Careers in Entrepreneurship
The journey between the 100 watt lit bulb in your head to a successful startup can be riddled with challenges. And many may argue that its success is subject to the nature of the entrepreneur vs nurture (education, degree, environment, etc.) or vice versa (read Are Entrepreneurs born or made?).
But one thing is clear, for every Zuckerberg’s billion-dollar success there is a Kramer (Seinfeld from circa pre-millennial era) with a failed “make your own pizza” joint. The answer to what makes an entrepreneur excel at his job is impossible to sum up in one formula.
However, what seems to help is the right kind of knowledge and experience to sustain ones’ company in the sea of competitors.
And this is where MBA, or related business degrees like Masters in Entrepreneurship, can help in building a steady launch pad.
“An MBA is not a requirement to become an entrepreneur, but it assembles a lot of the raw ingredients you need in order to become a successful entrepreneur,” says Mathew Prince, one of two Harvard MBA graduates to have created Cloudflare, a cyber security company valued at over $1 billion.
According to GMAC’s Alumni Survey Reports, the count of the number of MBA graduates who choose a career in self-employment bliss is roughly between 5-10% upon graduation.
And while this percentage seems to be rather small, many highly capable business trained individuals shift gears after a few years of working for the “else”.
According to a study by Financial Times, the number of MBA graduates who start their own companies can increase four-fold in just three years out of school.
– Do Indian entrepreneurs need an international MBA degree?
In this article, we will cover an overview of choosing a career as an entrepreneur.
- Why would you want to start your own company?
- What would it take to start your own company?
- And, how can the universe join hands in your endeavour to start your own company?
If you are looking to sign your own pay checks, we suggest you read on.
Why choose a Career in Entrepreneurship?
Why indeed? With all the pitfalls of uncertainties of success and the insecurities therein, why would you opt for a career for yourself and by yourself, as an entrepreneur? Well, the manifold reasons as cited by many self-employed individuals follow a certain theme – independence, in thought and process.
1. Disenchanted with corporate life
Most entrepreneurs start off with a job in the corporate sector. Whether it is a general disdain for the corporate culture, the stress, the hours, the politics, or the often-thankless aspect of servitude, they choose to venture out on their own.
They bank on their experiences and network to explore an occupation solely driven by their passion and freedom. In fact, a survey of the workforce in India shows that a massive (>80%) number are inclined towards entrepreneurship as a desirable career. This is a little over 50% for the rest of the world.
2. Opportunity to pursue a cause/passion
Very few individuals truly ever manage to find a job aligned with their passion. A startup can give them an avenue to make a living working towards a cause. “Corporate Purpose” is the hot name for this feeling of wanting to make a difference to the world through an initiative.
Interestingly, women entrepreneurs are more likely to be driven by this “purpose” than men towards starting their companies.
Though running your own company can be taxing on time, being your own boss offers a big latitude on how to work your job around your personal life. This flexibility is a big attraction for many entrepreneurs who are tired of the “tied” nature of corporate life.
4. Perfect opportunity to grow your skills
Running your company will require all sorts of management, technical, and operational know-how. This is in turn will serve as an invaluable self-development opportunity for the self-employed.
Getting hands on training for projects that you are so invested in is probably one of greatest testaments of business knowledge.
What are the different types of Entrepreneurial Ventures?
There can be a lot many classifications based on size, area of venture, capital, etc. However, there are four broad categories into which entrepreneurial ventures can be classified.
– Small Business where the size and the nature of the business is small. Examples include consultancies, restaurants, coaching centres, or essentially any small business idea that serves as a modest livelihood for its founder and people associated with it. They are usually funded by small business loans or private lending.
According to Small Business Administration (SBA) Office of Advocacy, roughly 20% of these ventures fail within the first year. However, given the fact that most startups are small businesses, they still enjoy the largest share of companies in the world of entrepreneurship.
– Scalable Startups differ from small businesses in their potential to scale higher by growing products, services, and markets. Their profit margin expands as their revenue surpasses the expenditure on resources. They usually follow a growth vision through innovation and are funded by Angel and VC investors who rely on their scalability for returns.
– Entrepreneurship in large companies provides a vital means to dodge an existential crisis. Constant innovation is essential to overtake competitors and stay relevant to the growing demands of the market. This is where corporate entrepreneurship or intrapreneurship helps large companies to stay ahead in the game.
– Social Entrepreneurship focuses on driving projects towards the benefit of society without the expectation of large profits.
Startup Statistics at a glance
These are gleamed from various sources and are there to provide a realistic view of how people’s innovations transpire into ventures.
– We already mentioned that about 20% of new startups fail within the first year. Among the ones that survive, a little over 50% make it to the fifth year. And a third of those manage to get through their 10th year with about 40% reaping profits.
