This article is essentially part two of the previous article about whether getting an MBA is worth it for an entrepreneur. However the issue discussed in this aticle is whether MBA degree is necessary to start a business. As an MBA, I have some input on this topic.
The short answer is that MBA degree is not necessary to start a business. A person can start a small business without any education whatsoever. However, MBA knowledge and skills may provide an overview of the business world knowledge and network of connections that may help start and grow.
The answer to this question also depends on the type of business and on the need for investment or funding to start a business. So let’s dive in right away.
When is MBA not necessary to start a business?
MBA is not necessary to start a small one-person or family business in its initial stage. Mainly, this is true for business owners providing any personal services in person or online. All they need to do is to be able to balance the price and quality ratio.
People like personal trainers, programmers, web designers, audio-video editors, lawn movers, mechanics, or house painters, first of all, need to know their craft well.
They do not need MBA to publish an ad in the newspaper or pay for an online ad. And much less one needs MBA when offering personal or not so personal but still straightforward service through freelancing websites.
Nowadays, it has become much easier to reach the audience and potential customers, and clients. As a result, there is no need for a long-term advertising campaign for business, which previously required plenty of funds.
Why would a t-shirt printer need an MBA? Or house planter or house cleaner or dog walker? I think MBA can help to start grow such business but not but MBA fo rthis kind of business is not essential.
Even those who open a store or hamburger franchise business does not need MBA. And for professional services like lawyers, veterinarians, or even hairdressers – MBA is not necessary to start a business and get your clients or patients.
MBA may instead help in the future a person or a business owner to expand their business beyond the local geographical area. Then condensed MBA knowledge and network of connections may come in handy to help expand business empire faster.
When is MBA helpful to start a business?
MBA can be helpful if you want to start a larger-scale business right away and need to attract investors or obtain debt financing. In addition, MBA gives some credibility to business owners because investors or bankers are less likely to trust an unknown person from the street than someone with MBA.
However, MBA is not necessary for a person who started a business and managed to grow it for several years. Then business track record is sufficient by itself.
On the other hand, MBA gives a business owner knowledge to speak to investors or banks using commonly known business concepts from economics, finance, or marketing, increasing the legitimacy of the business owner.
Another area where MBA may become handy is a business revolving around financial services. But then, it is knowledge of finance and economics that’s necessary. Learning economics and finance is possible if you can learn well on your own. And through work experience too.
Why is MBA not necessary to start a business?
The reasons are plenty for ditching MBA in favor of practical business knowledge. First, the business usually is a practical endeavor. Second, education gives a theoretical foundation but usually does not give much practical training.
Some so many details nuances that come up in everyday business operations that education cannot address them.
The best practical skills can be learned on the job. The same situation is with business. Nobody can become a business person by only reading books. You become a business person by starting, trying, failing, and then succeeding.
You become a business person only after you start your business. You can become a business person by starting a business without an MBA, but you cannot become a savvy business person only by getting your MBA degree.
Every business startup is different and has different needs. No MBA can prepare you for all unexpected situations that will be occurring around your business. As a result, there is no perfect success plan.
MBA teaches a theoretical foundation of the business world. Business is the practical daily application of problem-solving and decision-making, sales and promotion, dealing with all kinds of people from customers to employees and suppliers.
One cannot learn those sales and communication skills from MBA alone. But one can know it without MBA by emerging in business activity daily.
To start a business, one needs a service or product to offer, a bank checking account, and the ability to do basic accounting – revenue minus expenses. That’s it.
When a business owner needs an MBA
But note that every business person eventually will encounter a need for knowledge taught by MBA programs. Many business concepts learned in MBA came from the practical business world.
A business person will need to understand revenue, loss, profit, expenses, financial statements, some macro and microeconomic trends, supply and demand curve, and many other concepts taught in MBA programs worldwide.
In a previous article, I went over several MBA classes that provide practical value for a business owner, so I will not repeat them here.
If you do not want to spend time on a full-blown MBA program, you can learn those business concepts independently or through a course.
One thing that MBA teaches well is working in teams. I talked about that in the previous article.
If you are a total introvert and never learned how to work in a team, MBA may be helpful for that reason too. But if you are a good communicator and can operate in a group, you can learn how to manage a team without an MBA.
What would be advice re MBA and starting a business?
If you think about starting a business or going for MBA, then the short answer is simple – create a business. I wrote that MBA is helpful for a business person because of its practical knowledge base, contacts, and business mindset that an MBA student helps to develop.
Some small business owners who went for MBA sometimes have these “Aha!” moments while in class. They wish they learned some of the MBA staff sooner – that would help them to run businesses better.
Many MBAs started a successful businesses. Many undergraduate graduates began businesses. And many people with only high school education started businesses. So, MBA is not a pre-requisite. But, starting a business is a thing one can do even in their teens.
Running a lemonade stand does not require MBA. Expanding and running 30 lemonade stands may not require MBA either. But 100 plus lemonade stands in several different cities may already require knowledge taught in MBA. I just gave you a multimillion-dollar business idea.
I have met an owner of multiple McDonald’s stores in southern California. He was a very successful businessperson and still is. He knew every tiny aspect of his burger business.
He could make a burger, close, open the store, and know all about supplies and suppliers. He could work the register or drive-through if necessary because he learned t on the job.
Then he got his first franchise and then another one, and so on. He did not have MBA or business degree.
If you think MBA will undoubtedly help you to start a business, then you are wrong. Of course, MBA can help any business owner. But MBA itself does not turn a regular person into a businessman or businesswoman.
