PLENTY of successful entrepreneurs don’t have MBAs. For many, to be an entrepreneur is to possess a constellation of hard-wired personality traits – an appetite for risk, an eye for an opportunity, the personality to carry investors on an exciting bandwagon from start-up to IPO. Surely these qualities can’t be taught? Many business schools disagree. An increasingly noticeable part of their offering, whether as part of MBA programmes, or as stand-alone courses, are classes devoted to training entrepreneurs and equipping them with the skills to take an idea and run with it.
A cynic might argue that schools are playing with the media zeitgeist – that teaching entrepreneurship is part of an eye-catching strategy to capture attention while they continue to plod along with a core offering for corporate-minded executives. But the numbers, and the money, tell a different story. Cass Business School has invested £10m in an entrepreneurship fund for promising start-up ideas. Professors tell of increasing numbers of students who are leaving professional careers and, armed only with a vague idea or desire to start their own firm, are using MBA programmes as a springboard.
But is an MBA really the right choice for a potential entrepreneur? Programmes can cost in the region of £40,000 for a year – wouldn’t that money be better spent renting offices or investing in market research? For some it will not be the right choice. But, if you do want to start your own firm, and perhaps lack the confidence, the broad business knowledge, or even the idea to take that desire forward, an MBA could prove useful.
THE MECHANICS OF ENTREPRENEURSHIP
According to John Mullins, associate professor of management practice in marketing and entrepreneurship at the London Business School, “many people who want to start a business realise they have not yet developed all the skills they need. It’s a generalist game,” he says – the first few years of a start-up may require getting involved with all areas of the new business. An MBA can provide this generalist knowledge and experience.
Julie Logan, professor of entrepreneurship at Cass Business School, agrees. An MBA gives you “a raft of useful skills, like learning how to build a brand from the start and how to deal with the financial side of a firm. Even if you start a business in a team,” says Logan, “you still have to set your hand to everything.”
Many schools also offer targeted entrepreneurship or start-up electives outside their core curriculum. Both Cass and the London Business School run focused courses that seek to develop an understanding of the life-cycle of a typical start-up. “In our second year, we have a portfolio of eight different courses which take students through the entire life-cycle of a start-up,” Mullins explains. Cass offers an entrepreneurship summer school which takes students through the process of starting a firm. “Students can’t get onto the summer course until they have written an in-depth analysis of their business idea,” Logan says. If they are successful, “we take the best of the theory and combine it with what they need in practice.
SOWING THE SEEDS OF AN IDEA
Learning the practical mechanics of entrepreneurship is useless without an idea. To some extent an MBA can provide the tools to enable a student to discover a market opening – by teaching about systematic market research, or how to test financial feasibility. But professors won’t provide you with an idea, only the skills to identify the good from the bad.
Where an MBA might prove useful in reaching that elusive eureka moment is in the culture and location of the business school – in the conversations students have among themselves and their professors, and in the collaborations between schools and nearby businesses.
Conrad Chua, head of MBA recruitment and admissions at the Judge Business School, part of the University of Cambridge, says that “Cambridge MBA students get involved with local businesses and organisations at a very early stage of their MBA.” Situated amid the Silicon Fen, a cluster of high-tech businesses, many of which have connections with the university, Chua thinks Judge has an advantage for potential entrepreneurs because of the lessons these start-ups can offer students.
“Collaborative projects give students a glimpse into the entrepreneurial space,” says Chua. Whether that glimpse leads to a practical business plan is another issue. But by meeting with successful entrepreneurs, learning how they reached their ideas, and seeing how academic research at business schools or elsewhere in the university has translated into practical ideas, Chua thinks MBA students can accelerate their idea generation.
FROM SEEDCORN TO HARVEST
But entrepreneurship shouldn’t be simplified into a single model of idea plus business knowledge equals profit and expansion. It’s a messy game, as risky as it is exciting. According to the Entrepreneur’s Advice Bureau, 90 per cent of businesses fail within the first three years, and a UK business goes bankrupt every 12 minutes.
Business schools have a stake in their alumni’s future success. It reflects well on them. In 2010 Cass Business School launched a venture capital fund to provide growth equity to start-ups run by people with a link to the school. Of course, seed capital can be found elsewhere, but where business schools may have an advantage is in their ready-made, easy to access package of expert support, experience and facilities.
“It’s difficult to be successful, and definitely lonely,” says Mullins. “We don’t just say go off, good luck.” London Business School has an incubator programme, which provides early stage start-ups linked to the school with office space, angel investors and mentors. “These start-ups can bounce ideas off each other. They’re in different sectors, so there’s real camaraderie,” Mullins says.
It’s difficult to measure whether this commitment by schools to remain involved in their graduates’ careers has an identifiable effect on success rates. But their readiness to assist former MBA students with their business ventures is a convenient alternative to having to build connections and raise capital without assistance.
A MOMENT OF REFLECTION
An MBA is not an entrepreneurial degree in itself. As Chua says, “an MBA will not create an entrepreneur out of someone who does not have passion in the first place.” MBAs are broad-based business degrees, designed to assist any professional with their career development.
But they can also be a time for reflection, an opportunity to consider where and how you want to build your career. This is why MBAs can be so attractive to a potential entrepreneur.
If you do have that vague idea to start your own firm, and you don’t have a well-thought through idea, an MBA will provide you with the tools and experiences to consider your options.
But if you decide entrepreneurship is too risky, and you already have a settled career, you can climb back on the corporate ladder with all the advantages of a business degree.