Do you really need an MBA? It's an age-old business question, and that every expert has weighed in on at least once. The debate over whether an MBA is worth the investment becomes even more heated when the question becomes more specific: do you need an MBA if you want to be an entrepreneur?
The most accurate answer is: it depends. Here are some of the pros and cons of getting an MBA before you start a company. At the bottom of each consideration, you can see if the “pro” or “con” applies specifically to your case.
1. Networking opportunities
Whether you’re looking for investors, partners, or mentors to help you start your venture, schools like MIT Sloan, Stanford GSB, and Chicago Booth will offer enormous student, alumni, and faculty networks. In business, success often comes down to execution, and your network can help you perfect it. The right kind of insight or partnership could put you ahead of your competitors and help you avoid mistakes along the way.
- Disregard this “pro” if: you’re a powerhouse networker or have already built an outstanding network from previous employment.
2. Legitimacy and shared vocabulary
If you don’t know how to communicate with other business people, you'll have trouble engaging potential partners and investors. “Vocabulary” isn’t just a superficial matter; having the right language to express an idea may help you clarify your thoughts (which translates into more productive decisions). Also know that some people consider the pedigree of the founders when evaluating the potential of certain business plans.
- Disregard this “pro” if: you are skilled at self-directed study and have built up such a record of achievement that an MBA wouldn’t confer any additional prestige.
3. Range of skills developed
Yes, you can always partner with someone who excels in areas in which you are more deficient, but you should have something to offer, too. Business school will give you time to develop your skills in your area of interest, as well as provide you with an understanding of basic business principles. Also, the depth and range of a business education may give you ideas you simply would not have had otherwise.
- Disregard this “pro” if: you have built a deep understanding of accounting, finance, operations, strategy, and marketing in addition to whatever you ultimately specialize in.
4. Access to job opportunities that offer good apprenticeships.
As serial entrepreneur Steve Blank points out, one of Silicon Valley's most pervasive myth is that “all winning startups are founded straight out of school by 20 year olds from Stanford or Harvard.” Sure, the media loves to talk about young entrepreneurs, but in truth, most successful entrepreneurs are older, with at least a few years experience as apprentices at established companies under their belts. An MBA can help increase your chances of securing a job that will provide you with the experience, skills, and mentors you need to start your own successful company someday.
- Disregard this “pro” if: your resume is already studded with powerful brands and you are ready to break out of apprenticeship mode.
5. Venture/business plan contests.
HBS offers prizes that total $170,000 in their annual Business Plan Contest and Wharton offers $10,000 to “Venture Award” Winners. Though you certainly shouldn’t go to business school expecting to win a contest, know that many successful businesses have been launched with the cash won in b-school contests and the momentum that the win provided. Plus, even if you don’t win a contest, you may receive valuable feedback from the judges that helps refine your idea and make it more attractive to potential VCs.
- Disregard this “pro” if: you already have access to a large amount of cash.
1. Cost and forgone salary.
Business school is expensive. And while going to school early may put you on the fast-track to success, it can also pressure you to take the highest paying position out of school instead of exploring other options (check out what our CEO Jose Ferreira has to say on the matter). So, if you haven’t saved up a good deal from previous employment and value your short-term financial freedom, you might want to hold off on pursuing an MBA.
- Disregard this “con” if: money isn’t an issue, or you don’t mind waiting a few years post-MBA to start your own company.
2. Less hands-on experience.
What comes to mind when you think of entrepreneurs? People who solve problems, capitalize on opportunities, and recognize the needs of consumers and move quickly to fulfill those needs. Hands-on experience is essential to developing these skills.
- Disregard this “con” if: you already have experience and want to refine your skills with a formal business education before starting your own venture.
3. You won’t necessarily be surrounded by like-minded classmates.
This is a point John Warrilow brings up in his article, 4 Reasons an MBA is Bad for Entrepreneurs. He argues that most students in top-tier MBA programs will have gotten to that program “by answering the questions correctly, not by examining the efficacy of the question itself” -- in other words, they’re more concerned with being right than with being creative. It's certainly true that more b-school grads go into consulting and banking than become entrepreneurs.
- Disregard this “con” if: you don’t mind seeking out a niche of like-minded peers, or if you’re looking at b-schools with dedicated entrepreneurship programs. These places are almost certain to attract like-minded peers.
Bottom line: Salesmanship is a necessary part of being an entrepreneur. Be confident that you can sell yourself and your business idea to potential partners, investors, and customers whether you choose to pursue an MBA or not.
This post was written by Christina Yu. For more GMAT tips, check out the Knewton GMAT blog.