Do you wanna be an entrepreneur? Do you have ideas that you can convert into a business? Are you, like everybody else, considering an MBA?
STOP. Right there. If you are considering an MBA, go through this article and the references given below and then decide for yourself.
Over the last decade, MBA programs have become very famous all over the world. A lot of businesses have started coming up and you can see that a lot of people are starting up their firms on their own. You could see business fanatics fighting nail and tooth to get into Harvard, IIM, ISB, etc. Beyond all this craze, off late, there are a lot of speculations about whether an MBA is necessary at all. Here, in this article, I’ll be discussing the reasons as to why pursuing an MBA is not gonna be a wise choice if you want to become an entrepreneur.
Over the past decade, business schools have started divulging from traditional MBAs and have started offering specializations in entrepreneurship and business. As much cool as it may sound, this brings up a lot of questions.
- How much will it cost?
- Will it be worth it?
- What will I learn?
First of all, there are a few mistakes that people do when it comes to business education.
- Pursuing it because it sounds cool or will lead to riches.
- Pursuing it because they didn’t get a job right out of college, thinking an MBA will get them a great job.
- Pursuing it because everyone else is doing it.
There are few advantages of going to a business school – connections, skills, theoretical knowledge, learning to play by the books, etc.
But the real question is, weighing the pros and cons of going to school versus not going, which one is the wiser option?
The trends point to an ever rising enrollment fee for getting into any business school program. I present you here, various debates considering the amount of money, effort, time put into an MBA and the return on investment that one gets back.
1. Pursuing an MBA thinking/hoping it will make you rich
Any author who has written about money, wealth, and riches has made one point very clear: A JOB WILL NOT MAKE YOU RICH. If you are like most people, you will be aiming to get a job on completing your MBA degree and getting that piece of paper that speaks for you. So, if you didn’t already know, that job or whatever job it is, is not going to make you rich.
You see, people who are working jobs, at least most of them, they WORK FOR MONEY. You work for money. Heck man, even I work for money. But, the main ingredient to becoming rich – MAKING MONEY WORK FOR YOU.
How to make money work for you? That’s for another post. But I can surely say that if getting a job is your goal out of an MBA, then it’s just a dead end and an MBA will not be worth it. You know why? Coz, any MBA program, doesn’t matter which college it is from, if you are going to get it from a reputable institution, it’s gonna cost a shitload of money. And, if you are like most people who do MBA, from a middle-class family, you are going to take a loan. Even if you get a really good job, you are going to spend the next 7 to 10 years out of college settling your debt. So, it probably won’t make much of a difference considering what you will have left after taxes, deductions, etc.
2. Pursuing an MBA hoping that you will get a job
Well, to be honest, what Engineering and Medicine were 10 years back, MBA is that now – a fad, an obsession. There are a lot of people out there with an MBA degree and a lot less of them with a proper job, the one they expected. Only a few of them have an MBA degree from reputed universities. Only a few among them actually have the jobs that they wanted. If you are thinking about pursuing an MBA as a means to getting a job, stop and rethink. Why? Coz, in the money you invest on that MBA degree, you could probably learn everything using books worth maximum $2000 and you could save more than $98000 that you would have ended up paying for the college. You could instead spend all that on investing, starting up a business, or better yet, put it in real estate/stocks and make money.
3. Pursuing an MBA because everyone else is
If you are an Indian, you would have seen the ad for Shiksha website – a guy telling his classmates that he is going to pursue an MBA in some institute and all of his classmates following him around like a flock of sheep. That’s what it is like, to pursue a degree just because everyone else is doing it, or just because it seems/sounds cool to have MBA behind your name. Don’t do it because everyone else is doing it – if you are going to do, at what cost? A loan in your name that you will be paying every month out of your pocket for the next 7 to 10 years? A menial job in a management position, probably in HR, Finance, Administration with very little money left after taxes and deductions? You don’t want that now, do you?
We have covered the mistakes you might make in taking the decision to pursue an MBA in the previous section. Now, in the following section, I will give you the reasons why you shouldn’t be pursuing an MBA.
