Ready Entrepreneur

Are MBA subjects Important for an Entrepreneur?

by Case Lane

Does the traditional MBA business school curriculum, help you to become an entrepreneur? 

The expectation is you will spend two years attending classes, interacting with professors, and learning from books.  You will not be creating your own business and being your own boss? 

However, if you read the life stories of the most successful entrepreneurs, the short answer about business school is almost certainly, is ‘no.’   The formal education will not help you become an entrepreneur. 

But the long answer is different story.  In the long run, the information taught at business school is almost certainly going to be important to entrepreneur.  Knowledge about accounting, finance, marketing and the other disciplines will have to be acquired or you will have to pay other people to look after the details for you.

The question to ask is whether it worth the two years and the expense to get that information yourself through the classroom?

Alternatives to B-school

Even if MBA subjects are important to entrepreneurs, the information taught in B-school is not exclusive to the walls of your preferred campus.  You can go online, take one off courses in specific subjects, hire someone to teach you, do an internship or paid work with a specialist or ignore the details.  This article will focus on the choice for a two-year full-time MBA program at an established business school, or anything else. 

Considerations

• How do you prefer to consume and understand information education?  Scroll online or formally sit in a classroom?
• Do you want the back-to-school experience?
• Do you want to work, in management, for a big corporation, investment bank, consulting firm, or technology company – even for a couple of years?
• Do you immediately want to work for yourself?

NOTE:  The author’s MBA is from the Anderson School at UCLA.  In reviewing the core curriculum classes for two-year, full-time MBA students, the author also looked at the universities of Chicago, Harvard, Stanford, and the Wharton School.

Purpose of MBA

The Master of Business Administration degree is one of the flashy pedigrees of the educated.  If you said to someone, “I was in a room full of MBAs,” the person will know what you mean.  A room full of MBAs means professionally dressed, polished, number-crunching thinkers.  People who will work 80 or 120 hours a week for hundreds of thousands of dollars and lots of perks.

In general, the MBA degree is the calling card of professionally trained business managers.  The degree provides foundational business knowledge that allows a graduate to talk the talk.  And the talking is done with recruiters.

Recruiters

The MBA program is for recruiters – people who work for companies who are looking for skilled managers, and want to know that the people they are interviewing have some grounding in the core subjects a typical businessperson should learn.  Recruiters need people who can be trained as managers within a corporate structure. 

Therefore, a graduate must know the difference between assets and liabilities.  Companies do not want to spend money teaching potential managers the basics.

The Entrepreneur’s Dilemma

MBA subjects are important to entrepreneurs in the context where the entrepreneur must also know the difference between assets and liabilities.  But many entrepreneurs wait until they have sufficient assets to protect, and hopefully not to many liabilities to pay off, before wondering how they can learn more.

Therefore, an entrepreneur needs to understand these issues before there is any chance of being ‘ripped off.’  The criteria for deciding when to acquire non-expert knowledge is before you are in a position to be ripped off.

If you decide to pursue the MBA to learn the basics of business, what are the subjects you will learn?

Types of Courses

To begin, there are basically three types of courses, the standards, the some-form-bound-to-haves, and the rare.  Different schools may call these courses by different names, but the content is usually the same or similar at each school.   Also the assumption in all cases is that the entrepreneur’s proposed business is not based in a core MBA subject.  If it is, learnings beyond the MBA may be necessary.

Standard

A first-year MBA is almost guaranteed to have a core curriculum that includes courses in accounting, economics, finance and marketing. 

An entrepreneur will almost certainly want to know about accounting and marketing, and probably about economics and finance too.

Accounting

Basic accounting is the discipline of keeping track of your money, balancing your books and knowing the situation for your revenues and expenses.  Accounting is a crucial skill for people in business.  It is also a formal profession and a business can outsource its accounting work.

But an entrepreneur will need to understand the information the accountant is presenting.  As the head of your a business, the founding entrepreneur or CEO is ultimately responsible for the numbers.  The business can find a trusted accountant, but must take ultimate responsibility.  At some point as an entrepreneur with an ongoing business concern, you will want to have a general understanding of accounting.

Economics

The discipline of studying the economy is a subject for entrepreneurs who want to understand the larger economic issues of the day.  If you intend to frequently watch CNBC, and understand and interpret the discussions, economic terms and concepts are the foundation required for this type of conversation.

An entrepreneur may decide to take an interest in economics as a matter of general business interest.  If the business operates in the global economy as a global corporation, the head of the company should understand how economics issues may affect business.

However, when an entrepreneur is getting started or in the early years of business, the subject of economics may not be of interest, except the field of behavioral economics, the discipline covering how humans (and therefore your potential consumers) behave in the marketplace.

Finance

Many people view finance as stocks and bonds, but as the world came to understand in 2008, financial companies create and use many different complicated financial instruments.  These instruments are created by mathematicians or physicists and other geniuses who are crunching numbers in search of value in the marketplace.

For an entrepreneur who may one day contemplate an initial public offering (IPO) or become an investor, the information in finance class may be especially valuable.  But at the beginning of the business, years before a IPO, the intricacies of financial minutia will not be valuable. 

Marketing

With the exception of unique high demand products or services, or a specific dedicated super-niche customer bases, most entrepreneurs want or need instruction in marketing. Marketing gets your product or service in front of customers.  And the MBA-level course will teach the traditional tricks and concepts for accomplishing this goal.  Successful entrepreneurs today still refer to classic marketing gurus like David Oglivy as the standard to follow for creating marketing campaigns.  The student learns how to analyze company campaigns, slogans, jingles and customer targeting.  But the lessons tend to focus on corporate marketing. 

