt magnifies results: profits look bigger in good times, but fixed interest payments can crush a business when sales fall.
- Concentration risk
- Depending heavily on one customer, supplier, or product. If that one relationship ends, a big part of the business goes with it.
Background reading
The official sources this lesson is based on.
- How to Read a 10-K/10-Q (opens in a new tab) · investor.gov
- What is Risk? (opens in a new tab) · investor.gov
- EDGAR Full Text Search (opens in a new tab) · sec.gov
45-minute agenda
0–5 min
Warm-up
Post: “What's the biggest thing that could go wrong for your favorite local business?”
5–17 min
Direct instruction
Present the lesson slides. Make sure students leave with these points:
- Name the risks honestly — every business has them.
- Debt magnifies good and bad results.
- Concentration = too much riding on one customer, supplier, or product.
- Read the Risk Factors in a company's 10-K.
Use the “See it” slide (Common business risks) to make the idea visual.
17–22 min
Worked example
Walk through “One customer, 60% of sales” on the slides. Pause before the result and ask students to predict it.
22–32 min
Risk Radar
Format: small groups · 10 minutes
- Case: a bakery gets 60% of its sales from one café, owes a large bank loan, and buys all its flour from a single supplier.
- Groups list every risk they can find and rate each one: likely/unlikely and minor/serious.
- Groups propose one fix for the two most serious risks.
- Share and compare risk ratings.
What to look for: Key risks: customer concentration (the café), leverage (the loan payments stay even if sales fall), and supplier concentration. Fixes: add customers, pay down debt, find a second supplier.
32–37 min
Check for understanding
Use the question slides — or run them as a Four Corners game. Questions:
- What's the biggest risk?
- Borrowing money magnifies both good and bad results for a business.
- Where do public U.S. companies describe their major risks?
37–42 min
Discussion
- Which risk would worry you most if you owned a small business? Why?
- How could a company reduce dependence on one big customer?
42–45 min
Exit ticket
Prompt: What does leverage do to a business's results?
Differentiation
Common misconception
“Debt is always bad for a business.” Used carefully it can boost returns — but it adds risk.
Support
Walk through the leverage example at 10% on the board before students try 2%.
Extension
Read the “Risk Factors” section of a real company's 10-K and summarize its top three risks in plain language.
Homework or make-up work
Students can complete the full interactive lesson — including its knowledge check — at learnwithflc.org/courses/understanding-businesses/business-risk. No account needed; progress saves on their device.