Many students earn their MBA degree in the hopes of owning their own company. Not all may be certain what running a business for themselves is actually like. It may not always be a fast process; just having a business plan is not enough. They must have good management skills and possess qualities that are unique to entrepreneurs in order to be successful in their new venture.
Picking the Right Type of Company
Although it may have been the student’s dream for years to own a family restaurant or a successful retail clothing store, the newly-minted possessor of an MBA degree should choose a company that is right for them. It is best to go with what is familiar. If the potential owner knows nothing about running a restaurant, they should either get some experience before they forge ahead or choose another type of business. It also takes a considerable amount of capital to start a new business venture. The student may have been able to save up some money, if so, it is important to make sure that the business plan takes into account contingencies. A start-up usually needs more money than originally planned.
It may also be possible to find an angel investor. These investors will fund certain start-ups for a return on their investment. Often, they will only fund certain types of businesses, such as those dealing with information technology. The student may also consider bootstrapping, which is the process of starting a company and financing day-to-day operations with sales. This usually requires the owner to ‘keep their day job’ and can be challenging. Another possibility is purchasing a franchise. Although these require a certain amount of capital, they begin to make money quicker since brand recognition is already established, as well as customer loyalty. Franchisees must also still report to the corporate office and be subjected to periodic inspections.
The usual management skills apply for MBA students who wish to start their own business. They need to have excellent people management skills and be able to deal with all types of customers and vendors. They should decide what kind of leadership fits their company the best, whether it is democratic, autocratic or laissez-faire. Most companies lend themselves well to the democratic style of leadership. Business owners should have fabulous communication skills and be able to delegate responsibility to those who can perform certain tasks better than they do. Good managers can also work well with a team and problem-solve on the go. Critical thinking is crucial to managing any company, large or small.
In addition to management skills, a new business owner should have entrepreneurship skills. These are above and beyond basic management skills. An entrepreneur often has a unique skill set, but it may not be possible for them to run it all. They may wish to hire a manager or go into business with another entrepreneur who has a skill set that they lack. An entrepreneur often has to wear many hats and be very flexible. They need to be able to prioritize tasks and do the most important ones first. They must be able to take constructive criticism and feedback and make necessary changes. An entrepreneur must be able to sell; if they do not feel that they are good at selling, they should take advice from books by experts. Anyone can learn to sell; the most important part is having passion for their product or service.
An entrepreneur should have a solid strategy for the future. The business plan should be a living document that changes with the company. All activities the company performs now should be leading up to that future picture. The entrepreneur should also have a working knowledge of finance and accounting. While it is a great idea to hire professionals for certain business tasks, the owner should be able to look at financial statements and understand where the money is being spent and where changes might need to be made. A business owner without some accounting knowledge can also let himself or herself open to fraud or embezzlement. A little education can go a long way in this department.
Entrepreneurs must also be willing to change when necessary. A business that does not keep up with the times will eventually flounder. While there is no need to embrace all of the newest technology right away, an owner will want to upgrade when needed in order to serve their customers efficiently and effectively. An entrepreneur should also be an optimist and be able to look at the bright side of things when business is slow or maybe things have not been as expected. Businesses have normal ups and downs; it is important to plan for down times as much as it is for increases in sales, such as around certain holidays.
Above all, a business owner should be ethical. A company is only as good as its reputation. Those companies who are honest and take care of their customers will far outlast those who are not. A business owner who takes care of problems when they arise can keep the situation from escalating and result in a happy customer who not only returns, but also tells their friends. Before beginning any new venture, an MBA student should take inventory of their skills and make sure they have what is needed to be successful.