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Does Formal Education Matter When Opening A Business?

By Ken Sundheim
37 Comments

Entrepreneurship is taught in nearly every business program at university, but does your education or your college major really factor into success when going out on your own as an entrepreneur?

If so, what types of education are beneficial to entrepreneurial success and what types are worth a second look?

To best answer this question, we must look further into a few different situations and dig into some myths that many entrepreneurs have about their education in relation to their ability to succeed in business ownership.

Does What College You Graduated From Matter?

I don’t think graduating from a particular college really factors into one’s ability to successfully start and operate a business.

Yes, in certain industries intelligence does matter, but you don’t have to be a Cambridge graduate to make money as your own boss. As a matter of fact, many entrepreneurs are too cerebral and end up thinking too much prior to taking any risk, which is a very bad habit.

On the flip side, I feel that there is an indirect correlation between the more rigorous college programs and the ability to be successful as a business owner.

The reason for the heightened odds of success is that entrepreneurship takes a ton of work and one must possess the ability to self teach. If you’re an aspiring entrepreneur and you think that education and studying ends with a diploma, having to write a resume is in your near future.

Above all, the most important thing I learned in college is how to sit down and study. Mentors can only do so much and my mentor, Harvey Cohen (may he rest in peace) died of pancreatic cancer two and a half years ago.

Therefore, I am reliant on studying and books and, regardless if you have a great mentor, you are going to need to implement study time after college graduation – a habit best learned while young.

Does Your College Major Matter?

Your college major does not matter all that much. Non-business majors may have some catch-up to do when first starting out, however, this is not too extensive as all businesses start small. Baby steps make learning on the job easier.

Regarding majoring in entrepreneurship or small business, I don’t think that any university can fully teach entrepreneurship in a few years, as it takes on the job learning as well as maturity before you can fully dive into the subject.

Regardless, I do recommend that all students take some business classes – especially an introduction to finance and accounting. Thinking statistically is crucial for growing one’s business and retaining an accountant is quite expensive.

I also recommend that students take creative writing classes, as while marketing remains visual, the search engines have also made fresh content of utter importance for anybody who wants to gain name recognition as well as be considered an expert in their respective field.

I think that any education is important and the more well-rounded an entrepreneur’s education is, the more likely they are going to learn how to sell and connect with people, which is another basis of entrepreneurial success. From knowing successful entrepreneurs as well as learning more about myself and my education, I’ve come to the conclusion that each major has its strengths and weaknesses and I would recommend diversifying and even taking extra classes while in school.

If you want to be an entrepreneur, the extra few points on your GPA doesn’t matter, so take the hard classes and get “B’s” rather than your lay-up classes. Hard work and adversity builds character and lays the foundation for your success owning your own business.

What About An MBA?

MBAs are helpful as they are a crash course in business after one gets a broad education. Nevertheless, MBAs give only a slight advantage to those who don’t have them. This is assuming that the entrepreneur makes sure that he or she learns as much possible.

If you are looking for something to pad your bio, an MBA is surely expensive padding. As I was writing this, I checked to see if I had my education on my bio and I left it off – simply didn’t cross my mind because the professional world isn’t too concerned with what college you went to.

Before you start studying for the required admission test(s), keep in mind that MBAs are very expensive and that money can be invested into your company. Also, all the study time cuts into time that you could be making money. Opportunity cost is something to consider.

If you are going to get an MBA, I suggest opening your business before you do so as you may learn that the money is not worth it. Then again, you may decide that getting an MBA for entrepreneurship is worth your time and the investment. Make sure you get a ton out of it.

My closing remarks on the topic are: never get an MBA just for business contacts because relying on contacts as an entrepreneur is not as lucrative as many think. Just because somebody went to the same college, does not mean they are writing you a check. Always remember that an MBA and entrepreneurial success are mutually exclusive.

Business Is The Best Education

You will never know how successful you can be as an entrepreneur until you jump in with both feet. The last thing that you want to do as an aspiring business owner is to postpone opening your business for further, formal education. Opening a business is education enough. As a matter of fact, it is by far the best education one can receive in regards to business.

If someone could legitimately teach people how to become millionaires by owning their own business over and over again, hordes of people would be signing up to enroll. With formal education, if you think that you can’t swim without an MBA or a particular major, you are wrong.

