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As in all major life decisions, there are several variables, and weighing the pros and cons is essential; whether to pursue an MBA in entrepreneurship before or during the running of a business is not an easy choice. An article from Forbes reiterates this writer’s conclusion: the answer depends. The answer depends on the business owner. It depends on the owner’s life goals and business goals. It depends on the type of business.
A report from the Financial Times raises an interesting question. According to the report, only one out of five MBA graduates is choosing the entrepreneurial path. Is the explanation that the MBA graduate and the entrepreneur are simply two similar yet distinctly different types; is the explanation that the degree in entrepreneurship does not meet the needs of the entrepreneur?
An MBA in Entrepreneurship is Worth What?
Any course, workshop, or seminar related to entrepreneurship will say the prospective entrepreneur needs credibility. The source of that credibility can be what the entrepreneur brings to the table in terms of experience, natural talent, and academic credentials. The question addressed here is whether the inarguable feather in the cap from a graduate degree in entrepreneurship is a cost-effective use of resources.
In contemplating a business venture, one has to inventory themselves with the question of whether they already possess the acumen to materialize the dream, or whether hired help or academic training would be needed. The need for help, incidentally, is not an automatic reason to shelf a dream. It does mean operational costs will be higher from the start. A similar key question is whether potential customers, lenders and angel investors will acknowledge the would-be entrepreneur’s fit for the task. The MBA, will at least, feather the entrepreneurial hat. Be not unduly impressed, however. He who knows the difference between a board-certified physician and any physician knows the certification is only an academic exam taken and passed. It is not a declaration or an affirmation of skill with a scalpel or diagnosing complaints.
An advanced academic achievement designation at the end of one’s name is not a guarantee of success at the entrepreneurial helm. Though there are overlaps, the administration of an existing and well-established business entity is not the same proposition as raising a business from the start and nurturing and growing it.
Professional contacts and networking
Another value of an MBA in entrepreneurship is that professional contacts and networking are facilitated through the academic program. That fact once may have been considerably more relevant than it is now because there are numerous opportunities for entrepreneurs to network with other entrepreneurs. Not only that, Shopify and other platforms, plus other digital marketing applications, enable on-line business owners of a common category to share visits by potential or returning customers for negligible costs compared to that of an academic degree.
Almost gone are the days when membership in a prescribed profession with the prescribed academic credentials, a home in a prescribed neighborhood, membership in the yacht club, the golf club, and the like were the ways to meet the people with a name that would open doors. Contemporary entrepreneurial efforts are often industry-specific and highly specialized. What a person knows besoms exceedingly more valuable than whom a person knows.
The advanced study of business has its roots in the American Industrial Revolution. The program will teach an entrepreneur some models to follow for hypothetical corporate success. The MBA in entrepreneurship provides the same curriculum of core courses as any MBA — marketing, accounting, management, and information technology. Not only that, but the entrepreneurship program also offers some courses specific to the entrepreneur like an entrepreneurship overview, revenues for the entrepreneurial entity, costs, budgeting, capital, and business plans.
Does every entrepreneur need to be well-versed in all aspects of operating a business? That question can be answered only by each entrepreneur. A two-person partnership in legal matters, for example, may not need talent-managing training. A shop restoring vintage automobiles likely needs diversity and team training skills, but not so much in target marketing. Remember the question is not whether the knowledge or skills obtained from an MBA in Entrepreneurship have value; it is whether that which is obtained justifies the cost in time, energy, commitment, and monetary expenses.
How the Value of an MBA in Entrepreneurship Depreciates
It is not a pivotal point, yet it can be a significant one in considering the logistics of entrepreneurship management, civil responsibilities, and academic life. Schools offering the MBA in entrepreneurship are not as numerous as those with a typical MBA program. Would relocating for a school jeopardize business opportunities? Would an online program to avoid relocating provide the same networking opportunities?
We recently published an article that discusses the results of a study sample of around one thousand entrepreneurs. The dominant theme of the conclusion of the study is that entrepreneurs come in all types. Each has a different mindset, a different attitude, and approach to goals or problems. Therefore, no one approach or solution will succeed every time for every business owner.
