Entrepreneurs start businesses in many ways. Some dive right into building their companies. Others complete training and education first. Do you need a business degree to start a business? Though there is no rule saying you must earn a degree; many successful startup stories begin with a college education.
Do you need a business degree to start a business?
If you’re like many aspiring business owners, you’ve considered going to college, but you’re hesitant about pursuing a business degree. Looking at how other entrepreneurs got started might help you decide which route is best for you.
Hugely successful entrepreneurs with no business degree get a lot of publicity. They are business world heroes who skipped the institution and forged their own paths to the top. Passing on the cost of higher education to run a profitable company is an attractive plan. But, is it the norm for today’s business owners?
According to the most recent statistics, the answer is no. A 2012 Manta survey revealed that most business owners (64%) had some form of education after high school. Of those, 23% had bachelor’s degrees and 17% had graduate degrees.
Do you need a degree to start a business?
Technically, no. But, whether aspiring entrepreneurs should go to college for business is a heavy debate. While some are against earning a business degree, others say it makes all the difference.
Why some say you don’t need a business degree
Though most owners have at least some college experience, not all support business degrees. Many career paths require you to hold credentials to work in the industry. Business ownership is not one of those. So, if there’s no education needed to own a business, why go to college?
Here are some common reasons for starting a business without a degree.
The cost is high
One of the biggest explanations for business owners establishing companies without a degree is the cost of college. Education expenses vary widely by school, program, and degree. Depending on the track you choose, you could end up owing a lot of money for a business degree.
A Master of Business Administration (MBA) provides experience in business strategy, accounting, and marketing, among other subjects. This level of training is valuable to business owners, but it comes at a price. According to MBA Programs, the average cost of MBA tuition is $50,000 per year or $80,000 for the full two years.
Costs don’t stop after commencement for new entrepreneurs. The internet is full of startup ideas that require little or no overhead. But, usually starting a business requires cash. A 2009 study by the Ewing Marion Kauffman Foundation said the average cost to start a business from scratch is just over $30,000.
Put these figures together, and you’re looking at an expensive future. Of course, not every business owner’s debts are the same. There are financial aid programs available and less expensive business degree options. Entrepreneurs also have a variety of small business funding options, such as SBA loans, business credit cards, and angel investors.
College takes time
Aspiring business owners don’t want to clock in and out of their jobs like robots every day. They are passionate about their ventures, which drives them to grow their companies. Often, entrepreneurs want to start their businesses right away.
Building a business takes time. With so much to do for the business, entrepreneurs might feel that a four-year degree is too long to wait. And, they will likely have to take extra courses required for the business degree that have nothing to do with their business plan. For certain individuals, time might be better spent developing the startup.
Support for business degrees
The majority of business owners have at least some college experience. Though you don’t need a degree to own a company, education can make you a better business owner. Here are examples of how a degree can help you as an entrepreneur.
Gain communication skills
As a business owner, good communication skills are crucial. If you can’t sell, you won’t make money. College teaches you how to communicate with different audiences (one-on-one and to a crowd) through multiple channels (written and verbal).
University communication experiences transfer into operating a business. From generating leads to negotiating prices, you need to be able to “talk the talk” in diverse settings.
Be a problem-solver
As an entrepreneur, you constantly face new challenges that you must overcome to stay in business. You use your resources to solve problems and adapt to changes. A business degree gives you pre-ownership insight so you don’t have as many startup lessons learned the hard way.
A business degree prepares you in many ways to run a business. What skills do you need to start a business other than problem solving? You also need to understand time management, how to organize, and project management. College will help you develop the ability to make a road map for your goals.
Create a network
A large part of building a successful business has to do with your connections. People introduce you to mentors and clients who help your company grow. By earning a business degree, you have a professional network before you start your company.
With all the technology available, word-of-mouth is still a valuable tool for business owners. Long-term relationships in business form over time within your network. With a business degree, you shake influential hands that can help you get your operation off the ground after college.
Have a backup plan
By getting a business degree, you’re not putting all your eggs in one basket. If your company fails, you have that degree to fall back on. Considering only about half of new businesses survive the first five years (according to the SBA), it’s a good idea to have a backup plan.
Even if you learn how to start a small business that is profitable, you might find that entrepreneurship is not for you. One Bureau of Labor Statistics survey showed that baby boomers held an average of 11.7 jobs. And, people are jumping jobs more than ever. Having a business degree will make transitioning into a different career a smoother process.
We’re human beings. We fail. We change our minds. We evolve. For entrepreneurs, a business degree offers experience needed to run a successful business and opens doors to future opportunities.
Amanda Cameron is a content writer for Patriot Software, LLC. At Patriot, she explains difficult payroll and accounting topics for small business owners.