Do you need an MBA to become an entrepreneur?

“Why do you want to do an MBA?”
“I want to be an entrepreneur.”
“Do you need an MBA to become an entrepreneur?”

Even though I answered “Yes” with out any logical thinking, this question of my Professor Anirban Ghatak kept me thinking for the entire two years in MBA. Do you need an MBA to become an entrepreneur?

Source: http://www.vctec.ac

MBA – Masters in Business Administration – is different from entrepreneurship. To be specific, MBA is a subset of entrepreneurship. Entrepreneurship is more than that of MBA. The roles of a manager and an entrepreneur are not comparable. The approaches to the same problem by an MBA graduate and an entrepreneur are also different. The way they think(intuitive/ systematic), the decisions they make, idea generation methodologies, their dealing or presentation with other people, the risk taking abilities, and even their appearances and mannerisms are different.

An MBA graduate, usually, focus on one particular specialisation and even into micro specialisations. But an entrepreneur is a jack of all, and sometimes may be a master in one subject. There is no need of an MBA to start a business, but to proceed further, may be after a year, one needs some knowledge about managing the business. An entrepreneur can avoid this step by appointing a manager in the firm to take care of business. But would you prefer another person to run the business to you? Three things matter here.

Effectiveness: The entrepreneur has better information and knowledge regarding the business because he/she is the one who conceives the idea. And hence he/she can manage the business effectively and efficiently.

Trustworthiness: Since the entrepreneur knows the business inside out, it is better to take the position as a manager than appointing another person.

Money: You need to pay the manager a hefty amount if one is appointed.

An MBA is good when you need to understand more financial/marketing/HR concepts, otherwise there may be a chance that your own employees fool you and take advantage of your ignorance.

The critical factor: Idea
The critical factor that decides whether you need to do an MBA to become an entrepreneur or not is “idea”. If you have a very good ‘innovative idea’, do not waste your time in doing a two year MBA course. Start it right away. Get the help from a professional to make a business plan and present your idea before venture capitalists. They will take care of the funding part. But be cautious that the professional who is helping you to prepare the business plan should not steal your idea. (It is better to prepare a business plan by yourself or patent your idea).

But what if you do not have an innovative idea? An existing business or a successful idea copied from another country is prone to more competition. You need to know how to develop your business and here comes the importance of MBA. It depends on a number of external factors like economy, politics, technology etc. If you do not want to waste your time and have good financial backing, go ahead and hire a manager.

Decisions and risk-taking ability

An entrepreneur thinks both intuitively and logically more or less the same. But intuition plays a less role in the decision taking ability of a manager. Business schools will teach you to think in a systematic way just like solving a case study. But no one in business schools will teach you how to think intuitively. It is qualitative and is difficult to convey. One need to practice it. Keep in mind that intuition plays a major role in decision taking.

Entrepreneurs are more risk taking than managers. An entrepreneur identifies an opportunity and grabs it. He/she takes the risk and acts accordingly. But a manager is more into traditional way of thinking and hesitates to take the risk. Even if a manager do not take a risk and the business goes smoothly, he is not in a dangerous position. But if he takes risk and the business flops out of the risk, his may get a pink slip. This thought hesitates the managers to take risk. Always keep in mind that the risk should be a calculated one.

Learning: an on-going process
Whether you have an MBA or not, whether you plan to take an MBA or not, whether you are a manager or an entrepreneur, to run a busiess, it is essential that you need to learn continously. It is an on-going process.

Keep on updating your knowledge. Identify the opportunities, anaylse them – its advantages and drawbacks. If it is viable, take the risk and invest in it. Reap the benefit as soon as possible.

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MBA should not be taught in B-schools!

Master of Business Administration (MBA) should not be taught in b-schools; instead it should be taught in business firms. A business school can only simulate a firm and will not be equivalent to a corporate at all. Even the most adored ‘case study’ methodology will not be useful as that of a b-firm. This is one among the reasons why do most of the b-schools prefer candidates with work-ex for MBA.

The case study methodology helps to simulate a real scenario in a firm. But there are a lot of if’s, but’s and what-if’s in it. The number of assumptions may be too many in some cases which will really destroy the beauty of the case. It is similar to playing cricket in computer and that in the real life. The simulated experience will not take into consider the mind set of human beings (employees in a firm), the macro economic situation (which may vary based on the country understudy), the competition, history of the firm, customer relationships, previous executives, on spot decisions taken etc. There is always a gap between what is happening in the industry and the picture of industry depicted in the cases.

To make the MBA students more industry oriented, the MBA education should be under the control of the respective industry bodies and should be happen in a business firm only. This helps to understand the business very well and also helps in taking better decisions which is one of the important objectives of MBA.

Every student must select an industry in which (s)he is interested and should undergo the MBA in a business firm in the selected industry. The student should be an employee of the firm and must have a minimum contract period with the firm. The education and the work should go hand in hand. A stipend should be given to the student for the work (s)he is doing. Scholarships should be given to meritorious students. There should be only practical tests with real case scenarios and should not include any theoretical questions (which is utter useless). The certificate of MBA should be given by the industry body which may have a tie-up with any University. The top performing students should be retained in the firm in which they studied.

Also there should be assistance from the industry bodies for those who wish to be entrepreneurs in the respective fields.

No (fresh) MBA graduate is perfect. It is similar to learn swimming. Unless you try it out, you cannot be a ‘Master’ in business administration. So face challenges, put your hands in fire, learn and correct the mistakes. Practice (valid experience) makes a manager perfect!

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