You quit a job and go to business school, only to graduate with nearly $100,000 in student loans. But instead of landing that six-figure job in consulting or investment banking, you do something that not long ago was unthinkable: you start your own company.
More MBA grads are gravitating to the startup world than at any time other than the dot-com boom of 2000-2001. The entrepreneurial fever is partly a reflection of the success of that sector of the economy, but also it’s due to the encouragement of business schools. They’ve launched business plan competitions, dangling cash awards to student winners so they can start their new businesses. And they’ve put startup projects into the basic MBA curriculum.
“It isn’t a goal for Harvard Business School to graduate more entrepreneurs, but this will be a side benefit,” says Alan MacCormack, a Harvard professor who recently oversaw the school’s startup initiative. That new addition to Harvard’s MBA curriculum assigned an entire class of 900 students in teams of six to launch micro-businesses with seed capital from the business school.
A new study by the Graduate Management Admission Council—based on 5,366 recent or soon-to-be graduates of business schools—found that only 5% of students plan to own or start their own business after graduation. The study, released May 21, was conducted between Feb. 15 and March 18, 2012.
ZUCKERBERG WANNABES ARE MOSTLY MALE AND SLIGHTLY OLDER MBAS
Who are these Zuckerberg wannabes and why are they taking the entrepreneurial route when they can earn well-paying jobs right out of school? GMAC says a majority of these entrepreneurs are men (78%) compared to women (22%). Graduates in the 31-and-older age group (59%) were more likely than younger age groups (41%) to be self-employed. By program type, the self-employed graduates were evenly spread among full-time two-year MBA (27%) full-time one-year MBA(28%) and part-time MBA (25%) programs, with the lowest amount found in executive MBA programs (15%).
Similar to the results of GMAC’s 2011 survey of graduates, the products and services sector (37%) was the prevailing industry of occupation for business entrepreneurs, followed by consulting (20%) and technology (17%). An additional 7% of potential business owners expect to work in finance and accounting, 6% in manufacturing, energy and utilities, 5% in health care, and only 2% in the government and nonprofit sectors.
MBA ENTREPRENEURS HAVE CERTAIN QUALITIES THAT SET THEM APART
“When compared with other students, those considering starting a business were significantly more likely to exhibit leadership qualities that set them apart from manager traits,” GMAC said. “Qualities such as setting direction, taking risks, inspiring others, and exhibiting high levels of innovation were traits more often associated with entrepreneurs rather than those seeking other employment options.
“The leading motivation for most graduates to begin their own business was passion or doing what they enjoyed (see table below). For graduates of part-time MBA programs, the number one motivation was autonomy—being the primary decision maker— followed by having a flexible work schedule and passion for their work. Key motivators for entrepreneurs graduating from executive MBA programs were potential for income generation and prioritizing social responsibility, or contributing to the community. The tradition of joining the family business was the least important motivator across all program types,” GMAC found.
Motivations for Starting One’s Own Business