An entrepreneur building a business today will almost certainly look at tools like social media and direct e-mail marketing.  These still new and rapidly growing fields may not yet be covered in traditional business school classes.  One common complaint about university is around their inability to keep up with the times.  Online advertising strategies and developments may not yet be fully integrated into the curriculum.  And even if it is, the information may be outdated before school starts.

Some Form

The core curriculum also contains some form of subjects with names like Human management, Operations management, Personal Skills, statistics and strategy.

MBA subjects are important for entrepreneurs if these types of corporate business skills, which are rarely needed when starting a business, become critical as the business grows.

Human management – Organizational Behavior/Human Resources

Courses that can be called organizational behavior or human resources or human resource management are about managing people.  This is a critical and important skills which, as we often learn in the news, is not given the respect deserved by corporate management. 

This subject teaches processes, structures and ideas around managing people.  As a business grows, some of these structures will be legally required, but may be implemented by skilled professionals trained in the field.  But when an entrepreneur is starting there is typically no reason to hire these expensive resources, unless the business has a specific reason begins as a corporate entity with employees.

Operations – Operations/Technology/Information Management

Courses with names like operations management, technology or information management have a similar approach as the human management courses, with one crucial exception, operations skills will be required earlier than human resource skills.  An entrepreneur is likely to be put in place systems to run a business from day one.  If the business owner understands how to develop and setup these systems, the efficient approach will save time in the long run.

Determining how to run the business is an early introduction into learning how to think like a businessperson.  Operations processes look at the inputs and outputs, time constraints and productivity issues.  If an entrepreneur understands which components need to be assessed, then she will also want to understand how to get established.

Deciding how to run the business often takes different permutations, trial and error, and the application of technologies.  As an entrepreneur becomes more experienced, the processes become more functional.  But filling in the operational processes after the business is successful can create a bottleneck to future growth.  Knowing how to move forward early, can prevent future disruptions.

Personal Skill – Communications/Inter-Personal Skills/Leadership/Ethics

The MBA courses dedicated to personal skills such as communication, leadership and ethics, are among the most useful.  Personal skills are as valid for solopreneurs, as for the CEO of a Global 500 corporation.  However, many executives do not develop these skills or forget how to put the knowledge into place once they arrive at a company.

An entrepreneur will want to figure out how to learn these skills at some point on the entrepreneurial journey.  But personal development is probably the easiest of the skills to develop outside of school.  Organizations such as Toastmasters have been training managers on speaking techniques for years.  And books about communication and leadership are often bestsellers that can be used to learn the foundations of the ideas and why they’re important. 

Statistics – Data, Decision-making

A statistics-related course is often in the core because businesspeople need to know how to analyze numbers and make decisions from those numbers.  Data has become even more critical with the rise of online usage and the accumulation of data in the background of search activities.  Even a solopreneur, will want to keep track of business activities by analyzing statistics that tell a story.

But the formal statistics training in B-school may go far beyond the information you need to run your business operation.  Online courses that split this field up into manageable sub-topics may be more effective.

Strategy

Business strategy is MBA-speak for: what is the company doing and how are they going to do it.  Strategy is the core activity of the highest-paid executives, and the top subject of their meetings and decisions.  In business school, strategy focuses on big corporations and how they make or fail to make changes to reflect realities.

An entrepreneur starting out will likely make adjustments on the fly.  Strategy adjusts constantly as new processes are learned and the statistics reveal new opportunities.  Entrepreneurs decide every day how they want to run the business.  Strategy is a core activity for a rising entrepreneur, but the corporate strategy class may be too much too soon.

Rarely Core

Often outside the core, but part of electives for second year are two glamour subjects for prospective business school students, entrepreneurship and international business.

Entrepreneurship

Many schools offer courses in entrepreneurship – both the study and the practice of the field.  Some programs have start-a-business project may be available for credit.  When assessing business schools, an aspiring entrepreneur should look for the option to finish the first year core classes then focus on entrepreneurship oriented classes or starting a business in the second year.

The programs that actually offer practical opportunities to start a business, not just theory, will be more effective.  If an entrepreneur can get the best of both worlds, work through mandatory classes in first year, and spend the entire second year on a business, the entire process may be rewarding, especially if the business is up and running by graduation. 

Also, aspiring entrepreneurs should carefully review the mentoring or guidance offered by the programs.  Check for professors who are really going to support practice over theory, and strong links to the entrepreneurship network of the community.

International

The other missing piece that’s rarely in the core program is global or international business.  Yet many aspiring entrepreneurs are interested in how they can participate in the global economy.  Some programs will weave international case studies into the other core courses, but rarely is there a focus just on global business.  In this day and age, most rising entrepreneurs need a grounding in trade policy and international business issues to operate in the global economy.

So what is the value of doing an MBA if you want to be an entrepreneur? 

The Decision

Before deciding if MBA subjects are important, an aspiring entrepreneur should take a second look at the considerations for business school.  What are your answers to these questions?

• How do you prefer to consume and understand information education?  Scroll online or formally sit in a classroom?
• Do you want the back-to-school experience?
• Do you want to work, in management, for a big corporation, investment bank, consulting firm, or technology company – even for a couple of years?
• Do you immediately want to work for yourself?

Some future entrepreneurs are discouraged by their lack of training and skill, and believe business school is required before getting started – but that’s not how it works.  Many people also start with no knowledge and run into trouble later when their business is making money.  In all cases, experience is the skill that often makes a difference, and just getting started with the business is the only way to move forward.

Others prefer to hedge their bets and do both.  That’s a viable option if you can find a program that supports your entrepreneurial dreams.  You have to decide based on the of your decision against the benefits or drawbacks you may receive from paying to obtain skills you believe you need.