Should Tech Entrepreneurs or Business Owners Get An MBA?

There has always been a debate as to whether an MBA provides an added advantage to the entrepreneur or business owner who may have already passed the initial hurdle to starting a business.

On one side of the debate is the negative implication that an MBA stifles creativity, provides too much structure for a startup entrepreneur, and curbs the natural discovery process an entrepreneur will need in order succeed in this competitive environment.

On some level this negative connotation has merit given the fact that the theories and solutions presented in the case studies in many

An MBA curriculum provides at best hindsight to a problem or solution that is most likely not going to repeat itself exactly as in the case study. The truth is that these case studies are mere frameworks, although some professionals in the corporate and executive management environments swear by them.

The MBA framework is geared towards structuring a thought process within the Corporate infrastructure, and like any curriculum is created for the general population.

Furthermore, the main argument against the MBA for entrepreneurs is that the case studies and theories make many assumptions that the business will “behave” like normal. Even some MBA programs that focus on the topic of entrepreneurship are be seen as more academic than practical.

In most classes, we assume that a business operation is an object that we can control or manipulate to our desire. Simply write a business plan and follow the directions accordingly, without too much variation and the business has a greater chance of succeeding. In reality however, many successfully businesses did not have a plan before starting.

Additionally, we should not think of a business operation as an objective entity, but rather compare it to a living breathing baby, that will cry when its wants to, eat when it wants, and not following the path laid out for it.

Ultimately many MBA schools don’t teach its students what they actually need to know in order to run a startup, which is why the case against getting an MBA can be so strong.

That is not too say the argument is conclusive however, as there are many tremendous benefits to getting an MBA for entrepreneurs and business owners.

For example, there is an acquaintance of mine who is a “director” at a sizable company in NYC who just started go back to get his MBA. With a “director” position at any large NYC institution, like Cornell, the likelihood the salary and benefits are high are quite favorable.

However, the rational for getting an MBA in this scenario is clear. Most MBA curriculums are designed to enhance corporate philosophies and instill an institutional mindset, providing a clear path to executive management.

While above example makes sense for the person seeking a corporate career, what about the entrepreneur that has already owns a business.

Could the MBA really help when you learn what you as a business owner should already know? In some cases yes, as a good part of MBA programs are geared for quantitative study (finance, accounting).

Over the years I have come across the financial records of some great organizations and some not so great organizations. Especially for smaller businesses, many times a business owner will look at the bank balance as an indicator of the financial health of an organization.

This method of financial management is what I call “emergency mode”, a situation where the business does not have any long term financial solution and has not forecast appropriately for growth.

In some cases, the management does not possess the requisite skill to implement the financial concepts that could be instilled in a great MBA program. In this case, a business owner who goes through rigorous financial training would be able to better manage the financial future of his or her organization.

Another component of the MBA program is its ability to extend your network, collaborate with other innovative minds and hopefully learn more from the experiences of your fellow classmates.

The experiences of your MBA colleagues provide what I call “Real Life” case studies and can many times be more insightful than the academic case studies. With any good MBA program, the idea is to bring together bright people from a vast array of backgrounds who can contribute to one another’s experiences.

It is no wonder many startups are comprised of co-founders that went to the same school or institution. Having met my co-founder of SME in an MBA class, I can safely say that the ability to spend time with an individual over the course of 4 months before deciding to work with them is most rewarding.

I am also sure some companies and HR recruiters wish they had the privilege of vetting their candidates this way as well.

Finally, following the banking collapse and global recession of recent years, many people have gone back to pursue their MBA.

In one of my recent conversations with a Venture Capitalist (VC), they admitted that the majority of founders in their funded startups are not financially savvy and many times run out of cash due to poor financial planning and management.

Perhaps an MBA would serve the founders well. While an MBA is may not be the final answer, it does provide an additional tool for business owners and entrepreneurs to better prepare for and take control of their businesses financial and operational future.

You can hear from and meet tech entrepreneurs and business owners by registering for our Hackathon on the weekend of May 17.