The path to owning my own business started around 10 years ago. I graduated from high school and went on to college for business. I graduated, got a job as a financial analyst, and then around five years ago, completed my MBA with an emphasis in Finance.
It seemed like a logical path – graduate from high school, go to college, get a job in that field, and then get my MBA to further my career opportunities.
It was the path I fell into, and I never really gave it a second thought. For my MBA, I figured I needed it in order to be successful in the corporate finance world.
However, I’m now a full-time blogger.
One of the questions I’m often asked is if I regret going to school for so many college degrees (3). After all, it took a lot of time and led to a significant amount of debt.
I definitely did not learn a thing about blogging back in college, and an MBA isn’t 100% focused on the topic of starting your own specific business, especially a niche one. Plus, I did not get my MBA thinking that I would be starting my own business. I went for it to better my career opportunities.
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According to the U.S. Small Business Administration, there are 28.8 million small businesses in the United States, which make up 99.7% of all U.S. businesses. And, a huge number of the population are starting their own business and working for themselves.
But, does that mean they all need or have an MBA?
Remember, an MBA is not required when starting your own business. But, does that mean that those without an MBA do better or worse?
I researched to see what the value of an MBA is, and I was able to find a great chart from the U.S. Bureau of Labor Statistics about unemployment rates and earnings by educational attainment for 2016.
This data shows earnings for full-time wage and salary workers, but it doesn’t specify those who have started their own business. However, it does show that there is some value in a Master’s degree.
According to this chart, the unemployment rate is much lower for those with one or multiple college degrees. The median usual weekly earnings tends to increase as well.
However, according to a report released by the Harvard Business Review, most of the top business leaders in the world actually do NOT have MBAs. In fact, only 29 of the 100 best companies had executives with MBAs, and less than half of those received their MBA from an elite business school (think Harvard, Stanford, etc.).
Here’s a short list from Business Insider’s Top 100 Entrepreneurs Who Made Millions Without A College Degree:
- Walt Disney, founder of the Walt Disney Company, dropped out of high school at 16.
- Richard Branson, billionaire founder of Virgin Records, Virgin Atlantic Airways, Virgin Mobile, and more. He also dropped out of high school at 16.
- Rachael Ray, Food Network cooking show star, food industry entrepreneur, with no formal culinary arts training. She never attended college.
- Michael Dell, billionaire founder of Dell Computers, started his business out of his college dorm room, but he later dropped out of college.
- Larry Ellison, billionaire co-founder of Oracle software company. Ellison actually dropped out of two different colleges.
However, there are also many successful people who do have MBAs, such as Elon Musk, Michael Bloomberg, Sheryl Sandberg, and Dr. Oz.
So, should you get an MBA if you want to start your own business?
MBAs can be expensive.
An MBA can cost anywhere from $5,000 to well over $100,000 depending on what college you attend.
And, according to Poetsandquants.com, the cost of obtaining your MBA continues to rise.
New York University’s Stern School of Business costs over $200,000, Harvard Business School has a total two-year cost to $204,640, and Stanford University’s Graduate School of Business costs $210,838.
That is a TON of money in order to get your MBA.
I went to a moderately priced state university and received my MBA, and I think that it was a great value. However, if I had to pay over $200,000 to receive my MBA, I don’t know if it would be worthwhile. That’s a lot of money for not much real world experience that can be applied to a specific business idea.
And, let’s not forget about the amount of time it can take to receive your MBA.
For some students, they focus on their MBA full-time, which means that they aren’t bringing in an income, or they are bringing in significantly less than needed to sustain most living expenses. Some MBA students do work full-time, but they usually take a smaller course load.
I worked on my MBA full-time and worked full-time, which meant that I didn’t have time for pretty much anything else in life.
Plus, if you know that you want to start a business, the time it takes to get an MBA can make that goal that much farther away.
An MBA surrounds you with other determined people.
By earning your MBA, you’ll most likely be surrounded by a network full of people who are wanting to succeed in the business world.
This can help you build your future business idea, gain contacts that may help you and your business later on, and more.
