Don't Skip the MBA. It Makes You a Better Entrepreneur
While an MBA is a big investment of time and money, studying for one also builds the skills you need to make it as an entrepreneur.
Business writers such as Martin Hoffmann and Stephen Greer have questioned the value of a Master of Business Administration (MBA) for aspiring entrepreneurs. The suggestion is that an MBA may not give you a large enough payoff in startup world. Entrepreneurs can effectively replace formal management training with rapid on-the-job-learning.
I believe that timing really determines whether you should invest in an MBA program. If you don't have a genius, winning idea just yet, studying for an MBA degree could be exactly what you need to create a platform for success.
When and When Not to Start an MBA
Doing an MBA comes with pressure to make the investment worthwhile. The same goes for a PhD in Economics. That was the qualification I earned before starting my company.
Unless you have an employer who'll pay for you or a large scholarship, tuition fees are going to set you back financially. In the United States, program fees push well into 6-figures at the top business schools.
There is also the opportunity cost of your time. And this is where timing matters for entrepreneurs.
For a typical MBA candidate who is just looking to climb the corporate ladder, time out for study may not be much of a problem. An MBA can be a welcome career refresher. The qualification also offers an advantage in potentially many future job applications. A solid return on investment can be expected.
For an aspiring entrepreneur, on the other hand, time out to study could be critical time lost. You might otherwise be developing your business venture, and gaining knowledge and insight into your chosen industry. Speed to market can also be make or break in terms of having a viable investment.
If you already have a promising startup, or a brilliant idea for one, it's probably not the moment to start a degree. The opportunity cost is too great.
But it's a different matter if you lack an obvious path to success. Then, an MBA offers high returns while imposing only limited costs on your time. You can use your studies to build the skills you need for an entrepreneurial career.
You Can Learn "Entrepreneurial" Skills by Doing an MBA
Advocates for skipping the MBA have questioned the real-world relevance of MBA programs for people who want to start a business. For example, Jeff Rose thinks that starting a blog may be a better option because of the learning value of blogging.
This begs the question: are the skills you learn by doing an MBA relevant for entrepreneurship? The answer is absolutely yes. The main reason is that just about every skill you gain by doing an MBA could be useful to you as an entrepreneur.
If you think being a salaried manager within a corporation is tough, try starting a company from scratch and growing it into a lasting profit-making business. You really need a wider set of skills to be an entrepreneur compared to being a regular business manager.
This is something I found out for myself after launching my own company. The work I used to do managing teams and providing high-level industry advice for the government now seems like a walk in the park.
Entrepreneurs need to wear a lot of hats. Typically, you are managing a small, lean, evolving enterprise. Hiring a specialist for each task is something you may dream about but probably must hold off doing until revenue grows.
The sorts of careers favored by MBA holders are also roles that entrepreneurs take on as they develop a business. Careers for MBA graduates include: account management, business development, finance, marketing, operations, and sales management. Any entrepreneur worth his or salt needs to be across all these fields.
By doing an MBA, you can have a decent skill set in place before you launch your startup. This could turn out to be much less painful than launching prematurely and learning the hard way: through trial and error. On-the-job training as an entrepreneur only works if your personal abilities, and the strength of your ideas, are enough to overcome the inevitable mistakes.
Study for an MBA Flexibly Online
With online study options expanding, you also have the opportunity to get the entrepreneurial skills you need in a targeted, efficient way. Gone are the days when you have to spend hours attending lectures of questionable relevance.
Online MBA programs are designed to be flexible, with minimal disruption to your lifestyle. You can choose the ideal program from any location, from Australia to the United Kingdom, and study only where and when it suits you.
Distance learning means you can select a program to develop targeted skills. Business schools offer subject specializations and individual unit choices. The vast menu available through online study allows, for example, you to build financial and information technology skills rather than, say, corporate leadership.
Some online MBAs also have an entrepreneurship focus, such as by offering lessons on investment pitching and startup financing. They can also incorporate into the curriculum industry projects, such as IMD international consulting projects, where you link up with innovative companies.
Refine Your Ideas While Studying
A potentially great advantage of doing an MBA as an aspiring entrepreneur is that you could come away with a solid, workable idea for your startup -- one that applies the skills you've acquired.
Among the top MBA programs for entrepreneurship, consistently around 20 percent of students launch a startup soon after graduating. No doubt, some students decide against the entrepreneurial path through their studies -- after spending time contemplating the challenges of growing a new business.
You can also bet that the graduates who start a company begin from a strong position compared to before their MBA. They will have developed some of the essential business management skills you need to actually run a company.
MBA holders also gain an edge from having spent so much time thinking about business development. After around two years of MBA studies, your ideas for a new business should be well considered. Cameron McLain describes MBA studies as, "an opportunity to start a company in an almost risk-free environment ... a chance to test a burning idea and learn first-hand whether entrepreneurship is a fit for you."
Perhaps the key question in deciding between creating a business and doing an MBA is this: do I want to jump into the world of entrepreneurship now, with all the attendant risks, or should I invest a chunk of time to better prepare for success?