Ken

Image courtesy of ralph and jenny

About Ken Sundheim

At age 25, Ken Sundheim started KAS Placement Recruitment and Staffing from a studio apartment in New York. With no industry experience nor contacts, Ken learned the staffing business out of a book. KAS Placement now has two offices and is currently nominated as America's Most Promising Companies in 2012 by Forbes Magazine. Ken has previously contributed to NYTimes.com, WSJ.com, USAToday.com, Forbes and many more. You can read more at kensundheim.com.

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37 Comments

  • Not to downplay education (because I do hope my daughter goes to college) but I dropped out of high school, got my GED, tried college but never finished…

    I own a company, live on the beach, answer to me.

  • My major was law. I went to law school and even practiced as a lawyer before parenthood and moving to a new country forced me to start an online business. I even considered doing an MBA, but that was because I was thinking of starting a consultancy and felt the extra letters will imply credibility.

    I have learned a few things from my formal education that I’m applying to my business:

    1. I know how to write.
    2. I know how to study – it was practically all we did anyway. and
    3. I read the fine print. Just because the whole online world is raving about a product does not mean it will suit my needs. I do my research.

    But will I have done as well as I have without formal education? I think I might have. I don’t think lack of one should be a limitation for anyone. Determination will help you learn all you need to in order to be successful.

  • Hi Ken, interesting article. I’ve been posting on LinkedIn saying formal business education is over-rated. As an MBA myself I can say, hand on heart, that I’ve learnt a lot more from running my own businesses for the past four years, than anything I learnt during my MBA program. Having said that, if I wanted a job with a blue-chip then the MBA would be essential, but for business I’d say you definitely need more savvy and “get up and go” than academic credentials.

    Also the ability to allow yourself to test ideas, and fail, as you learn and grow your business. Too often education punishes us for failing and that’s something that sticks with us for life and makes us afraid to try new things.

    • Yes quite agree with you.

      Wanted to have a good job than go and get degree but in fact at there too experience is vital.

    • Hi Cassie,

      Thanks for the response. My opinion about getting a MBA is that you must learn enough to decide whether it’s good for you and whether the people who are teaching you know what they’re talking about.

      In all sincerity, when people put “MBA” front and center on their resume, it means “I cost more to an employer.” It is what it is, though I think that once the masses stop getting them, they will increase in value as they had 15yrs ago.

  • Ken

    my brother I feel the same way, a formal education is not required to make it in business. All the mass population see is going to college, instead of trying to go into themselves and see their talents and abilities.

  • When I do hiring, I tend to look more at a person’s past hands-on experience first before looking to see what, if any, schooling they had. I believe that college is important, but at the same time, a book smart person needs more coddling in comparison to someone who has already done the job.

  • I would tend to agree that education doesn’t really matter when it comes down to starting your own business. There are certain traits that help increase your odds of success, but they’re not necessarily something you can learn in school.

    Does anyone know of any studies done on this subject? It would be interesting to see some objective results.

  • If you want to get a good job than go for the education and degree and if you really want to be entrepreneur than come to the real world … and get the practical degree.

  • Wow Ken, why all the hate on MBA’s?

    I’m an MBA grad and I would say it made me who I am today. Even during my MBA, I was hand picked and mentored by the CEO of Europe’s largest retail org, something which would never had happened had I not choose my MBA.

    MBA can open amazing doors for you and it can really change you as a person. What defines good MBA’s from bad MBA’s is the openness to find fault within themselves. I learnt from my colleagues and my classess that I needed a change in mindset to make it really big. It is narrow minded MBA’s that waste their time.

    I walked out of my MBA fully confident to take on CEO’s – something I was always scared to do beforehand. My business skills are now pretty good, yet I know business is still a lifelong learning process. I learned how to take my smaller business experience and make it work in the big corporate career I was to undertake.

    I thougherly enjoyed my classes and learned so much that I still keep in touch with many of my professors. It deepened my understanding and took it to a much higher level.

    Presenting it as a ‘crash course’ in business is offensive. MBA is an ADVANCED business course – if you need a business course go to college and do a undergrad course.

    Yes, do think about why you want an MBA and what you really want to LEARN out of it. I also recommend going to a good school simply because the calibre of students tends to be better and you will learn as much from students as formal education.