I always say that networking is extremely important, and an MBA can definitely help you in that area.
An MBA won’t specifically teach you about the business you want to start.
An MBA will give you a pretty well rounded background on business in general. However, it won’t teach you everything you need to know about starting and sustaining your specific business plan.
This means that you will probably have to learn how to start your specific business elsewhere, such as researching your ideas and business plans outside of your MBA program.
For example, if you want to start a blogging business, you most likely won’t learn anything about a blogging while earning your MBA. The same goes for many other business ideas as most MBAs aren’t really focused on specific markets.
What they do offer is a good background on the actual “business” side of starting your own business, as discussed below.
You do learn about business, though.
While earning an MBA is more about business theory, it still offers you a lot of background information that can help you create your own business.
Through my MBA and the career I had as an analyst, I learned about business accounting, business law, managing a business, economics, business finances, marketing, advertising, and more. These are all things you should know about when running your own business. Sure, you can outsource a lot of these tasks, but for most start-ups, you may personally have to take on many of these tasks, especially in the beginning.
My analyst position also taught me a lot about running a profitable business, since I dealt with successful business owners every day.
There are a lot of times that my education and work experience have helped me run my own business. And, I am extremely grateful because it has helped me run my business extremely well.
According to Investopedia, around 30% of new businesses fail during the first two years of being open, 50% during the first five years, and 66% during the first 10 years.
Some of the reasons for failure that are cited in the above article include:
- Business owners not investigating the market.
- Business owners have problems with their business plan.
- A bad location, bad internet presence, and bad marketing for the business.
These are all things that are taught, in general, when working on your MBA, which can be great background knowledge for someone wanting to start their own business.
What about real experience?
I believe that real experience is the best. However, with an MBA, you can receive a well rounded education that can help you to launch a successful business.
You can learn how to manage a team, understand business specific finances, research the best business plan, and more.
When put together with real experience, I think that an MBA can be a great learning tool.
Does that mean that everyone should get their MBA?
No. Everyone is different, but I do believe that my MBA has helped me manage my own business.
What do you think? Should a person who wants to start a business get their MBA? If you’re already a business owner, do you have one? Why or why not?
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I have my MBA and I don’t think it’s a pre-requisite to owning a business. Now I think having an MBA helps expose you to things if you don’t have a business background and can potentially lessen the learning curve but at the end of the day, running a small business takes a lot of hard work and focus 🙂
Yes, that’s exactly how I see it.
I think the school you go to and their focus makes a big difference. The vast majority of problems you face in a business are very specific to that business and won’t be covered by an MBA. It’s more fire fighting than long term strategic thinking.
BUT, for the bigger picture things, an MBA at the right school with the right focus can be extremely valuable because it gives you a mindset and approach that has been tested rigorously.
An MBA also can give you an instant network of folks that may be valuable in your entrepreneurial journey.
An MBA isn’t necessary or sufficient but can be helpful. Is it worth the cost (time and money)? That’s debatable… but it does provide some benefit.
I graduated from college in 2006 with my bachelor’s in accounting. I worked for a time and thought about getting my CPA, MBA, or a Law degree. I ended up getting none of them. I always wanted to started my own business since graduating and never really had the desire for them. My goal has always been to work for myself.
I think those designations and degrees work if you want to climb the corporate ladder. Also, if you want to start a tax business let’s say, having a CPA legitimizes you more.
But, overall, I think the best experience for anyone who wants to start their own business is to start a business! Just do it! Experience and failure are the best teachers. You learn what you don’t know, fail at it, pick yourself up, and repeat.
If you want to move up in a career, get the MBA because that’s what will distinguish you from other candidates. If you want to be a business owner, just go be one.
Yes, experience and failure are great teachers 🙂
I was very interested in an MBA for awhile, but I realized that (for now) it is not for me. I am a full time working mom and I have a successful career so far. While an MBA would certainly be a boost, I’m not sure if it would put me any closer to my goals. I enjoy a very healthy work-life balance right now, with the ability to work hard and advance in my career while also spending time with my family and pursuing my passions and hobbies. Taking the time and expense to work towards an MBA right now is not on the books (but who knows what the future will hold!).
