Having creative ideas for your business and wanting to go into business for yourself is enviable. It requires many different types of skills to be a successful entrepreneur, however. There are good reasons why around 96 percent of businesses fail within 10 years.
The businesses that survive and prosper are a rare breed. However, research has shown that a lack a high-quality strategic decision-making is one of the deciding factors for which businesses do well versus the ones that don’t. It’s worth noting at this point that business degrees do cover strategic decision-making because it’s a core skill in business.
Does an MBA Help with the Financial Side?
Starting a business is tricky if you’ve never done so before and you’re not an accountant. Let’s face it, most people don’t enjoy the numerical side of of business that includes budgets and bookkeeping, and probably never will – and that’s okay!
What’s important to learn is how financial statements are put together and why they’re important. Understanding the use of different types of depreciation is useful because it will affect the stated earnings and their liability for taxation. That doesn’t mean you need to the know the full ins and outs of business taxes – you’ll have an accountant for that – but appreciating the broad strokes is valid and useful.
In an MBA program, students are taught about business financials, including management of expenses, negotiating terms to reduce costs, and the importance of good documentation. It provides the groundwork that many creative entrepreneurs need to start from in order to establish a solid foundation. If that sounds interesting to you, consider registering here as part of the MBA Tour to begin searching for a college with a course that appeals to you.
Is the People Side (Soft Skills) of Entrepreneurship Benefited by an MBA?
It used to be that communication and strategic thinking – often referred to as soft skills – were underrated. For most companies, that’s no longer the case.
Establishing good business relationships with new contacts, getting them on-board as a new client, and keeping them happy is critically important in a hyper-competitive business environment. Many prosperous business relationships have been ruined by a few ill-chosen words that the client objected to.
With an MBA, lecturers look to improve their students’ communication skills, so they can become more effective in their jobs, especially as they rise up the managerial ranks.
Strategic thinking is also a focus because when regularly encountering complex operational issues, it’s necessary to think about the broader picture when making decisions. Planning several moves ahead and weighing the possibilities carefully, including the likelihood of success, is all part of that.
Does an MBA Help on the Operational Side?
Holding an MBA is particularly useful when it comes to the operational side of business. Many Operations Managers are MBA graduates. Why is that? The course provides a detailed overview of different areas of responsibility for running core operations within a company. Therefore, being in charge of all operations including the supply chain, supplier negotiations, and relationships, and the financial side to keep budgets on-track, is well suited to a business graduate – especially one with an MBA.
While there are Operational Management degrees now, a Master’s in Business Administration is much broader. It allows you to work in different roles besides being the CEO if you wish to get a better understanding of how your company operates to make improvements along the way. With other business degrees like Marketing or Operations Management, the narrower focus will end up pigeonholing your abilities, especially when running a business.
Is the Confidence to Start a Business Likely to Be There?
Yes. That’s a surprising answer for some people who believe that this type of degree is only for employees. An MBA actually covers enough business-related topics to be very useful for anyone who eventually wishes to go into business for themselves.
Whether needing to brush up on your financial knowledge, get updated on what’s reasonable with business ethics, follow new employment policies, or think strategically to compete in the marketplace, the knowledge acquired through an MBA is more than sufficient.
The connection between academic topics and real-world business situations is strong enough that graduates have confidence in their decision-making abilities upon graduation. Indeed, many alumni who previously held themselves back from starting a business subsequently decide not to re-enter the corporate world and instead open a business. This is testament to the fact that MBAs are not only for employees – entrepreneurs can find real value in them too.
Our business knowledge is often patchy. We might understand most parts of a Profit and Loss Statement, but we’re less confident with a Cashflow Forecast. Alternatively, you may never have worked in operations running a business from the inside and worry that your understanding and ability to create reliable systems won’t be sufficient. Whatever your concern, it stands to reason that a well-rounded approach to business education is almost always going to be better than operating with gaps in your knowledge.