Starting a business can be an intriguing prospect. Whether innovating a current industry or bringing an entirely new invention into the world, creating your own company is a challenging pursuit with some potentially vast rewards.
With that said, success is far from ensured in the world of entrepreneurship. According to data published by the Bureau of Labor Statistics, around 20% of new companies go out of business during their first year.
Do You Need a Degree To Start a Business?
Anyone can start a business — whether they hold a degree or not. However, the high rate of startup business failure suggests that not every business is a success. Startups fail for several reasons, whether from inexperience, lack of flexibility, or even poor timing. If you want to give yourself the best chance for a positive return on your startup investment, you need to approach the founding of your new company with a serious and well-considered business plan.
This plan should include a variety of factors, but it may also include strategies for how you can build your business skills and apply them to your operations. The best way you can do both of these tasks is by furthering your education. A higher education program like a Master of Business Administration or a business certification from a business school provides relevant skills and training that can be useful throughout the different stages of building your company.
What Do You Learn in an MBA Program That Can Help With Starting a Business?
The skills learned in an MBA (or an EMBA for working professionals) may not initially seem directly related to starting a business. After all, the coursework in many MBA programs focuses on managing an existing business rather than starting a new one. This can lead you to wonder if pursuing the degree is worthwhile.
The skills learned through an MBA program help to reinforce some key concepts for running a business that is important to establish as early in the company’s life as possible.
Some skills learned through an MBA program that can help run a startup include:
- Core business principles: MBA programs typically begin by reinforcing the fundamentals of business. This includes building an understanding of topics like finance, economics, marketing, accounting, and operations management.
- Strategic thinking and decision making: Students learn to develop strategic thinking capabilities. Lessons are oriented around setting goals, developing plans, and making decisions that will impact the future of the company. It also includes recognizing market trends and industry developments, and understanding how they influence a company’s ongoing strategy.
- Leadership and management skills: Students learn to effectively lead teams, manage projects, and handle interpersonal dynamics in a business setting.
- Networking: While not generally a formal part of the curriculum, networking is an important part of pursuing an MBA degree. This includes building relationships with peers, faculty, and industry professionals which can become valuable connections for later career opportunities. It can also help find guidance and staff within your new company.
These skills can be crucial during the early stages of a business’s operations, but they remain important as a company develops. Building these foundational skills can help to avoid business pitfalls, or even pivot effectively when issues occur.
How To Start a Business
To more fully understand how an MBA study can help when starting a business, it’s important to consider the steps that create a firm foundation for a successful company. Reviewing these steps can help draw a more complete link to the skills learned during the MBA program too. With a more practical context, you can get more out of your study and start your business with a more established perspective.
Tips for Prospective Entrepreneurs
Like people, businesses differ. They may have different operations, different inspirations that spurred on their creation, and even differing market and industry factors that affect their success. However, some tips may universally help businesses start successfully.
- Research the market: In its list of 10 steps entrepreneurs should follow before starting a business, the U.S. Small Business Administration suggests beginning with market research. This can help you avoid spending time and money entering into a business pursuit that is likely to fail, due to lack of a market, or too much established competition.
- Create your business plan: This critical document outlines the company’s vision, goals, target market, and funding requirements. This can be essential for securing funding whether from investors or lenders.
- Secure funding: Business funding can come from several sources. Whether you choose to fund with personal savings, money from angel investors and venture capitalists, taking out loans, or some combination will depend on your personal financial situation. However, if you seek funding from an external source, remember that a well-designed business plan is key.
- Choose a headquarters location: Choosing a central hub for operations is important, and includes factors like proximity to a target market, available talent pool, and cost of operations. Even if your planned business operations take place entirely online, this is still an important decision, since the headquarters can affect taxes or regulations.
- Network: When you’re planning your business, it can pay to have the involvement of other people in the field you’re considering, which highlights the importance of networking. Networking may also expose you to other professionals in your field or other business owners — not only can you ask them for advice, but it may present the opportunity for future partnerships. You can even build your network while gaining your MBA.
Following these steps, you will need to register your business and associated trademarks. You’ll also need to apply for federal and state tax IDs for your business, as well as other licenses or permits you may need to be legally compliant.
This is another potential benefit of earning an MBA; familiarity with the technicalities of running a business helps you spot mistakes in your company’s legal preparations and helps to avoid any liability or other ramifications for missing these steps.
Should You Pursue an MBA Before Starting a Business?
Ultimately it is your decision on whether you wish to pursue an advanced degree before starting a business. There are plenty of reasons to further your education, including building essential knowledge and skills that can help to make better, more informed business decisions and hopefully allow your company to flourish.
Sources:
U.S. Bureau of Labor Statistics, “Survival of Private Sector Establishments by Opening Year”
Forbes, “Should You Get an MBA If You’re An Aspiring Entrepreneur?”