Sounds like a good choice 🙂
From my experience in my corporate job and in starting my own business it doesn’t seem to matter if you have an MBA. What matters more, in both cases, is your willingness to learn and constantly improve.
It could be that MBA’s have that mentality of constantly improving given they’re typically going back to school after being in the workforce for a few years and maybe that’s part of what helps them succeed.
In fact, at my previous employer they specifically said to us that an MBA wouldn’t make a big difference because the company values actual results much more. An MBA might help you deliver better results but its not necessary.
Yes, definitely!
I’ve contemplated additional schooling, but I ultimately decided against it. It all came down to ROI on my $ and my time. So much great information is available for free on blogs, and I found that I almost always get a great return on books (usually the information you find in them is worth much more than the price tag).
Would highly recommend “ReWork” to anyone who is thinking of starting a business! 🙂
I’ll have to check that out, thanks!
Sounds like a good decision!
My MBA was very affordable since I went to a state school 🙂
I personally feel going to the highest level in college to achieve an MBA or even a Ph.D is good for anyone if they have the financial means to do so. It’ll not only create a feeling of higher life achievement, but also a feeling of achievement of being on an elite business and personal level. It’s good for a person to have not so necessarily to get a job and get promoted, but also have something to fall back on even if she or he succeeds in entrepreneurial adventures and earns millions in their businesses.
Larry Ellison is from my neck of the woods. Brooklyn, New York. We know all about him. In fact, he’s virtually the last of the mohicans that’s straight out of Flatbush Brooklyn and became a billionaire. Trump might be the biggest real estate developer in NYC, but Mike Bloomberg is by far way richer than Donald Trump and the richest man in New York City. And Bloomberg only has an MBA.
I got my MBA just to feed my ego, which is a terrible use of higher education!
Much of the curriculum is overly theoretical, and much of it is outdated. I agree with Dave: taking the leap and starting your own business is the best way to learn. And you don’t have to do it alone. You can stand on the shoulders of giants so to speak by learning all about your business heroes and learning from the mistakes they’ve made.
I have a friend who thinks the only way he’s going to succeed is by going to business school. He makes terrible financial/investment decisions all the time and thinks an MBA is the only way out for him.
I do not plan on getting an MBA yet. I am focusing on putting to practice all I have learnt so far
I suppose it depends on the sort of business and the timeline. If it’s something like starting a hedge fund or a global consulting firm, then it probably makes sense that you’d need to go through business school to build up the funds, make the contacts, etc. If it’s a service business or something that doesn’t, then I suppose not.
On the other hand, if you’re strictly getting the MBA for the knowledge, it still could make sense. But I would probably stay away from top schools and such.
Less than a year ago, when my son was born, I started taking prerequisite courses to start earning an MBA. Three courses later I quit. I did well in the classes, but chose to blog instead. This is the complete opposite of what my parents would expect of me, but I have a good job and want to do something on the side that I take joy in. I hope to achieve even a fraction of your success.
Oooh, what a toughie. I do think there’s value in an MBA, but like any degree, you need to go into it with a plan. I don’t think it’s wise to say “Eh, I think I’ll get an MBA or something since I don’t know what to do.” That’s a recipe for having a degree but no results.
This is good advice. Getting an MBA is good but it does not replace experience or that knack or drive that you need.
I don’t think the MBA is necessary. I’d say, taking accounting classes, some business classes and marketing as a Minor/Major is good. I also say, fund college as CHEAPLY as possible, especially for a business major as many business majors graduate without jobs because they don’t have a focused specialty. I have a degree in Finance, minor in Business and Econ, have started and managed several small micro businesses while working a f/t job in an area I enjoy but don’t have the energy or desire to run a business within. The bottom line is, funding an expensive degree that is not going to equal to a sure-fire job is a big risk that most people shouldn’t take. Starting a small micro business while in high school or college may be a way to figure out whether your passion for owning and operating a business is really what you want.