If you want to be wealthy, if you want to be rich like those millionaires and billionaires out there, you are going to have to have a source of income other than your salary. With a job, you will be selling your time for money. If all you have to do to earn money is sell your time, even if you work 24x7x365, you won’t manage to rack up more than a million or two per year. And even if you manage to do that, what’s the point? Where’s the LIFE in that?
If you wanna be an entrepreneur, the same applies. You start a business for some reasons. Most common reason is to become rich and at the same time provide something of value to the people around you. Say you work 18 hour days. Only you work. Nobody else is assisting you. How will it be? Do you think you can help 10 people a day? Probably yes. A hundred people a day? May be. Thousand people per day? Probably not. Ten thousand people per day? I don’t think so.
This is where you will have to start thinking about outsourcing different jobs that the business will require of you if you want to scale your business to provide value to thousands and thousands of people or millions of them. You will have to recruit people, have them do your work for you while you pay them. Now, when you go to a business school, you will learn a lot about these processes. You will probably learn to do things by the books, you know, playing by the rules kinda thing? The problem with this is that a lot of millionaires and billionaires you see out there in the real world, haven’t come up to where they are, playing by the books, following the rules. They learnt the game and they played it better than anyone else played, making their own rules along the way.
In the real world, most of the billionaires out there – they never got an MBA. Most of them didn’t even go to college. Bill Gates, Zuckerberg, Steve Jobs are some of those who dropped out of college. The list of people who had some degree but not an MBA includes Richard Branson, Charles T Manger, etc. Mistake me not, there are billionaires with MBAs, but they didn’t come up to where they are with that degree alone. The richest men in the world are entrepreneurs and do not have MBAs. Many of them have no degree at all or quit college when they realized that it was only teaching them to be employees and to obey.Today these people hire the ones who have degrees. Consider the cases of Mark Zuckerberg with Facebook, Bill Gates with Microsoft, Steve Jobs with Apple, Amancio Ortega with Zara–Inditex, Richard Branson with Virgin, or Ingvar Kamprad with Ikea.
Schools and Colleges these days, they teach you certain things:
- How to Obey
- How to FOLLOW rules
- How to BLEND IN with the society
- How to be like everybody else
- How to do things the way everybody else is doing.
An MBA course, even in a reputed institution teaches the same things, from a business related perspective. That is the only difference.
The author of the famous book “THE PERSONAL MBA”, Josh Kaufman had this to say about getting an MBA degree:
Getting an MBA essentially buys you a $150,000+ interview with a large consulting firm or investment bank, since it’s used as an HR screening criteria. (And entry-level MBA positions are usually soul-sucking and often quite scammy.) For all other purposes, it’s a waste of time and money with a massive opportunity cost – there is absolutely no difference regarding long-term compensation, hiring, promotion, or job satisfaction between MBA-holders and business professionals that don’t have a degree. None. If you want to work in an industry that uses the MBA as a screen, you are effectively buying yourself a $150,000 interview. If you want to do anything else in business, if you want to start your own company, get a job in another field, you don’t have to have an MBA. It’s better if you don’t because of the debt.
The effect (of the degree) is strongest immediately after graduation, then largely wears out within three to five years. After that, you’re on your own. Hiring managers no longer care so much about where you went to school. They care more about what you’ve accomplished since then.
All of the reputed top firms in the world combined, from Goldman Sachs to McKinsey & Co., probably hire no more than 5,000 to 10,000 MBAs a year out of the more than 200,000 people who are getting MBAs around the world. The other 190,000 to 195,000 are getting MBAs they don’t really need. For pretty much everyone else, it’s a waste and a very bad investment.
Going to Harvard all told can cost you about $350,000. That is mortgage level debt. Put that through an amortization schedule at a 6.8% rate of interest. It’s a $2,200 monthly payment over 30 years. You are spending $821,000 when you account for the interest. The cost is enormous.
If you put in the same amount of time and energy you’d spend on completing an MBA into doing good work, improving your skills, and developing your knowledge of business, investing, finance, etc., you will do just as well.
MBA is seen as a means to an end, but, in reality, it is not. MBA is not the cause of professional success, it is only correlated to it. Ferrari owners are correlated to higher income, but the Ferrari is not the cause of their wealth.
