Though there are some who argue money would be better spent on startup funding rather than an MBA, some exceedingly successful companies have been born during or shortly after MBA courses, such as Nike (Phil Knight) and Electronic Arts (Trip Hawkins).
Entrepreneurship is not necessarily the preserve of the young either; the average age of a founder starting their high performance startup is approximately 40.
But do you need an MBA to become an entrepreneur?
Types of entrepreneur
When it comes to graduate founders there seems to be two types of entrepreneur.
Some decide to start up straight from university—roughly 5% of graduates do this—in an environment where although you have limited experience and access to funding, you have nothing to lose, no career to give up, and no family to support.
However, many decide to work for several years after undergrad to get to know their industry, spot opportunities for how things can be done better, and then leave to start a business with a lot of industry experience in the bank.
For many MBAs, this second route represents an excellent option—with about 10% of MBA graduates starting a business during or shortly after the course (although this is higher in universities based in startup friendly areas like Stanford).
How can an MBA help you become an entrepreneur?
Most MBAs have significant industry experience and the time on the MBA can be used to gather networks and perform a feasibility study (often using MBA module coursework).
You can also slowly and thoughtfully incubate your idea during your MBA—perhaps this suits the more analytical and methodical mindset of an MBA entrepreneur that prefers to take calculated risks, rather than the ‘simply dive in’ traditional entrepreneur.
Some accuse MBAs coming from the corporate world as having no sense of the practical realities of starting a business—especially the ability to take risks and understanding the possibility of failure.
While not all the taught elements of an MBA directly apply to startups, some such as law and accountancy certainly will, and entrepreneurship electives might help you to articulate a business plan and understand how to apply for funding.
If you’re transitioning into business from a technical background, then much of the basics will also be useful. Consultancy projects with external businesses tend to be quite entrepreneurial and while no substitute for running your own business, these projects do help the MBA to understand risk.
Interestingly, those MBAs starting a business have a similar three-year survival rate as those startups graduating from an incubator or accelerator program—approximately 80%*—while Office for National Statistics (ONS) data from the general population in the UK suggests a three-year survival rate for businesses of about 50%.
This is especially impressive since MBA businesses are likely to be more complex than the average business. So, the relatively small numbers that give it a go are generally successful—and perhaps good entrepreneurship teaching can also illustrate the stark realities of starting a business and put off those initially interested but that would be likely to fail.
Why business school is a good place to become an entrepreneur
For those from overseas studying in the UK, there’s the option to apply for a startup visa that allows you to stay in the UK to start your business. This can be done via your university, and also via some incubators, accelerators, and other organizations that support entrepreneurs. An MBA can give credibility to the business credentials of those applying for visas, as well as to those applying for funding.
For example, Erick Vera Bazan, originally from Ecuador, used the visa scheme to set up Little Inca, a plant-based baby food company in the UK, following an MBA at Alliance Manchester Business School (AMBS). Caleb Conner, another AMBS MBA, set up luggage storage company, City Spare Space, which was launched in 2018 and is now operating nationwide in the UK.
At university, you have access to a vast array of both business and technical knowledge in the form of experts, journals, and databases—more than typical small and medium enterprises (SME) would have access to—plus dedicated support to help start your business.
Most universities have business plan competitions—which can offer in the range of £10-20k ($13-$26k) towards your business—and there are mentoring schemes and accelerators, which are often student-led. With one of the key aspects of an MBA networking with your peers, you can gear your networking to find potential customers and collaborators for the future.
Of course, if the idea fails or you choose not to take it forward, you’re unlikely to be unemployed for long. You’ve still gained skills that are very much in demand by employers—learning from your failure may also help you be successful with your next business idea.
Dr Robert Phillips (pictured above) is a senior lecturer in entrepreneurship at the University of Manchester’s Masood Enterprise Centre, Alliance Manchester Business School. All opinions stated in this article are of the author and not of BusinessBecause.
*Bone, J., Gonzalez-Uribe, J., Haley, C. and Lahr, H. (2019). The Impact of Business Accelerators and Incubators in the UK. BEIS Research Paper Number 2019/009, Department for Business, Energy & Industrial Strategy, UK.
Alliance Manchester Business School
The course structure
The course is well structured and organised effectively. Every subject in the field of international business is covered in the course module. The lectures are of excellent quality and are simple to comprehend. · The lecturers are also very knowledgeable about their subjects, quite thorough, and very helpful when it comes to answering questions and giving additional information on their subject. · Students can easily access the assignment, lectures, and seminar content thanks to the blackboard technology. Students also benefit greatly from the reading materials that are posted on the blackboard.
Practical Business Experience
3 live consulting projects, Non-for-Profit consulting, Commercial Business Consulting and International Business Consulting projects within the programme, provide us with a great opportunity to exposure to the real business world.
Quality education and student support system
What I love about The University of Manchester is the fact that, alongside with the excellent education it provides, it also takes care of the well being of the students and supports them throughout the year.
Endless networking opportunities!
I would 100% recommend this university! Throughout my 4 years there I received endless guidance and support from the amazing staff; both professors and student support teams. A particular highlight was the insightful guest lectures, networking employability events and career meetings, these significantly helped in preparing me for my future career.
AMBS provides excellent teaching and outstanding facilities, both of which combine to make a great learning experience. The teaching staff make sure we have plenty of resources to aid our learning, and always make sure we are making the most of our studies. The business building itself is the most impressive on campus, and provides plenty of places in which we can work.
Great facilities and support
It is a great university that provides extra support for its students. The teachers are very helpful and willing to support you and the environment is just great. It offers good facilities, study spaces and workshops that can help in your experience as a student.
New building, innovative teaching methods
The staff is very well prepared and pays a lot of attention to the student. The building is new and full of updated facilities. Teachers propose intriguing learning methods and there are plenty of international students to learn from.
It's an amazing University!
I think that AMBS is among the most well rounded universities in the UK. The cultural diversity among the students as well as the faculty is what catches my attention the most. The campus is very new and beautiful and has all kinds of facilities.
Quality and QS World Ranking
AMBS has the diverse set of batch where the students get the opportunity to mingle with the students coming from different parts of the world. The group of faculty is also very diverse having different skill set. I'd always recommend it for studying masters in business analytics.