It’s the latest craze and it almost sounds like a contradiction but many universities in the USA have quickly adopted an MBA program focused on entrepreneurship. If the university isn’t adopting a certified program, they’ve instituted seminars, weekend training, networking events and more that address entrepreneurial needs. It’s hard to imagine that academia would be able to show budding new entrepreneurs how to run a successful business. The MBA degree was developed to help managers become better managers. Now, we are taking into a position that requires a broader set of knowledge, skills and abilities. Many universities realize the challenge in providing such education so they often solicit the support from local entrepreneurs. In fact, many colleges hire entrepreneurs to develop the new MBA program. While the MBA isn’t really a requirement for anything, an MBA entrepreneurial program isn’t either but it might be helpful for your startup. In this post, we’ll take a look at some of the key elements of this type of program so that you can determine if it’s right for you.
Assessing business ideas. If you want to be an entrepreneur but don’t have any idea what business you want to create, then learning to assess ideas is very important. The ability to recognize and evaluate opportunities is not an easy task. Most entrepreneurs and entrepreneurship educators recognize that only a small percentage of venture ideas actually represent viable business opportunities. Such skills are critical as startups are usually plagued by high uncertainty, low information and the need for rapid decision-making. Students are often introduced to numerous platforms for evaluating business ideas such as the Timmons Model of the Entrepreneurial Process, the New Venture Decision Making Model and the Opportunity Search Model. These models help you assess potential opportunities by guiding your focus in areas of environmental attributes, owner characteristics, strategy factors, resources, economics, and product/service model.
Basic organizational structures. Most programs offer guidance in identifying the various types of structure that might be suitable for your business, such as an LLC, C-corp, S-corp and so on. The factors that are important here are usually the number of owners, tax benefits, liabilities, and record keeping requirements. If you don’t know anything about these, then the knowledge you get will be helpful. However, in my experience, spending a few minutes with a business attorney or CPA is just as sufficient.
Develop a sound Business Plan. If you’ve been reading our blog, this should be easy. We just saved you a ton of money. MBA entrepreneurial programs will give you great support in building a good business plan. The business plan serves two purposes: (1) clarifies your value statement and revenue model, and (2) communicates sufficient growth potential and stability for investors. Of course, the quality of plan is only as good as the experience behind the creator, so you might want to investigate the experience of your professor. Ideally, you can create your business plan early in the program and implement it throughout the life of your MBA program.
Marketing Plans. MBA programs concentrate more on analytical and strategic marketing, such as creating marketing plans and strategies for sales purposes. There is potential to develop some powerful skills here, such as competitor analysis, market research, budgeting, branding, communication, marketing tactics and metrics for monitoring. Marketing plans are very valuable for a startup as they will help you focus your energy. If you don’t develop the skills yourself, you’ll likely be hiring them at some point.
Funding. Many programs offer courses on working with venture capital firms, banks and angel investors. These sources are exciting as they often come with sophisticated investment analysis tools and models, as well as thoroughly researched and professionally prepared business plans. The top tier programs also give you access to these fund providers. Unfortunately, most startups don’t usually get to tap into such sources. The more common sources of funds for new and smaller businesses are family, friends, informal investors and the entrepreneur themselves. Much of what you’ll learn won’t be used right away but will be helpful later on.
Mock experience. Most programs will tell you this is a huge advantage, as students are afforded the practice of key business skills in a safe environment. You can basically work with a team of students to walk through the development and implementation of a business venture. The intent of this mock experience is to help ensure decisions are made using sound business practices. The hope is that you’ll fall back on your habits, developed during practice, when difficult situations arise. Of course, you may have the view that there are many factors that can affect your decision making abilities that can be emulated in a classroom setting. It reminds me of the scene in the movie Harry Potter: The Order of the Phoenix when Harry asks Professor Dolores Umbridge “And how is theory supposed to prepare us for what’s out there?” In this scene, the ministry felt that a “theoretical knowledge will be sufficient to get you through your examinations.” Unfortunately, starting your own company has real consequences that can be quite costly and theory ignores the fact that real businesses often deal with irrational people, both in your own team and the customer.
Identify new ventures. To sustain growth of your organization, you must be able to identify new opportunities, including understanding, qualifying and quantifying the market. Additionally, you must also understand your competitive advantage, build a financial plan, secure funding and build a team that can implement the plan. These lessons may seem a little premature when you’re just starting up as you’ll be more focused on implementing your business plan, which usually doesn’t include changing course or expanding products and services right away. If you don’t know what kind of company you want to start, this may help you understand how to assess any opportunities you find interesting.
Global strategies. Most offerings are designed to help you develop leadership and strategic thinking tuned to the realities of today’s global economy, including topics related to operations, partnerships, product development, and legal contracts. If you don’t plan on going abroad anytime soon, this may be a little premature and not a great deal of help for your more urgent startup needs.
Networking with other entrepreneurial minds. Networking is a common theme for MBA programs. Apparently it works for entrepreneurial programs as many students partner with other classmates to launch their business. Networking is always helpful as it lets you bounce your ideas off existing entrepreneurs, professors and students who can help you evaluate your ideas. Now, this can be done in many places, not just a college campus.
Startup acceleration. This offering is usually dedicated to helping fundable startups with scalable business models connect with companies who might be interested in supporting the business idea through mentorship and venture capital. If you’ve got an idea that requires considerable startup funding, this might be a useful approach.
While I’ve always thought that universities have become quite adept at jumping onto new trends, entrepreneurship seems to be more popular than the MBA itself. The concern I would have in partaking in such programs is that you will be spending a lot of money to learn skills that may not be easily transferable to other companies should you decide not to start your own upon graduation. Even worse, you could graduate from the program and your startup company fails a short time after. That would be a huge setback. Now, this is not to say that such programs don’t have value. They do have value, especially if you have an idea of the business you want to start. I’m not sure you’ll gain great benefit in these programs if you have no idea what business you want to create. Just think about the challenge of any MBA graduate who finds themselves at the end of the program asking themselves “now what?”
In our next, we’ll give you a list of questions you should consider before enrolling in such programs. We’ll also try to bring you real experiences from graduates to assess how well the programs work.