Barry Merkin, a professor of entrepreneurship at the Kellogg School at Northwestern, himself got an M.B.A. (from Harvard) before launching a successful business. But, Merkin argues, "I'd do everything possible to tilt the odds in my favor. For that, you need critical knowledge, and an M.B.A. is one of the best ways I know of to get it."
OK, assume, for the sake of discussion, that you buy Merkin's argument: an M.B.A. can give even the best entrepreneur an edge. What would that edge be, exactly?
Economic Analysis. The San Francisco real estate crash of the early 1990s pushed Bruce Helmberger to get an M.B.A. His company, Helmberger Design Construction, builds and remodels houses and commercial properties. As competitors failed by the score Helmberger resolved to stick with the business but decided he had to get smarter. He enrolled part-time in the executive M.B.A. program at the University of California at Berkeley.
Two years into it, Helmberger, 40, has studied the staples--managerial accounting, finance, marketing, and organizational behavior--but it is his economic-analysis courses that have already proven invaluable. "Should I buy an apartment building in Santa Clara or in San Francisco? Given the economic currents, which building has the greater likelihood of succeeding? I've learned to synchronize my moves with the economic waves. Before, I just sailed around wondering why the waves were smashing the hell out of my boat. Now I know what I'm doing. I'd like to build this to a $20-million company, and I'm getting the skills to do it."
Marketing Savvy. When Culin Tate and two partners started Chemical Automation Technologies, in Ijamsville, Md., in 1992, they knew they'd face entrenched but complacent competitors--a nice opportunity, if they could seize it. Their company produces microprocessor-based systems for monitoring and adjusting the chlorine and pH levels in swimming pools and hot tubs.
The vice-president for marketing and sales, Tate, 25, has a B.S. in economics. Another partner is a computer engineer, and the third ran a pool-management business in the Washington, D.C., area. Together they had a nice skill set, but marketing know-how was conspicuously absent. So in 1994 Tate enrolled part-time in the M.B.A. program at the University of Maryland at College Park. "The idea," Tate says, "was that with me pursuing an M.B.A., we'd have a competitive edge to grow the company."
It was a heads-up strategy that paid early dividends, thanks to a course in information management last year. Tate took on a keenly relevant assignment: to develop a company-specific database using commercially available software. His five-student team included some programmers, and at Tate's urging the group customized a data-management system for his company. By the end of the semester, the database was up and running, and it's now Tate's primary tool for recruiting dealer-resellers. "We tailor the information we send them by zip code to help them reach new customers," he says. "I can run off a list of all the pools in that area and provide the names and phone numbers of contacts. Our approach has pulled in good dealers. We help them make more money."
With smart marketing, Chemical Automation Technologies' sales last year approached $1 million, and Tate projects higher revenues this year. "Business school eliminates the speed bumps," he says. "We would not be as far along without it."
Strategy Setting. The brothers O'Mara--Mike, 32, and Dan, 29--switched to the entrepreneurial life from corporate jobs. Both had accounting degrees, and after college Mike joined Deloitte & Touche, while Dan went with Price Waterhouse. In 1993, determined to run their own business, they pooled $50,000 and bought the Country Framer, a picture-framing shop in West Chester, Pa.
They knew accounting, obviously, but they had precious little knowledge of how to run a retail business. So just before they started, the elder O'Mara returned to Villanova, where he had done his undergraduate work, for an M.B.A. in the part-time evening program. Now nearing graduation, he credits the schooling with giving him a major competitive advantage: he and his brother can operate professionally in a mom-and-pop industry.
Not content with a single location, the brothers early on had considered franchising, but school killed that idea. "When I put pencil to paper, I realized that we don't yet have enough operational structure to franchise," Mike says. "My instructors and classmates suggested a regional chain instead."
The Country Framer added a second store last year, in Frazer, Pa., but not in a mall, where most of its competitors are. Mike learned in a marketing course that dual-income couples don't have time for malls. They prefer destination shopping, which means strip centers. That's where the O'Maras put the store, and, says Mike, "we feel well situated."
With sales this year near $500,000 and pretax margins of about 20%, the O'Maras are already generating the cash to grow. "We'd like to add one store at a time until we hone this into a science," Mike explains. "With the skills I'm learning at Villanova, we should be able to get operations tight enough that we could franchise if we decide to go that route."
Negotiating Skills.A rock-music aficionado, Gregg Latterman wanted to start his own record company. Undercapitalized, he devised a novel strategy. Knowing there were many good regional bands with local followings--groups that had produced their own CDs for their fans--Latterman decided to take his favorite cuts from those recordings and compile them under his own label, Aware Records. "I pay royalties but nothing up front for the music," he says. Among his early finds were such now-hot groups as Stir, Better Than Ezra, and Hootie and the Blowfish.
