Is an MBA worth it for the entrepreneur?
(Courtesy: Dinesh Moorjani)
April 24th, 2012
07:00 PM ET

Is an MBA worth it for the entrepreneur?

Editor’s Note: Dinesh Moorjani is the Founder and CEO of Hatch Labs, a mobile startup incubator creating new platforms and applications to improve mobility for the wireless generation.

By Dinesh Moorjani – Special to CNN

It’s often perceived in the business world that pursuing an MBA degree is analogous to buying career insurance, especially if you attend a top program.

What many aspiring entrepreneurs have found, however is that earning an MBA can actually momentarily slow down an upward career trajectory, considering the degree typically requires a two-year job hiatus at a full-time program.

The real benefit of this advanced degree may be the parachute it serves in times of economic distress.  But for those assessing the risk vs. reward opportunity, the need to consider the likelihood of that parachute opening properly remains paramount.  And perhaps the best indicator of that is how well the parachute is packed, or without the laborious analogy, how talented the individual is and how those talents are channeled toward meaningful professional endeavors.

To be clear, an MBA is not for everyone. While it can also serve as rocket fuel to accelerate career development, one overlooked fact is that this rocket fuel doesn’t typically ignite until a few years post-graduation. Furthermore, it requires some level of personal or professional accomplishments to combust.

To illustrate this point, let’s revisit the graph above. Why sketch an illustrative chart to make the point instead of comparing hard statistics? Because the decision is not purely a scientific one.

First, let’s understand the illustration.  When the post-MBA career fuel ignites and a new career path curves upward, it surpasses the expected outcome of the career path without the MBA.  Of course, we cannot actually compare both trajectories concurrently so we’re forecasting a critical eclipse point where the MBA begins to yield dividends.  But will the MBA lead to the expected outcome?

The most important inputs to answer this question are a self-assessment of your risk profile and an evaluation if that profile is in alignment with your professional goals.

The irony is despite the fact that MBA programs ask applicants to reveal these goals, the MBA degree may be most helpful for those whose professional goals remain unclear.

Career plans are rarely mapped with a straight line from points A to B.  Rather, success is built on our ability to identify the right trajectory and to track how every dotted line we trace is leading us in the right (or wrong) direction.  If you’re lucky, these dots will not only align, but they will build upon each other.

If you possess a clear understanding of your professional goal(s), you understand the dependencies to achieve them, and most importantly, you are willing to act on these dependencies, your path is no longer a straight line.  It would be like folding the paper to adjoin points A and B – you discover the shortest distance between two points is virtually zero, and is a result of "bending space."

This is precisely what entrepreneurs do.  They achieve their goals despite insufficient resources – in effect, they “bend space.”  Of course, we’re reminded that many successful entrepreneurs never finished school nor did they apply at all.  In these instances, an MBA would have likely impeded their progress, or hindered their ability to take calculated risks in order to accelerate their career.

On the other hand, an MBA from a top program provides a deep practical education and opens doors, allowing you to grow your personal and professional networks. This has the desirable effect of creating opportunity, either through coincidence or providence – or what I chalk up to the residue of hard work.  So, whether by choice or by circumstance, opening the right doors or exploring the right options statistically increases with the completion of an advanced degree.

According to a 2010 Graduate and Admission Council (GMAC) survey of 6,800 MBA graduates, even in a tight economy, 93% were employed and more than 70% felt that their salary met or exceeded their expectations.  It should be noted that the median salary of all those surveyed was $94,542, with their additional median bonus compensation averaging $17,565.

If you rely on stats and illustrative diagrams to guide your professional decisions, earning an MBA may be the right path.  But if you’re an entrepreneur whose appetite for risk is commensurate with the confidence in your capabilities, only you can decide whether idling in neutral for two years is worth the anticipated career acceleration.

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Topics: Business • Education • Innovation • Technology

soundoff (81 Responses)
  1. Minorkle

    Speaking strictly for myself, I can most assuredly say that my MBA from Yakult University has been the single most important ingredient to my success. It would have been impossible for me to achieve the high levels of fame and financial success that I have without my advanced degree. My prowess in the business world is legendary. That you so much, Yakult! Go Swallows!

    April 25, 2012 at 6:43 pm | Reply
  2. Minorkle

    Speaking strictly for myself, I can most assuredly say that my MBA from Yakult University has been the single most important ingredient to my success. It would have been impossible for me to achieve the high levels of fame and financial success that I have without my advanced degree. My prowess in the business world is legendary. Thank you so much, Yakult! Go Swallows!

    April 25, 2012 at 6:44 pm | Reply
  3. TC

    s

    April 25, 2012 at 6:56 pm | Reply
  4. TC

    Having paper is important and I encourage people to pursue education but accomplishments, communication skills and emotional intelligence is what defines successful people – so the paper enhances a resume. Lots of poor perfomers with degrees and lots of successful performers without degrees.

    April 25, 2012 at 6:58 pm | Reply
  5. Ron Blogger

    I am a MBA Student at Webster Univ in SE Asia and I write an MBA Blog at http://www.MBABlog.net – I thought this was GREAT Advice and will link it for my next post. Thank you

    April 25, 2012 at 7:33 pm | Reply
  6. Texan

    College just teaches you how to learn and where to look. Whether or not you apply it is up to the individual.

    – 3 time college dropout making six figures.

    April 25, 2012 at 8:13 pm | Reply
    • Steve Jobs

      Amen, brother

      April 26, 2012 at 8:04 am | Reply
  7. markishere

    ..."considering the degree typically requires a two-year job hiatus at a full-time program" – since when?! I went for my MBA in two years while working, I'm sure the vast majority of Americans do, as well.