While an MBA degree typically aids a graduate in identifying a personal management style, the MBA in entrepreneurship school may enable a business owner to identify that there are varying entrepreneurial types through talent management classes and of the importance to know which one is, but whether the owner identifies his own until he reaches the trenches, so to speak, is a very different question. Again, the question is not the usefulness of the MBA in entrepreneurship but its cost-effectiveness.
At least one of the MBA in entrepreneurship programs offers a course entitled Entrepreneur Strategy and Perspective. Whether a professor will teach the entrepreneur how to grow their small business or simply how to manage it to keep it within budget and meeting projections is debatable. Inarguably, the entrepreneur student learns some useful information about planning and strategy and the like. Where the potential for compromised learning, consequently value depreciation, is whether the information will have and keep value to the person endeavoring to begin and grow a small business.
There is doubt as to whether intuitive thinking is emphasized or encouraged in the academic endeavor. Even if it is, is the pragmatic result the student entrepreneur being taught a formula based on historical evidence? Are case studies used for real entrepreneurs, or is the guiding principle the assumption that what works for big business will work for a small business too?
For example, are students taught how to use Shopify to share website traffic and potential commerce? Do they teach students the traditional principles of inventory practices and accounting, or is the very real distinction made, especially as it relates to issues like dropshipping? Are they taught to use digital marketing programs? What about the entrepreneur who has a very useful idea, but is not technologically savvy? Will their program allow for personal attention, or will they require a tutor on top of the tuition costs?
The course listing and descriptions for the school considered will answer those questions. If historical data is the basis for projections and planning, then the student learning again depreciates as the world changes, people change, and the way they shop and do business changes.
Process-driven orientation to business
The typical MBA program is a process-driven orientation to business. Consider, for example, the insurance industry or the banking industry. There is a predetermined measure of what success is, how to manage risk to it, and what to do to meet the pre-determined objectives. For example, a benefit offered by an insurance company that ends up costing money will either have the eligibility requirements tightened to manage the risk of losses and/or rates will be increased.
A small business owner will have to decide whether they can continue to offer a benefit to customers that costs them money; also, whether the losses can be recouped somewhere else to continue meeting a customer base need.
Research is required
Interviews, program catalogs, and campus visits all can help the student entrepreneur decide if an MBA in entrepreneurship reaches down to the local level as does information disseminated in government help programs, or if it is the same assumptions taught in the traditional MBA program only packaged differently. Look at it this way; a tuxedo may be of superior quality and craftsmanship, and the man wearing it may wear it handsomely; however, to a rural resident who rarely attends black-tie events, how useful is the tuxedo even though it is a beautiful garment and he wears it well? Would not even a tailored suit and bow tie not serve that man better?
Resources for students
An MBA in entrepreneurship may provide resources that teach them how to deal with a life and work balance. On many campuses, however, such resources are not included in the cost of tuition and texts. Most of the entrepreneurial how-to publications state the owner should have, at least, three years of living expenses in savings before launching. How does a person arranging to pay tuition and business operating expenses maintain three months’ wages in savings, let alone three years?
The value of the MBA in entrepreneurship depreciates again if the teachings are admirable ideals, yet pragmatic nightmares. A student entrepreneur does not have the laurels of industry largesse on which to fall back as does a Wells Fargo branch manager working through traditional MBA school. The entrepreneur has to maintain his competitive awareness. A slow season can mean death to his small business while a mere capital loss to a big one. The value of his education is compromised again if the academic rigors distract him from business needs.
The very encouraging reality is the embryonic, post-natal, or maturing entrepreneur can obtain the information needed; whether it comes from a more pricey, yet centralized, source like a degree program, or low-cost state or federal sources typically more logistically challenged.
No one suggests at all that there is nothing to be gained from the MBA entrepreneurship degree. The most applicable questions for the entrepreneur are whether what is gained justifies what is lost in time, effort, and financial resources and whether the program meets the real-life needs of the entrepreneur.
Color, size, style, comfort, price, and craftsmanship are all important considerations. However, only the person that will wear the shoes can decide whether they fit. To reiterate an all-too-important point, after considering life goals and life demands, business goals, and demands of the proposed business, only that entrepreneur can decide whether the MBA in entrepreneurship will be time, energy, and money unimpeachably spent.
Have you considered pursuing an MBA in entrepreneurship? What has been your experience? Let us know in the comments.
This article originally published on GREY Journal.