MBA instead helps a person develop better analytical skills, learn the overall business world framework and jargon, and get into a more business or corporate mindset. All of these things are helpful as leverage of practical business knowledge.
I think that MBA from a top-ranking school, though, is always worth and necessary for a businessperson. A top business school MBA degree gives a good boost and credibility for any business to have an owner who graduated from such elite MBA program.
Plus, if a business fails, as the majority of companies do, you may find employment in a company because you will have both top MBA and business experience in a specific area.
What to have to start a business without MBA?
It would help if you had a practical business idea and a strong desire to pursue it. Then, do everything possible to make it happen. Be ready to fail to follow it, but desire to succeed. And the ability to work hard, long hours.
Be able to learn and become good at what you intend to turn into a business.
Because nobody else in the world will be as personally invested in your business as you, you are the only person in the world with the strongest desire for your business to succeed. Well, maybe your souse too. But that is about it.
What do successful people say about MBA and starting a business with MBA?
Elon Musk thinks that you need no MBA to be a successful business person. Of course, many others point out that Steve Jobs, Bill Gates, and others did not have MBA. But those are exceptional examples, and I would not rely on them. Those are extraordinary people with an extremely clear mind, focus, dedication, quick thinkers, and so on.
Most of us, regular people, were not born like that. However, in researching this article, I have seen a few successful business founders in North America who said that MBA knowledge did help them to start and operate a better business.
Generally, they say not that MBA helped them to become entrepreneurs, but that MBA enabled them to become better entrepreneurs. Feel the difference?
MBA gave them leverage in the form of knowledge and skills. For example, some say they manage people better because of what they have learned in organizational behavior management MBA class. Others say they strategize better because of what they learned in MBA business strategy class.
Experienced business people and consultants say that without MBA, entrepreneurs sometimes hit the ceiling in business which they cannot overcome because they do not see the big picture.
They could not see the options they could exploit or directions they should take when their business grew too much for them to handle. MBA helps to remove that ceiling.
A few entrepreneurs who received their MBAs later in life mention the benefits of MBA to their business mindset even when they argue that no MBA is necessary to start a business. This is a little bit paradoxical, but it is a fact.
For example, they write on Quora that MBA does not help to start a business, and then they provide a caveat that while their MBA did not enable them to start businesses, it at least somewhat helped them grow it and make better business decisions. Do they read what they write?
And, of course, those entrepreneurs who went into top MBA programs say they heavily capitalized on the network of connections among their former classmates.
How MBA helped me
And I can say that I understand economic trends better because of what I learned in my MBA economics classes. I also understand the news better. But why? Because I tried to be a forex and options trader and made mistakes based on fake news information. After that, I lost money and always rely on my guts and filter media news information like crazy.
I can say that my MBA economics class was more helpful in trading than all financial news networks combined. Because the single supply and demand curve concept made more sense than thousands of hours of misleading information from TV “experts.”
MBA eventually leveraged my practical experience. I am also better at recruiting at building and managing teams than I was before my MBA. That helps in any activity where I need to manage other people or work as part of a group.
I think MBA helps one to become a better manager, better business leader, and leader generally. There are some intangible soft skills learned in MBA that are different from what we know in business.
MBA helps to see business more globally. To see it in a more integrated way than without MBA. MBA gives a foundation for understanding business processes and how business lives and grows.
MBAs understand the importance of listening to an accountant, finance professional. They know that experienced consultants are not a waste of money because they offer company edge by providing specialized advice.
MBAs understand that workforce is essential and is at the core of any business. Tat workforce is not robots, but employees or contractors from a diverse group of different individuals with different work ethics and skills.
I can repeat that MBA made me a better manager. After my MBA, I occasionally trained people to build teams and accomplish tasks as a team member. I can attest that much of that success I attribute to my MBA training.
When it comes to recognizing business opportunities – MBA did not make me very much better than before. But MBA helped to make more informed decisions and choices. Not without mistakes, of course.
Conclusion
So, what conclusion did we come up to? First, it is safe to say that MBA is not necessary for the initial stage of starting your small business because you rely on simple decisions at that stage.
But if you succeed and your business grows well, then MBA may come help to become a better business leader and a better manager of your own business and workforce.
Because there is no definite answer about how helpful is MBA in lanching a business venture, everyone is different. Some people run small businesses all their lives. Others start and grow into big ones. Many people fail. Some succeed. Some are born with business skills, and yet others struggle a long time before they develop them.
First, you do not need an MBA to launch your business. Second, many small business owners also do not need an MBA when operating.
You can start and grow business without MBA degree. However, you may need knowledge that is taught in MBA programs to be a better business owner.
But the high-ranking MBA programs may offer a good network of connections or other opportunities which can help launch or grow a business.
MBA can become useful once a business grows, and you need to expand it by employing many different knowledgeable professionals. MBA may help to understand what they are talking about in the law, finance, accounting, economics.
You can learn those concepts in your business or on the side, but MBA degree offers a concise summary of those essential business concepts, making them easier to digest and understand.
As a businessperson, you may not need an actual MBA degree to start a business. Still, your busiess can seriously benefit from foundational information that can be obtained through MBA training.
How do you plan to acquire that knowledge? Reading books? Watching videos and interviews? Hiring consultants? Or getting an MBA?
It is up to you. Whatever your decision is, remember that your life is your responsibility. Do not blame anyone if you make mistakes. But invite others to share your success because you can succeed. It would help if you found out how you can do it.