    MBA has changed my life and it changed the life of many people I know too. It was an amazing experience, both educational and fun and it paid for itself very quickly.

    I would happily do it again… and an MBA on my CV does open doors.

    • My real perception about a MBA is very position, though many people do it for the wrong reasons and don’t understand that it doesn’t guarantee a good career.

      I have many job seekers who come to my recruiting firm saying they are going to get a MBA to start a business. I think that you look at it from a different perspective than many of the people who get MBAs – which, in my opinion is a positive thing.

  • Ken, I’m glad you mentioned that an entrepreneur has to be able to learn on their own before they can be successful at business. I think going back to grad school in anything (but especially going back to get your MBA) only makes it harder to learn how to ‘self learn’. The sooner an entrepreneur opens a book or reads a blog or listens to a podcast the sooner they will be successful. Thanks for the post!

  • Hey Ken,

    I love what you’re puttin’ down here. Especially this . . .

    “Regardless, I do recommend that all students take some business classes – especially an introduction to finance and accounting.”

    I hate numbers. But I learned long ago that marketing is nothing but math and psychology so this piece of advice is something I definitely embrace.

    Two authors that have had a massive impact on my deciding whether schooling was important or not (It’s not) were Dan Kennedy and Gene Landrum. I can’t recommend any and all of these authors books highly enough to anyone on the entrepreneurs journey.

  • Hi Dee,

    My real perception about a MBA is very position, though many people do it for the wrong reasons and don’t understand that it doesn’t guarantee a good career.

    I have many job seekers who come to my recruiting firm saying they are going to get a MBA to start a business. I think that you look at it from a different perspective than many of the people who get MBAs – which, in my opinion is a positive thing.

  • Hey Ken,

    Another great article that really gets you thinking. I agree with you on the side that education certainly doesn’t guarantee success, but I do believe that going to school teaches you some things that can help you succeed in business – such as discipline to sit down and study/learn, persist, etc.

    I also don’t think it takes a business degree in order to succeed, but the drive to learn and implement. I for example have an undergrad in biology and my advanced degree is in medicine – both degrees taught me ZERO about business, yet I was able to learn as I grew my business and correct my mistakes as I progressed. Sure I am at a disadvantage from someone with a degree in business because they’ve learned the basics, but it certainly isn’t something that can’t be made up by putting in more work on a day-to-day basis than the average business owner.

    I considered getting an MBA after medical school in order to learn how to start a business, but alas I came to the conclusion that having an MBA wouldn’t necessarily get my online business moving any faster, and I had no desire to move into corporate America so it really might not have been the best option for me anyway (not to mention medical school loans were already massive).

    I think at the end of the day, taking action trumps everything… those who take the massive action get the results, no matter what letters you have after your name.

    Great article Ken, keep ‘em coming!

    Paul

    • Thanks, Paul. When I look at the subject, I look at it from an entrepreneur’s standpoint where no client cares what you did yesterday, they care what you can do for them today.

      However you get there is up to you and some business education expedites the process when you’re moving forward to stage 2 of the entrepreneurial process (i.e. after you’re a start-up), but the question that people must ask is whether they learn better by themselves or need the discipline of a full classroom.

      Yes, the latter may be more convenient, but it’s also more expensive and time consuming.

      • So true, nobody cares what you’ve done unless it directly helps them (ie. do you have testimonials of success stories, etc) – and will this help them succeed… good points!

        This post has definitely sparked many points of view, which is always a fantastic way of learning and seeing how everyone else thinks.

        Thanks for sharing Ken!

  • I have a PhD and I can tell you that I would be better off skipping all these years of exhausting myself and starting a business. Would’ve been richer and happier now :).

  • I got an MBA from Chicago Booth, actually it had a positive impact on career, especially in recruitment processes. Recruiters put easier you short list.

  • No not necessarily if you are really determined and have the will power to get where you want to. It’s not at all easy to do so.

  • My major is English Language and Literature and I have my MA. In a way, a lot of stuff that I do has to do with what I’ve learned at college but also, a lot it I’ve picked up along the way.

    However, the college is more than simply going through the courses. The main knowledge that you get from it is – how to go through the system and how to get what you need from it! And that is the skill that you’ll use in any business.

