Do I Need an MBA to Start a Business?

Updated on June 27, 2024

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A master of business administration (MBA) degree isn’t a requirement to start a business, but it can help teach you the fundamentals of growing a successful enterprise.

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.

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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 5.5 million business applications in 2023. 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.

How Can an MBA Specialization Help 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 could set the stage for a social media marketing venture.
Cybersecurity is a rapidly growing field that is key to all businesses with an online presence.
Entrepreneurship covers the fundamentals of creating and growing a business and can prepare students to start various ventures.
Artificial intelligence is another rapidly growing field, with many businesses embracing new technology.

Pros of Getting an MBA to Start a Business

Many MBA programs in entrepreneurship offer courses taught by people who have actually been through the process of launching a new business. These professors and teachers can be a valuable resource for your future startup.
Many online MBA programs offer concentrations or specializations in entrepreneurship, business management, or a closely related field, making it easier to launch your business from anywhere in the country while furthering your education.
If your business startup fails, having an MBA can make it easier to land a job with an existing company. You’ll be able to apply your expertise to a variety of industries and business sectors.
MBA programs help you develop great leadership, collaboration, communication, and negotiating skills. These soft skills can be invaluable when working with clients and vendors.
An MBA program can familiarize you with many of the technical tools and software you will need for sales, operations, accounting, human resources, e-commerce, and marketing.
Most MBA programs offer an extensive alumni network that you will be able to tap into for advice and support when launching your new business venture.
An MBA will give you instant credibility, which can be helpful during business negotiations.
MBA programs give you the opportunity to present business ideas and get valuable feedback and advice from faculty and peers.
Many business schools have entrepreneurship clubs and organizations where students can access entrepreneurial resources, network with community entrepreneurs, and share ideas.

Cons of Getting an MBA to Start a Business

You don’t need an MBA to start a business. Many of the most successful businesses were launched by people without an advanced degree. You can always hire consultants or rely on the advice of experts when you find yourself in unfamiliar territory.
Pursuing an MBA requires a significant amount of time and financial resources. You may be better off applying the time and money to your new business venture while taking online certificate courses in the areas of business that you’re unfamiliar with.
An MBA doesn’t guarantee that you will be able to successfully launch a new business. An accredited MBA program can provide you with the skills and knowledge needed to start a business, but it’s up to you to successfully execute your idea.
Work experience in the business field that you plan to start a business in can be just as valuable as earning an MBA. If you have the opportunity to be mentored by another business owner, you should take advantage of it.

Skills Gained With an MBA That Can Help You 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.

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.

Frequently Asked Questions About Getting an MBA to 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 $63,000 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.

Note: The insights on this page were reviewed by an independent third party compensated for their time by BestColleges. Page last reviewed June 24, 2024.