By Andriana Mitrakos
Many young professionals who decide to return to school to earn their MBA envision themselves as future founders of a startup. They want to gain the finance and strategy skills they’ll need to make their businesses profitable, and they want to build the networks that will provide them access to the funding they’ll need to get their ventures off the ground.
While most students who dream of entrepreneurship will wait until after graduation to start their new businesses, some people can’t wait. It makes sense, as an MBA cohort is a buzzing hive of competitive, intelligent, creative, and ambitious people. Put them all together in one place, and you’re bound to have a few that are eager to start a new business. In this article, we’ll explore the pros and cons of starting a business during your MBA, and we’ll provide some tips for how to begin the process if you’ve decided to take the plunge while earning your MBA.
Starting a business during your MBA: the Pros
One top-tier MBA program that is known for fostering an unbridled sense of entrepreneurial eagerness is Stanford’s Graduate School of Business (GSB). One of the most successful new businesses to come from GSB’s entrepreneurial ecosystem is DoorDash, a food delivery startup that began at GSB in 2012 and is now valued at $7.1B. At the time, DoorDash’s founders were some of the first to utilize GSB’s pioneering Startup Garage, an ideation and mentorship space that provides selected students with resources to help them identify a market need, create a business model, and get feedback and criticism on that model from experts. The DoorDash team then tapped into the vast funding resources of southern California and were able to expand nationwide into the market leader they are today.
While DoorDash is certainly an outlier in terms of successful startups initiated during the founders’ MBA studies, its story shows how valuable it can be for those looking to start a business to have easy access to a creative space, mentorship, and ambitious co-founders – all of which can be found on a top MBA program’s campus. . In all likelihood, the DoorDash founders also probably leveraged GSB’s broad network of VCs and angel investors in Southern California to secure their initial rounds of funding. If those same founders had been trying to start their venture while holding down other jobs in the private sector, they could never have met, and they would have had to fund all of those baseline resources themselves. In other words, the MBA can provide a central meeting place for all of the ingredients for starting a new business.
Starting a business during your MBA: the Cons
While the success of MBA-incubated startups like DoorDash are exciting to future entrepreneurs, a good dose of reality is also recommended. Many business information outlets such as Forbes and Fortune claim that 90% of new startups will fail. That means that for every DoorDash out there, there are nine other startups that don’t make it. There doesn’t seem to be solid data available for the success rate of startups born out of an MBA program, but even with the resources and talent available to ventures started during an MBA, the success rate is still likely to be low.
If you are considering starting a business while earning your MBA, you should keep this significant risk in mind. MBA programs aren’t cheap, and if you spend all of your time outside of the classroom focused on your startup, you could be missing out on all of the valuable resources you paid for, including networking opportunities, extracurricular projects, and experiential learning opportunities. Your classroom work could also suffer if you don’t manage your workload appropriately or burn yourself out, a mistake that many business founders are known to have made. For additional information one may need MBA consulting.
Starting up during your MBA: Where to begin?
If you do have plans for starting a business during your MBA, the planning process should begin before you ever start your first semester. In 2012, Stanford GSB was leading the field with their Startup Garage incubator, but other top-tier MBA programs have since gotten on board the incubator train, and most programs now have several resources for students interested in starting a venture during their MBA. While you don’t need to have your business plan ready, you should have an idea of the kind of industry you’re interested in entering, as each MBA program is situated in a unique funding environment. For example, Stanford is probably a great place for a tech startup, but Manhattan-based business schools such as Stern or Columbia might be a better location for a finance-based startup. There’s no hard and fast rules here, except that you need to do your research into potential funding and networking opportunities available to students at different universities.
After you’ve done your research and secured admission to your target program, don’t rush things. Seek the advice of your program’s experts in entrepreneurship and develop relationships with other students interested in starting a business. Most importantly, keep your priorities straight and don’t sacrifice opportunities to network and learn essential business skills just to work on your startup. After all, you might be able to improve your chances of starting a successful venture after you graduate with the valuable skills that you’re paying to learn through your MBA coursework.
Andriana Mitrakos is a Chicago native with strong Mediterranean roots. After exploring over six fields of study as a Northwestern Wildcat, she completed her BA in Psychology and Business Administration. She is an avid screenwriter, writing short film scripts, and working on over a dozen student film sets during her time at NU.