  • Lela

    Degrees are not the all of everything. They are really just necessary because so many jobs will not let you in the door unless you have one. What people foolish believe is that college is going to teach real world experience but it is not college is going to give you information but it is not going to give you application. I would never tell anyone not to get a college degree but I would tell everyone to get a skill that can use to create their own employment.

  • Hi ken, your article is awesome..many people starting their bussiness after passing their education. i think that’s very late for doing bussiness because they haven’t experiences for it. but there’s nothing late for doing bussiness now.”better late than never do something”

  • Not sure about a formal education Ken but at the start of my own entrepreneurial journey, I did put a lot of emphasis on learning from successful entrepreneurs which helped me avoid most if not all of the costly mistakes. As a result I tasted success quicker than most people.

  • rahul

    I often regret taking a $40,000 loan to do my undergrad in digital enterprise management. That money, could have been well invested for me to become a better entrepreneur. I guess it serves as a “back-up” plan.

  • This has always scared me – the idea that you NEED a formal education before even attempting to run your own business. I mean, even with the hundred and thousands of success stories, there’s still that underlying feel of “better get it, just in case!” The best I got was an Associates in Office Admin, and my current business has little to do with it. Still, can’t help but feel that maybe I’d have an easier time if I had a better degree.

    • I do think that a basic degree is necessary. From what I have observed, it is a confidence thing with many people.

  • This is really a tough issue with so many variables. I agree with your points that your formal education background does not have that much affect these days.

    There are so many resources out on the internet on building a business it seems to make the amount of money used to pursue a college education outrageous. I think that the most valuable thing a person can do is understand that it will not come easy and it takes hard work. You have to be on a continual quest to learn something new everyday and take action on that new insight.

    I have found that being mentored is probably the most helpful thing you can do. You are given knowledge directly from someone who has walked the same path and has distilled all of the information out there into what works. Of course the quality of the mentor is important.

    To me the most valuable part of a college education is the amount of networking you can do. I know so many people who have graduated and done well not because of the knowledge they have gained but because of the relationships they have formed. The old adage its not what you know its who you know has alot of truth to it. Again though I think that the online world has a better advantage over this if a person has enough ambition and initiative. Your capacity to form relationships is unlimited.

  • My degree is in Computer Science. I didn’t take any formal business classes in college. I learned about business by doing my own due diligence. I spent more time than money for my business education. I networked with people in the city I lived in that own businesses of all sizes and in different niches.

    I am in favor of higher education. If I didn’t get my degree (business or not), I would’ve never been put in the position to start my own business.

  • Yes, in certain industries intelligence does matter, but you don’t have to be a Cambridge graduate to make money as your own boss”<—-intelligence isn't isolated to college graduates; I consider myself pretty intelligent.

    If you know how to think strategically, and take risks, you're going to make it. As far as the time-line goes: make as many mistakes as you can, as quickly as possible, and you'll – since lessons are learned by mistakes – progress quickly.

  • See Education does matter. If you are educated then you get more connections in your college life. Facebook, Google, Apple all the companies were started from college connections. When you go to college and a good one then you get the resources for turning your ideas into reality.

  • While I did not graduate from college I did get most of the way through. I don’t feel a college education is a must for some people but it would have been much more difficult for me without some of the tools i gained in school.

  • Ben

    I have to say that I wish I would have finished college. Someday I will, and I am eager to see that time come. Although I do believe you can be very successful without college, it makes a person well rounded, even if it may not make you more “successful”. A higher education may not contribute directly to your income depending on your profession, however, if it makes you a better contributor to society then everyone wins.

  • esp

    Over the years some of the most sucessful people on earth today didn’t make it through high school, let alone higher ed. I’ll be honest, if you want to start a business any formal education is optional, as long as you have the skills to create the product or service you want to sell, and the skills to sell it then formal education is waste of time for people. If a person is serious about starting a business then why waste time getting a degree. Nobody ever needed a formal education to start a business.

    I have a high school education and absoutly no respect for the education system, along with no intention of pursing any further formal education.

    • John

      No offense my friend, but I checked out your website, and artwork for sale on cafeepress as none of your images even work on the site. While I share your contempt of the education system you could use help with webdesign and with creating a product that will sell. Maybe I am wrong and your making a living now, but fix your images that would help.

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