    April 25, 2012 at 9:30 pm | Reply
  8. PaulThaddeus

    I really found this article quite interesting as well. Funny, I was taking a break from writing a paper for one of my EMBA classes. I was actually thinking this evening if all the work I am putting in will be worth it.
    Couple points:
    1. I work in corporate America, as well as I am an Entrepreneur. I have found that after 3 months the training I am receiving in my EMBA classes is both beneficial in my professional and Entrepreneurial careers.
    2. Many people are downing a degree from University of Phoenix. I can tell you first hand that you truly earn a degree from UofP especially if you attend one of the local campuses. I cannot speak to online. I attended a state college for 2 years then UofP to finish my degree. I learned way more at UofP then I ever did at the state school.

    This being said I can only hope the next 13-18 Months are as fun and beneficial as the first three.

    April 26, 2012 at 12:31 am | Reply
  9. dan

    that graph looks real scientific...

    April 26, 2012 at 1:39 am | Reply
  10. Steve Jobs

    MBA = Mediocre, But Ambitious

    April 26, 2012 at 8:02 am | Reply
  11. KAS

    I have said for some you should never hire an MBA to run your company. It's the surest way of driving it into the ground.

    MBAs all sound alike when you listen to them talk. Sure, they talk about free markets, but then the next words out of their mouths are how to get the taxpayers to foot the bill for their incompetence (ala Goldman Sachs, Wells Fargo, Bank America, AIG and the host of other incompetents).

    I have a cartoon which shows two guys talking at a bar with the caption reading:

    "I'm incompetent and I have an MBA to prove it."

    That about sums it up.

    April 26, 2012 at 8:57 am | Reply
  12. Muin

    You're right. Professional endeavour is different ball game. Mitt Romney made tons of money cuz he had real talent. He probably would've made that much money without JD/MBA.

    April 26, 2012 at 9:01 am | Reply
    • Reginald D Carter

      Mitt Romney made a lot of money because he was also born into moneyl...being born rich with lots of connections helps more than a degree.

      July 31, 2012 at 6:38 pm | Reply
  13. Jim E

    Hey Dinesh – Playing "Survivor" during our first year in "Club B" made it worth every penny....

    Seriously, an MBA from a top school (and there are 10 schools in the "top 5"), is absolutely worth it in terms of the enrichment, experience, friends, network, and yes, income security and career options. Getting a top MBA was a major inflection point in my career, and opened many doors (e.g. top consulting firms, private equity, etc...)

    April 26, 2012 at 9:01 am | Reply
  14. Iconoclast

    Looking back on my 35 year finance career I feel stronger than ever that an MBA would not have served any purpose over and above the BA I earned in combination with professional certifications and licensing I obtained after graduation while working in fortune 200 corporations. It has always occurred to me that the value of the MBA is the professional network and resources you can pick up while at school all of which can be obtained through work experience(unless you have your sights set on being a "hedge fund manager"). Thanks to those professional certifications and licensing I earned I left the corporate world over twenty years ago, started my own business servicing nothing but small businesses and get a chuckle every time one of my high school educated clients hits it big and sells out for a fortune to, you guessed it, investment companies run by MBA's. More times than not the buyers have over paid for the profits they're getting and the operation promptly begins to get mangled as management furiously tries to duplicate the results (using classic group corporate think) the founder was able to achieve. They are never able to duplicate the bottom line % but they are sometimes able to achieve sales growth through additional investments and mergers, that is until they sell it off to the next round of MBA's.

    April 26, 2012 at 1:46 pm | Reply
  15. CJ

    An MBA by itself means nothing, just like a JD by itself means nothing. One has to be willing to do what it takes to succeed. MBAs should be a goal for those that have a speciality or technical mastery. If the goal is focused on a particular industry/ vocation one has experience in an MBA can help. If the goal is to get the MBA and see what happens, then thats bad news.

    April 28, 2012 at 9:19 pm | Reply
  16. self employment course

    Excellent Info like that, encourage people to keep returning to here. Thanks

    May 26, 2012 at 3:57 am | Reply
  17. Ed

    With the economy being what it is today, this really is a conundrum for me. I have thought about going back and finishing my masters, but I am not sure it would be worth it in terms of the debt I would take on. If I knew my company would increase my salary when I was done, then I would certainly do it, but fewer and fewer companies are doing that now-a-days. I posted an article earlier in the month about this very topic, http://www.mbaalliance.com/is-an-mba-worth-it/

    Feel free to give it a read as well. Thanks for the article and I will check back to see some of the quality comments that are coming in as well.

    June 19, 2012 at 11:02 am | Reply
  18. Reggie D

    I'm a business owner with a PhD and wondered whether earning an MBA would help as well. Its a great look on your bio and useful when raising capital, but investors are only interested in whether you're capable of making money. As for applying for jobs, people with graduate degrees definitely have to appear less educated (less threatening) in this economy.

    July 31, 2012 at 6:46 pm | Reply
  19. Executive Education

    hey this is a great update......a lot of useful information was received.thanks for the update an keep up the good work. http://www.mentorindia.com/

    August 4, 2012 at 4:44 am | Reply
  20. LEONARD A WILSON JR

    As a current entrepreneur and an MBA student, I can answer from my perspective NO. An MBA is not worth it for an entrepreneur unless the program is specifically tailored for entrepreneurs. The program I am enrolled in is general, focused on management strategies. Right now, I hear a lot of theories but no applicable information. Possibly a waste of my time and resources.

    -Leonard Wilson, Jr., author of My Flexibility Manifesto available on Amazon

    August 25, 2012 at 2:03 pm | Reply
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    January 31, 2013 at 5:15 am | Reply
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