Do I Need an MBA to Start a Business?

• Getting an MBA can help you avoid many of the pitfalls associated with starting a business.
• About 23% of entrepreneurs hold an advanced degree.
• Around 45% of new businesses fail within five years.
• Entrepreneurship is among the most in-demand MBA concentrations.

While there are definite advantages to earning a master of business administration (MBA) degree before starting your own business, an advanced degree is not a requirement.

Millions of business owners and entrepreneurs around the world have successfully launched businesses without an MBA. According to a recent Kauffman Foundation Trends in Entrepreneurship Report, only 22.6% of the entrepreneurs surveyed had an advanced degree.

Starting a business can be fairly straightforward or very challenging depending on the type of business. If you're planning on launching a small business from home, an MBA might be overkill. But if you're planning on launching a new product or service with aspirations of disrupting an industry, an MBA could be your ticket to success.

Why Get an MBA to Start a Business?

Starting a business in today's fast-paced digital economy can be challenging, and getting an MBA can help you navigate those challenges. An MBA from an accredited business school that offers a specialization or concentration in entrepreneurship or a similar area can provide you with the skills and knowledge you need to launch a successful business while avoiding the pitfalls often associated with business startups.

People in the United States filled out around 4.5 million business applications in 2020. According to the Bureau of Labor Statistics, 45% of businesses are likely to fail within the first five years of operation.

Poor research and planning, lack of sufficient capital or cash flow, poor financial management, supply issues, bad customer service, poor marketing, and launching a product or service that lacks consumer demand all contribute to business failure.

MBA programs that offer extensive coursework in entrepreneurship, and business management concepts can help you turn your business startup dreams into reality. Entrepreneurship is among the most in-demand MBA concentrations.

Not only will you learn what it takes to be an entrepreneur, you'll also dive into business operational areas like finance, operations, administration, marketing, information technology, and risk management.

An MBA can definitely help you achieve your goal of starting a successful new business, but is it worth the investment? Decide for yourself by reviewing some of the pros and cons below.

Frequently Asked Questions About Getting an MBA to Start a Business

Will an MBA help me start a business?

An MBA can definitely help you start a business by providing you with the skills, knowledge, and connections needed to successfully launch and grow a business.

An intensive, cohort-based model means that students can network while also building fundamental skills that they can leverage to start their own enterprises. MBA programs are also offered in a wide variety of formats, including part-time and online, allowing students to work while they earn their degree.

Some programs also offer an accelerated MBA format as opposed to the traditional two-year format.

Even if you don't end up launching a business, earning an MBA can mean higher earnings and a good return on your investment. MBA graduates in the United States earned an estimated median starting salary of $125,000 in 2023, an increase from $115,000 in 2022, according to a recent Graduate Management Admission Council report.

An average MBA program costs close to $55,000 in total, although tuition varies by school and program type, with online and part-time programs typically costing less than full-time, in-person programs.

What skills does an MBA teach me to help me start a business?

MBA programs typically cover a broad range of fundamental business skills like finance, marketing, entrepreneurship, strategy, and other key aspects of management and running a business.

Many of those skills are applicable to starting a business. Having a good understanding of accounting, for example, can give graduates a leg up when it comes to planning for the financial health of their business. A strong understanding of digital marketing can give prospective entrepreneurs a good shot at building their customer base.

Additionally, many schools offer concentrations in high-demand fields like cybersecurity and sustainability, providing an opportunity for advanced training and niche business ventures.

Is an MBA worth it for an entrepreneur?

An MBA is a worthwhile pursuit for any entrepreneur lacking skills and knowledge in key business areas like accounting, economics, human resources, marketing, strategic development, and product development.

Will an MBA specialization help me start a business?

Many MBA programs offer specializations in areas that are key to starting a business or allow students to specialize in fields that are rapidly growing.

Some MBA specializations that could help a student start a business include:

• Digital marketing, which could set the stage for a social media marketing venture.
• Cybersecurity, a rapidly growing field that is key to all businesses with an online presence.
• Entrepreneurship, which covers the fundamentals of creating and growing a business and can prepare students to start a wide range of ventures.
• Artificial intelligence, another rapidly growing field that will be critical as businesses increasingly embrace the ever-changing technology.

What is the best MBA to start a business?

The best MBA for starting a business depends on what type of business you want to start. Generally, an MBA with a concentration in business management or entrepreneurship provides the most comprehensive education related to starting a business.

How long does an MBA take?

While a traditional MBA program typically takes two years to complete, MBA programs vary based on their format.

An executive MBA program, for example, is typically geared toward professionals with multiple years of experience. It is usually offered in an intensive, year-long format outside of usual business hours. An online MBA program can be offered either full or part time, typically taking 1-2 years to complete.

Can I work while getting an MBA?

Many MBA students work full time while earning their degree. Business schools often offer part-time or online options to allow students plenty of flexibility while they earn their degrees.

Alternatives to an MBA for Starting a Business

While an MBA can give you the skills you need to succeed in starting a business, it isn't the only route you can take to learn about entrepreneurship.

Various training programs, degrees, and certifications are available to help prospective entrepreneurs launch their businesses.

Degree in Entrepreneurship

An entrepreneurship degree is typically offered through a college's business school and puts a focus on real-world scenarios, immersing students in what it takes to start a new venture.

Entrepreneurship degree programs mix core business skills with leadership, fundraising, law, and other key aspects of starting a business. Schools offer both graduate and undergraduate entrepreneurship degrees, with some also available in an online format.

Programs sometimes feature concentrations in areas like small business, retail, sports fitness, and other industry-specific fields.

Degree in Small Business Management

Some schools offer degrees or specializations in small business management. DeVry University, for example, features small business and entrepreneurship as a dual specialization in several of its undergraduate business programs.

Massive Online Open Courses (MOOC)

A college degree program is just one of many ways to learn key skills for starting your own business. Free massive online open courses on platforms like EdX are often developed by seasoned professionals with lengthy experience in starting and growing their own businesses and can offer a unique perspective on how to create your own venture.

EdX offers a host of courses on entrepreneurship, including from high-power universities like the Massachusetts Institute of Technology, Harvard University, and the University of California, Berkeley.