– The entrepreneurship environment can be harder for women, with 7 female entrepreneurs for every 10 males, according to a Babson study. (read Problems faced by women entrepreneurs in India)
– A majority of startups are funded through VCs and other investors. And a significant portion are self-financed or backed by loans.
– Salaries for small business owners in USA can range anywhere from $30,000 to $160,000 with the average around $70,000 (source: Payscale).
In fact, at the early stage, a lot of entrepreneurs don’t even take any fixed salary home. But with growth and more streamlined operations, salaries can grow as well. And these numbers don’t reflect any additional profits or the massive downfall when they eventually sell their business.
If business is especially good, entrepreneurs stand a chance to make millions or even more. Some of the highest net worth entrepreneurs include Facebook’s Zuckerberg (>$60 billion), Amazon’s Bezos (>$145 billion), and Buffet (>$82 billion).
In India, young entrepreneurs like Ritesh Aggarwal of OYO (>$1 billion), Ola’s Ankit Bhati (>$1 billion) and more, rake in the big bucks for their smart business skills.
– Besides a lack of market need, two of the biggest reasons for startup failure are due to lack of competence and mismanagement of finances, failing to check for a steady cash flow for keeping the business afloat. These can be greatly ironed out with proper experience and education.
Hence the statistic that most entrepreneurs have a college degree while about 10% have a business degree and that there are more (>60%) entrepreneurs past 40 years of age, backed with years of experience, contrary to popular opinion that entrepreneurship is a youthful venture. (read What is the best age to start your own business?)
How to become a successful entrepreneur?
Entrepreneurship gets its fuel from both the heart and the mind. You cannot succeed in setting up, sustaining, and growing, your own business without certain personality traits.
Most successful entrepreneurs tell tales of their early days of uncertainties and how they carried on despite the despites.
Persistence and tenacity keeps them going against all odds. What may come across as roadblocks to many are often treated as a healthy challenge by a budding entrepreneur with the right attitude.
No negativity can diminish their hopeful optimism towards seeing their business succeed. Passion, not just for the business aspects but also the ultimate cause driving said business, is also essential.
Entrepreneurs are also adept at sniffing out opportunities. They are good communicators and can build great relationships with others, a skill that is extremely important in growing a useful professional network.
What also sets them apart from any other average dreamer is their ability to take action notwithstanding the risks. Entrepreneurs need faith, a complete belief in their self, trusting their instincts towards their goal.
But this heart talk also needs experience and training. A good number of them have just a bachelor’s degree to support their endeavour.
However, some seasoned entrepreneurs, lacking a formal business degree do mention the importance of teaching the mind, after the heart has found its calling.
This is where a lot of MBA degrees with their training in business planning, strategizing, and risk assessment, can positively alter ones’ attitude towards business.
Action Plan to set up your business
So, you have the attitude and the knowledge about the product you want to sell. Now what? As we mentioned before, the road from the idea to the customer invoice needs planning.
Here are some giant steps you will definitely need to take before you can begin to call your company your livelihood.
1. Business Plan
A business plan is a package of information that defines a business idea (here’s a list of small business ideas), its market potential and the roadmap to achieve it.
It will help you foresee your business strategy, resources, infrastructure, technicalities, financing, and all the other supportive elements that will provide the skeletal framework for successful operations.
Studies have shown that the chances of succeeding in business are doubled with a business plan. They are more likely to receive funding and manage growing their business at a much faster rate.
2. Secure Funding
One of the most obvious yet trickiest features of a startup is to get money to make money. Funding resources range from personal savings, generous friends and family, Venture Capitals, Angel investors, banks and crowdfunding options.
Research your chances of getting the best deals that leave you with reasonable room to build and grow your business, without being burdened under heavy interest rates and consequent debts.
Of course, where you get your financing will ultimately depend on your business area, product, location, and the ability to present a sound business plan for the investors willing to risk their capital for your dream.
According to Guidant Financial, 13% entrepreneurs use their own cash, 12% get it from friends, 24% on loans and the least popular funding source is crowd funding.
3. Network and Employees
You will need the right guidance and the most knowledgeable people you can afford in your team of merry-Startup. These will include experts who can fill in the gaps in your know-how, such as legal, marketing, financing, etc.
Or, you can play Jack of most trades and run the aspects you have been trained for in your business management courses.
A business without a marketing plan is, well, a lemon. One of the most significant aspects of a business plan should be about the customer – who is your target niche?
With your business shaping up for the big opening, marketing to that audience will help you get the word out there.
- Where is your business located?
- How is its visibility to your potential buyers?
- Do you have a website to promote your company?
For cost effective advertising, use digital marketing, including the ubiquitous social media, to market your product to your consumers. Your financial planning will need to cover these bases as well.
Ultimately, focus on your business, the behind-the-scenes planning and resourcing, the people, the money, and building a loyal following of customers to build a company with a secure footing for the future.
