Do you need an MBA if you’re an entrepreneur? Here are the pros and cons
Do you need an MBA if you’re an entrepreneur? Or is it an expensive luxury you can easily do without? Here are the pros and cons to help you decide.
One of the biggest questions that some new entrepreneurs grapple with is whether they should dedicate their time and money towards getting an MBA (a Master of Business Administration degree) before starting their own business.
Higher education can be invaluable, especially if you lack business-specific knowledge. On the other hand, there is no education quite like on-the-job experience, which also comes with a much cheaper price tag.
You’ll find no shortage of people on both sides of the debate who will tell you that you definitely need, or definitely don’t need, another degree to succeed. But ultimately, only you can decide what makes sense for you and your prospective business.
That being said, it’s worth considering the pros and cons of getting an MBA. You may find that for your situation, the MBA will help make your entrepreneurial venture a success; or, conversely, that it slows you down – or worse, limits your vision.
The pros of getting an MBA for entrepreneurs
Going to business school is expensive and, as with all graduate school programmes, you shouldn’t do so unless you have a vision for the future that only an MBA can help achieve. But if you are considering studying for an MBA, here are some of the benefits.
You will be surrounded by like-minded people
The motivation and, yes, peer pressure that comes from attending business school can push you to be even more creative, focused, and successful than you would be otherwise.
Your fellow students will broaden your horizons, give you feedback and criticism (whether you like it or not), and can even serve as guinea pigs for your burgeoning ideas. They might also end up being co-founders or investors.
You can build an unrivaled network
One of the biggest benefits of business school is the network of contacts you create on the way. This includes your fellow students, your professors and everyone in their respective networks who will potentially be available to you, during school and in the future.
Many top schools also have resources for their students, such as successful entrepreneurs and innovators on call who can talk you through early concepts and dilemmas.
A network is important for entrepreneurs not just for the emotional or intellectual support. But it will also give you a lead on finding investors who will be critical for supplying early-stage funding for your small business.
You will learn valuable strategy, finance, and marketing skills
When you start a business without a business background, you’re forced to learn many of the skills that a good business owner needs on the fly – or hire people who can perform important tasks like bookkeeping or marketing for you.
If you have no idea what customer acquisition cost is, or what the benefits of incorporating are for your bottom line, you can, of course, learn that online on your own. But to get a clearer understanding of how all this information is actually used in practice, little beats an in-person education.
You will also learn soft skills of the future
As you’d expect, you’ll learn about business in business school. But you’ll also learn important ‘soft skills’ which are increasingly becoming the most critical skills to have in an automated and AI-centric future.
Communication, critical thinking, empathy, writing – these are all skills that will serve you well as an entrepreneur but also potentially a worker or manager for another organisation down the line.
The cons of getting an MBA for entrepreneurs
Almost all graduate programs will have their detractors, and business school is no exception. There are some real issues with the concept, however, especially for those who plan to use this experience to start a business afterward.
You will be surrounded by like-minded people
This is both a benefit and a drawback. Billionaire entrepreneur and venture capitalist Peter Thiel is famous for his dismissal of MBA programs, saying that Harvard Business School is “a cohort of people who are very extroverted but have no opinions of their own, no convictions. And you put them in a hothouse for two years where they talk to other extroverted people who have no idea what to do.”
Some of your classmates will be driven people with a clear vision, and others will be attending the program because they have money and nothing else to do. You will have to separate the people who can actually motivate and inspire you from those who cannot.
It’s relatively expensive
This may be the biggest drawback of all. Because, unless you are independently wealthy or otherwise unconcerned with cost, business school will put a major dent in your finances.
For a top school, you can expect to shell out well over $100,000 in tuition, boarding, and books for a two-year MBA program, not to mention cover lost wages while you’re in school.
Considering that you’re not required to get an MBA to start a business, this price tag seems unnecessarily high.
You won’t learn all the entrepreneurial skills you need
In many ways, entrepreneurship is not about balancing budgets or handling logistics, but creative problem solving, coming up with unique insights, and knowing when to defer.
These are skills you are either born with or develop in the course of your professional life. While business school might present you with opportunities to improve those skills, those opportunities can be found without the price tag or commitment.
You don’t need to pad your resume when starting your own venture
An MBA looks great on a resume. But who do you need to impress when you’re an entrepreneur and you want to start your own business?
While your background may get you meetings with high-level investors, it won’t make you more likely to obtain a small business startup loan, help you find the best location, or get you a better deal on shipping inventory.
Weigh up the pros and cons before investing in an MBA
An MBA is an investment in your future, but it’s not guaranteed to get the results that many programs promise. That doesn’t mean it’s not right for you – but it does mean you need to weigh these pros and cons, along with the particulars of your situation, before you make such a big decision.