Budding Entrepreneurs' Business Education Basics
Educational programs for budding entrepreneurs have proliferated in the last decade, creating alternatives to the two-year master's degree in business administration that are both less costly and less time-consuming.
The options available include online business training tools offered by the Small Business Administration; free online courses from the Massachusetts Institute of Technology's Sloan School of Management (Sloan Full-Time MBA Profile) in Cambridge, Mass.; accelerated MBA degrees from Northwestern University's Kellogg School of Management (Kellogg Full-Time MBA Profile) in Evanston, Ill. and other institutions; and Master of Management programs from schools that include the City University of London's Cass Business School.
While a full-time MBA from highly-ranked programs such as that at Harvard Business School (Harvard Full-Time MBA Profile) remains the gold standard for corporate recruiters, low-cost alternatives are suitable for individuals who aim to start their own companies, says Maury Hanigan, president of the New York-based Hanigan Consulting Group, a recruiting consultant to Goldman Sachs (GS), Johnson & Johnson (JNJ), and other companies. Interest in entrepreneurship among young people is growing. A Kauffman Foundation study found that 3.3 percent of college freshmen in 2008 said they hope to become business owners, up from 2.2 percent in 1993.
"If I gave advice to someone who wanted to start a business, my advice would not be to go to business school," says Hanigan.
What follows is a rundown of the programs available for would-be entrepreneurs who don't want to break the bank:
SBA PROGRAMS: The Small Business Administration offers 29 half-hour online training courses on topics that include accounting, cash flow, venture capital, creating a business plan, marketing, and becoming a government contractor. In fiscal year 2009, 609,000 people used the SBA's online business-training tools, about 70,000 more than the year before, says Ellen Thrasher, associate administrator of the SBA's Office of Entrepreneurship Education. She attributes the increase to the poor economy. In June the national unemployment rate was 9.5 percent, with 14.6 million Americans out of work, according to the U.S. Labor Dept.
"I think that given the nature of the economy, there are people now who are thinking about going into business when perhaps they had not before," says Thrasher. "There are people seeking tools to help them survive."
SCORE: Formerly known as the Service Corps of Retired Executives, SCORE is a Herndon (Va.)-based nonprofit—partially funded by the SBA—that helps people start and grow small businesses. Through a network of more than 12,000 volunteer executives and entrepreneurs, SCORE provided online and offline mentoring, training, and advice to more than 375,000 people in fiscal year 2009, a 4.2 percent increase over 2008.
To get his business off the ground, Michael Epstein of Palm Beach Gardens, Fla., met with SCORE counselors in Washington in the fall of 2000. His goal: to sell glasses and software to render computer games in 3D. Although Epstein studied business as an undergraduate at the University of Maryland Smith School of Business (Smith Undergraduate Business Profile) in College Park, he didn't know how to start one of his own.
"We met with the retired executives and basically asked all kinds of different questions, from how to get legal advice to how to create a business plan and a marketing plan," Epstein says. "We ran through some of the ideas that we had and they helped us or gave us some feedback as to whether they thought it was the best use of our time, or too costly or not beneficial enough."
With $500 and an office in his college apartment, Epstein and a friend soon launched eDimensional, which now sells headsets, 3D glasses, and other video gaming gear. The privately held company has grown into a $5 million business with 10 employees and a 6,000 sq. ft. office and warehouse in Jupiter, Fla.
MICRO eMBA: This free online course was developed by Carter McNamara, a partner in Authenticity Consulting, a Minneapolis-based firm with clients that include Microsoft (MSFT), the Gap (GPS), and the National Park Service. While not an actual degree, McNamara says, the eMBA covers the "20 percent of topics that you need 80 percent of the time." The program is divided into 10 modules centered on tasks essential to any business. Module 2, for instance, describes how to conduct a feasibility analysis before starting a company, while module 8 covers budgets and financial statements. "This is more about the learning and resources to get something done," McNamara says. "This is not like going to Wharton or something like that."
OPEN COURSEWARE: People looking for more advanced business knowledge can check out OpenCourseware, a consortium of 173 educational institutions providing free online course materials, including courses from MIT, Tufts University in Medford, Mass., and the University of California at Berkeley. Thousands of courses are available. MIT alone has 1,999, including 150 from the Sloan School of Management.
Steve Carson, the MIT OpenCourseware program's external relations director, says the most popular Sloan courses include Introduction to Financial and Managerial Accounting, Economic Analysis for Business Decisions, Data Mining, and Game Theory for Managers. More than five million people viewed Sloan courses last year, Carson says.
ACCELERATED DEGREES: While free online course work might help students with the basics, it doesn't carry the same clout with employers as an actual degree does, says Benjamin Wolff, a recruiter with the Stamford (Conn.)-based executive search firm Michael Page International (MPI:LN). "I really don't think it holds up at all," says Wolff, who recruits for sales and marketing positions in the health-care industry.
Alternatives for those who want a degree without breaking the bank include accelerated MBAs and Master of Management degrees. A two-year MBA from the University of Pennsylvania's Wharton School (Wharton Full-Time MBA Profile) in Philadelphia will cost more than $100,000 in tuition, according to the school, while a one-year accelerated MBA degree can be had for $74,850 at Cornell University's Johnson School (Johnson Full-Time MBA Profile) in Ithaca, N.Y., $65,432 at Kellogg, and $54,058 at Babson College's F.W.Olin Graduate School of Business (Babson Full-Time MBA Profile) in Babson Park, Mass.
One-year degrees are common in Europe. In the U.K. tuition for accelerated MBAs costs $44,800 at the Cranfield School of Management (Cranfield Full-Time MBA Profile) in Bedford, England, and $30,537 at Durham Business School (Durham Full-Time MBA Profile) in Durham, England.
Single-year master's degrees in management are similarly priced. These offer business training to recent college graduates or to individuals with technical skills who seek to make the transition to management. One of the least expensive is offered by Cass School of Business in London. Tuition for the Cass MSc in Management is about $27,000, compared to $36,750 for the MS in Commerce at the University of Virginia's McIntire School of Commerce in Charlottesville or $42,135 for the Master of Management Studies degree at Duke University's Fuqua School of Business (Fuqua Full-Time MBA Profile) in Durham, N.C.
"There's hardly anywhere else in the world where you can do such a degree that's so highly rated at such an affordable price," says Rob Melville, co-course director of Cass's MSc in Management program. He points out that 79 percent of Cass grads found work within three months last year, despite the recession, beating Cornell and the University of North Carolina's Kenan-Flagler Business School (Kenan-Flagler Full-Time MBA Profile) in Chapel Hill, which ranked No. 11 and 17, respectively, in Bloomberg Businessweek's 2008 ranking of full-time MBA programs.
Business schools at state universities also offer discounted tuition for in-state students. Tuition for residents is just $22,000 a year at Indiana University's Kelley School of Business (Kelley Full-Time MBA Profile) in Bloomington and $23,000 a year at University of North Carolina, in each case about half what tuition would cost an out-of-state student.Michigan, California, and Virginia offer smaller breaks for in-state students.At the University of Michigan Ross School of Business (Ross Full-Time MBA Profile), for example, in-state students pay $45,189 a year—$5,000 less than their out-of-state counterparts.
If you're thinking of changing locations to get a deal on tuition, be prepared to wait. To qualify for residency tuition breaks in Indiana and North Carolina, you have to live and work in those states for at least a year, according to the schools' websites.