There are no laws or regulations that require entrepreneurs to have an MBA prior to starting a business — in fact, there’s no formal or professional education required. However, if you have startup aspirations, you may have wondered ‘do I need an MBA?‘ Earning your MBA strengthens your business savvy and improves prospects for success. Therefore, if you are looking to earn an MBA to start your own business, you may be on the right track to reaching your personal and professional goals.
Do I Need an MBA to Start a Business? MBA Entrepreneurs and the Stats on Startup Success
While you don’t need an MBA degree to open your business, the small investment of time and money pays off in your future success. The statistics on MBA entrepreneurs are compelling.
- Obtaining an MBA improves your success rate of starting a business by 18%. A study by the Financial Times found that 84% of businesses started by MBA graduates were still operating after three years.1 Compare this with data compiled by the Statistics Brain Research Institute, which lists the overall startup success rate at 66% at the three-year mark.2
- An analysis of “unicorn” companies (those created in the last 10 years that are now worth over $1 billion) revealed that 33% had at least one founding member with an MBA — and 82% appointed at least one MBA graduate to the executive team to help build the company.3
- A 2014 study by the Graduate Management Admission Council (GMAC) found that 31% of MBA alumni entrepreneurs run businesses with a multinational focus and the total median revenue among the group was $815,251.4
Do I Need an MBA to be an Entrepreneur? How an MBA Helps Entrepreneurs Succeed
Master of Business Administration programs produce graduates with a well-rounded, multi-faceted understanding of how businesses operate. Students learn managerial control systems, marketing strategies and principles, customer and supplier relations, supply chain measurement, strategic human resource management, and other concepts vital to managing (and growing) a business venture. Specific entrepreneurship courses also introduce students to key methods of starting a business, including how to prepare a viable business plan.
MBA programs are also designed to help students develop practical and effective leadership qualities that can be invaluable during the tumultuous early stages of getting a startup off the ground. Management and leadership courses introduce students to topics like strategic human resource planning, conflict resolution, employee motivation, and managerial communication. Students with executive aspirations may be interested in enrolling in an MBA program to learn how to create comprehensive business plans, as well as execute them.
Combined, these skillsets give MBA graduates an edge over entrepreneurs who start with nothing more than a great idea. This is reflected in the motives of many entrepreneurs who decide to get an MBA prior to starting a business. Many aspiring entrepreneurs may wonder if they should pursue an MBA or start a business. While there are benefits and drawbacks to each path, according to a 2013 study by the GMAC, aspiring entrepreneurs chose to pursue an MBA for the following reasons5:
- Increase entrepreneurial opportunities – 66%
- Develop general business skills – 66%
- Develop leadership skills – 60%
- Develop skills to manage my business – 60%
- Increase earning potential – 57%
If you are still considering the question of ‘do I need an MBA?‘ it is important to evaluate your current skillset, and identify areas where you may need further education. While you may not need an MBA to start your own business, it may be beneficial to executing your ideas with confidence, skill, and an understanding of business.
Is an MBA Necessary for Entrepreneurs? Successful Entrepreneurs Who Started with an MBA
Getting an MBA doesn’t guarantee that your startup will be a success, but it does give you the tools, skills, and knowledge needed to turn a great idea into a successful business. Some successful entrepreneurs who were helped by their MBA experience include Steven Hafner (co-founder, Kayak), Jeremy Stoppelman (co-founder, Yelp), Mark Pincus (co-founder, Zynga), and Aneel Bhusri (co-founder, Workday).
These extremely successful MBA entrepreneurs turned their ideas into multi-million dollar business ventures. Even if your startup doesn’t reach this echelon, an MBA can prepare you to be your own boss and run a business that provides a comfortable lifestyle.
If you have dreams of starting your own business, the online Master of Business Administration from Our Lady of the Lake University can help. In as little as two years, you will develop professional business skills important for starting, overseeing, and growing a startup venture. Request more information or call 855-275-1082 to speak with an admissions advisor.