And as we mentioned before, there is some merit in receiving the right form of education to reduce the initial struggle of starting a fresh business.
Best MBA Programs for Entrepreneurship and Startup
University education, and for that matter specific entrepreneurship courses, are by no means pre-requisite to starting a company.
In fact, studies have shown that the highest growth startups that have grown the maximum in the first five years of operation, are founded by 45 year olds (over 30% highest growth startups between 40-49 years vs 10% for 29 years and younger).
One of the biggest reasons for startup success for them is their prior experience. Experience instils education in the real world, the value of which has been picked up by many business schools.
How does college help?
67% of entrepreneurs have a university degree (Source Guidant Financial). 32% business owners have some sort of business training, while about 10% have some sort of business related degree.
Universities have recognized the potential of sound knowledge for startup success, designing entrepreneurship training to breed future founders.
Besides courses that help replicate the training received as entrepreneurs in the real-world, many b-schools help young innovators through specialty entrepreneurship centers. They are provided with expert coaching from their communities, faculty members and alumni.
Competitions and seed funding grants help launch top student ideas into the business scene. This environment of encouragement fosters ideas and growth among young thinkers.
So yes, school helps. In particular, these are the business school programs that have been able to generate startup success and support for its students.
Best Business Schools for MBA in Entrepreneurship
|Business School||Country||Entrepreneurship Resources||Recent Statistics|
|Stanford Graduate School of Business||USA||– 65 Entrepreneurial courses
– Stanford Venture Studio
– Center for Entrepreneurial Studies
– Stanford Entrepreneurship Network
|15% started their own company
|IE Business School||Spain||– Venture Lab and weekly Venture Network events
– Successful investors and serial entrepreneurs volunteer their time to advise students at our Venture Lab Accelerator
– Area 31 as the hub of entrepreneurial activity
|25% IE alumni start their own companies|
|Imperial College Business School||UK||– Entrepreneurship modules & Seed Funding competition
– Entrepreneurship ecosystem: Imperial Business (IB) Pitch Competition, MBA Connect, SMARTcamp, Plexus, and Advanced Hackspace
Exclusive MSc for Entrepreneurs also available
|9% started their own company|
|Oxford Said Business School||UK||– Entrepreneurship Centre for experiential learning with Student focused programs
– Oxford Seed Fund for capital and expert support
|11% started their own company|
|ESADE||Spain||– Entrepreneurship Institute with research focus on new ventures, growth and expansion, finance, family business and social entrepreneurship||NA|
|Harvard Business School||USA||– Entrepreneurship Clubs
– Over 35 faculties teaching entrepreneurial electives
– Rock Center for Entrepreneurship organizing competitions, innovation lab, fellowships and seed capital
|17% joined a startup with 7% founding a business|
|IESE Business School||Spain||– Entrepreneurship and Innovation Center (EIC)
– Over 1 billion Euros in alumni funding
– Expert guidance on starting and scaling up, corporate venturing, finance, tech transfer and search funds
|30% start a business within 5 years of graduation|
|Berkeley Haas Business School||USA||– Entrepreneurship Program
– Mentoring with Bay Area’s top entrepreneurs and VCs
– Seed Funding and Space, competitions, clubs and Berkeley’s accelerator program
– NSF I-Corps to foster tech innovations and startups
|Wharton, University of Pennsylvania||USA||– Penn Entrepreneurship Ecosystem
– Entrepreneurship classes, competitions, expert guidance and seed funding opportunities
|University of Cambridge Judge Business School||UK||– Entrepreneurship Centre with programs like accelerate Cambridge, Venture Creation weekends, etc
– Entrepreneurship courses, practical team projects, network with successful Cambridge based entrepreneurs
– Startup support
Source: QS Top MBA Rankings for Entrepreneurship
– Best MBA Programs for Entrepreneurship and Start-Ups
– Military veterans use business simulation games to learn entrepreneurship & management at Fayatteville State University
These don’t exhaust the possible choices of good b-schools for entrepreneurship training. Babson MBA, for instance, has an incredible history of support for its entrepreneurship majors.
Or this story about how NYU Stern MBA grad turned entrepreneur in India.
However, the go-getter in you should be able to industriously find out which program and school will be able to, if at all, help you. Although, it is wise to keep in mind certain caveats of getting an MBA en route to your entrepreneurship dreams.
This article – Why many MBA graduates never launch a startup – encapsulates some of the key reasons of their failure.
College loans, corporate temptations, lack of real world skills, and a general lack of motivation or inspiration, are some of the factors mentioned that can play hurdle in a budding entrepreneur’s action plan.
Nevertheless, keeping warnings at bay, now that you have some of the basics down, perhaps you can begin by planning beyond the “idea”.
Step out and understand how your business concept can be realized and what gaps will you need to fill to see your company stand on its own.
Good luck “bossing” around!