Business school can be an amazing investment. But ironically if you want to start and run a small business, it might not make the most sense. That doesn't mean business education isn't important - in fact, it's critical. For entrepreneurs, there is just so much to learn from sales, marketing and finance to operations, legal and HR.
So what is it that you learn at business school and why doesn't it work for small businesses? Business schools were created in the early 20th century as a way to train professional business managers. That model still applies today.
Students are encouraged to think about running bigger enterprises or ventures that can scale big. The classes and case studies, whether they be strategy, marketing, finance or operations, tend to focus on larger corporations or complex environments.
And of course, many students graduate with over $100,000 of debt, making starting a small business extraordinarily tough. Depending on your career choices, the return of that sizable investment can make sense. On average, alumni at the 100 schools in The Economist's latest ranking of full-time MBA courses saw their average pay rise by 79 percent from pre-MBA levels, excluding bonuses.
For a small business owner though, the investment can be preclusively expensive, taking two years off from work impractical, and the education imperfectly suited for the specific opportunities and challenges of a small business. Here are five lessons that owners need to learn, and business school isn't tailored to teach for small businesses.
Work-life balance is a misnomer.
Business schools will promote this idea to help students make decisions about choosing various demanding jobs. In reality, there is no balance - only tradeoff.
Think of it this way: your time is a scarce resource. If you only have 24 hours a day and you spend about 6-7 hours sleeping and another 2-3 hours eating and doing chores, it's a trade-off on how to spend the rest of those 14 hours. Do I work a little bit more? Do I invest in a hobby? Do I spend times with friends, family or significant others?
The best work-life balance happens when you love the work you do because it's not a trade off, it's one in the same. Small business owners feel the real pressure of working all the time, and they'll freely admit that they trade-off rather than balance their priorities.
Bravery isn't something you can see on a resume.
An MBA will open up some amazing opportunities. But with student debt and big corporations recruiting students, small business will feel a lot less attractive. Still, small businesses can grow into large businesses. Exciting growth companies aren't limited to Facebook and Amazon, there are so many examples of incredible success stories. For many MBAs, the corporate job is hard to turn down. For small business entrepreneurs, they never had to fear that opportunity cost.
How to negotiate when there are consequences.
Like leadership, negotiation is a staple at class in business school. There are a lot of frameworks taught, which can be very helpful. But the stakes aren't very high -- usually negotiation exercise have little to no real money or consequences associated with doing well or poorly (the specter of a bad grade won't feel as big an issue as potentially losing $100,000). It's the stakes that often complicate negotiations and small businesses often find themselves in situations where they need to be the company's future based on their decisions.
In business school, they don't encourage failure; in fact, in some ways, it can feel like a way to minimize failure. Getting comfortable with failing is extremely hard for motivated, high achievers.
When I needed more funding for my business, I pitched to venture capitalists who rejected me at least 50 times, maybe 100 before getting a few yes's. Often, I would get a straight "No", sometimes, a reply a bit more directly "no, that's a terrible idea." Mostly though, I would get a smile but no response to my follow-up emails - which in some ways felt worse.
At a certain point, you start to appreciate the straightforward rejections. Remember: it's hard to cope with rejection but once you accept it, you can begin to understand what is behind the "no." Running a small business will give you an unrelenting amount of opportunities for failure and rejection before getting a yes.
Business school won't teach you the thousands of tactical things you need to know as a business owner. They will teach you how to interpret a financial statement, but you won't have the skills to do the bookkeeping. They will teach you different marketing strategies for various types of businesses across industries, but they won't actually teach you how to make an inside sales call. They will teach you about organizational design, but there's no mandatory class won't teach you how to hire or fire an employee even though every business owner will need to do it, it's hard, and hugely consequential.