By @Surabhi Chourasia
It takes more than just a good idea to kick-start and grow your company. Whether it’s a brick-and-mortar business, a scalable start-up, or a social enterprise, success lies in the skilful execution of your idea. Earning a Master of Business Administration (MBA) is one way of learning the skillset you need to turn your passion and purpose into business success. However, an MBA may not be right for everyone. The key is understanding the benefits of an MBA and how those benefits can help you achieve your specific goals.
A decade ago, nearly all b-school grads flocked to traditional corporate jobs in finance and management.
Today, however, a growing number of newly minted MBAs decide to start their own businesses.
In one study of over 30,000 Wharton graduates, conducted by the University of Pennsylvania, researchers found that more than 7% of 2013 grads started their own companies right away - five times as many as in 2007.
They also discovered that, since 1990, nearly a quarter of Wharton grads have been entrepreneurs at some point, even if it wasn't straight out of school.
Ethan Mollick, coauthor of the study and an entrepreneurship professor at Wharton, predicts that this growth is likely to continue. "MBA students are good at seeking where the opportunities are," he says. "When banking is hot, more students go into banking; when consulting is hot, they go into consulting; and when entrepreneurship is hot, they go into entrepreneurship."
Although an MBA isn't necessary to build a successful business, it does offer several advantages for graduates, including an automatic network of contacts.
Additionally, earning an MBA creates an instant backup plan in case the business fails. Knowing they can always count on a graduate degree from a top school to land a more traditional job allows MBA holders to take more risks. They're able to turn an entrepreneurial failure into something that won't hurt their resumes.
Why do entrepreneurs need an MBA?
Here are five reasons why getting an MBA is an essential investment in your entrepreneurial career.
1. You need to know how to scale your business
If you want to run a successful company, you must know how to grow a business. Running a small company does not translate into managing one with hundreds of employees. As you generate more revenue, you need to know how to hire the right people, how teams fit into your company’s culture and vision, and how you can engage staff in what you are trying to accomplish.
An MBA provides the skills needed to grow companies from start-ups stage to IPO. You'll learn about finance, marketing strategy, operations management, and using data to successfully scale your business.
Therefore, getting an MBA can be an essential investment in your entrepreneurial career. Another advantage of an MBA is that it teaches you how to make tough decisions, even with limited data and resources.
2. You need to know about technology, accounting, financing, taxation and business law
While some entrepreneurs may be accountants by profession or have a background in accounting, most aren’t familiar with the financial aspects of running a business. Getting an MBA will help you understand the financial side of things and teach you how to think about your business strategically. It will help you think of your business as a complex system that is scalable and can expand to include several products or services and run by a variety of people who share the same vision.
As your business grows, you will need to hire people who can handle the accounting and administrative side of things. An MBA will help you figure out how best to delegate work within your company so that everyone has a clear idea of what they are responsible for.
However, you can't just outsource your understanding of these vital areas. You also need to have a solid foundation in them yourself and recognise how they affect profits.
An MBA will help you learn about accounting, payroll, taxation and other legal areas so that you understand what it takes to sustain long-term success. That’s one reason why many believe that getting an MBA helps you to be a better entrepreneur.
3. MBAs are well trained in leadership skills
There's more than just sales and marketing strategy involved in getting your start-up off the ground. You also have to know how to recruit the right people, work with the media, and take care of customer service problems.
While entrepreneurs are leaders at heart, they need to lead a team towards achieving certain goals for the business. Therefore, entrepreneurs have to think about cultivating leadership skills in their employees as well.
When deciding whether to fund a start-up, many venture capital investors look not at the idea but at the founders. MBA graduates score highly on the criteria of being skilled leaders. This is because an MBA program emphasises leadership skills such as negotiation and decision-making.
4. An MBA will sharpen your skills
According to the U.S. Small Business Association, 30 per cent of new businesses fail during the first two years of being open, 50 per cent during the first five years, and 66 per cent during the first 10 years. One of the most common reasons businesses start to flounder is having poor financial and operational frameworks. While products and passion may lie at the heart of the entrepreneurial spirit, many entrepreneurs fail to thrive without proper structures, strategies, management, and business plans.
An MBA can help entrepreneurs get ahead in business by building essential fundamental knowledge and practical insights into business administration. The lessons learnt about finance, governance, operations management, strategy, data-driven decision making, marketing, and organisational leadership and management are the skills needed to thrive in a competitive marketplace. Whether it’s taking steps to manage your cash flow from operations, navigating tax laws, creating a legal structure, managing employee relationships, or setting up an organisational framework through a business plan, an MBA will give you the skills to solve complex business problems.
Entrepreneurs need to wear many hats – from marketing to sales management and business development to social media execution. According to Pete Flint, CEO and co-founder of Trulia, doing an MBA is going to make you a better entrepreneur. He says doing an MBA gives you access to capital and talent; exposes you to different disciplines and case studies; and provides you with the creative space to think big, as well as the environment to fail safely.
5. An MBA will expand your worldview
Business school attracts students from all corners of the globe. This means the pool of people you will be meeting will bring a diversity of thought to business practices and any problem-solving situation. Through this international lens, you will gain an in-depth understanding of worldwide trends and market dynamics and cultivate a global mindset.
The ability to think globally is about developing the skills to work efficiently with business leaders and organisations with cultural differences. According to research from the UK Centre for Economics and Business, fostering an international outlook improves the bottom line. So it makes good business sense to think globally and act locally.
Surabhi Chourasia (MBA)
Marketing Manager
AirCrews Aviation Pvt. Ltd
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