It is pretty easy to explain. You see, these top rated business schools, they admit only people who have proven themselves – those who have proven that they have got what it takes to become successful. The more prestigious the institution, the more the fees, the more the competition and demand for admission. But the only problem is, this so called prestigious MBA degree doesn’t add anything to the student that he/she already didn’t have before joining the institution. When that student who graduated from their institution goes out to the real world and becomes really successful as an entrepreneur, they just take credit for it.
The world has changed a lot, but whatever is taught in MBA is not. A lot of what’s taught in the prestigious MBA programs are outdated age old principles and theories, a lot of which don’t work in the real world anymore. You will only be using a small portion of whatever you have learnt, in your first job as an MBA grad. Five years after that, most of what you learnt in your MBA will have changed.
As for the connections, the connections you make in your MBA are no better than you yourself. Also, people don’t run around asking you for the degree certificate before they consider connecting with you.
One of the famous authors Mariana Zanetti had this to say about the value of MBA when it comes to employers & interviews:
But what about employers? Don’t they really value the degree?
They do. An MBA always looks good on a resume. If two candidates for a job meet the requirements, most employers will choose the one who has an MBA. What is the conclusion most professionals come to when seeing this? That the MBA is worth time and money. Wrong damned conclusion!
Employers will choose the MBA candidate… if there is a tie. But there is not going to be any tie if one of the candidates has the experience or the skills they value most. Why would people mortgage their future to buy a tie-breaking joker? Joan asks in her article: “Why on earth would they outlay the money and time [pursuing an MBA] and NOT use it to build toward something that will significantly change their earning potential?”
If you don’t want to be an entrepreneur, and you want some position in management consulting, investment banking, etc., by all means, go and get an MBA degree. Before that, remember, most of these positions involve you working for 100 hours per week. If you know what you are getting into and you want exactly that, by all means go ahead and get the piece of paper.
Truly re-thinking the MBA means questioning whether or not it’s necessary at all. Based on all available evidence (and there seems to be a quite a bit of effectiveness research that colleges are deliberately withholding ), MBA programs are not necessary at all – you can learn what you need to know to start, run, and manage a business effectively by yourself or far less expensive help from subject-matter experts, in less time, without debt.
MBA is nice to have. But it’s not worth the cost. It’s like a cherry on the cake, but a cherry does not make the cake.
If you wanna be an entrepreneur, you are gonna have to create a business model, with the long term in perspective. I am not talking about huge excel sheets, statistical models, graphs, etc. It’s about action. The only thing you should dread is inaction. Being an entrepreneur is all about TAKING ACTION. You don’t need analytical and statistical skills to create a business. You have to have some personality, charisma, and some kind of fire inside – the kind of fire that doesn’t let you give up, the kind of fire that propels you to go ahead and grab all the greatness that you can catch ahold of, the kind of fire that makes you wanna go to sleep a little bit late every night, the kind of fire that makes you wanna wake up a little bit earlier every morning to work on what you are passionately building. At the end of the day, that fire is what this is all about. You can gain knowledge from books and apply it in whatever you do. If you’re smart and you have the potential to get into Harvard Business school, then, in all likelihood, you will never need a Harvard MBA.
So, rethink your decision.
While you do that, take a look at this book – The Personal MBA – Master The Art Of Business by Josh Kaufman. This book will give you whatever you need, to get a head start. Read that book and you will know what to do.
Meanwhile, once you complete the Personal MBA book, you might wanna take a look at this.
This is the personal MBA manifesto – which provides you with 99 books which you need to learn from. Completing those 99 books is as good as getting an MBA.
You might also wanna take a look at Josh Kaufman’s Personal MBA Website
That website contains all the guidance that you will need to make an entrepreneur out of yourself.
You have all the resources available at your disposal. You can save that $150,000 that you will spend on your business education and instead spend a maximum of $2000 to get the same from the books, apply them, create a sustainable business model, build your ideas and who knows? You might even end up changing the world.
1. Personal MBA Book – The Personal MBA – Master The Art Of Business
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