Even though starting and operating a business is not traditionally thought to be part of the ethos known as the American Dream, 85 percent of small business owners in the United States begs to differ. According to a 2018 survey of 1,000 small business owners conducted by Kabbage, an online business loan platform, the majority believe that being your own boss should be a pillar of the American Dream, and they would also like to see their children follow a similar entrepreneurial path.
What the Kabbage survey reveals can be described as economic optimism, which is certainly an admirable trait within American society, but there is also a flip side to consider, a dose of reality compiled by the U.S. Bureau of Labor Statistics (BLS): 20 percent of American small business owners will fail to keep their companies afloat within the first year, and half of them will stop operating within five years. By the time small business owners are ready to celebrate their first decade of operations, only 30 percent of them will be able to do so.
The BLS figures above should not be disheartening; if anything, they are a reminder that starting a business is an activity that conveys a certain level of risk, particularly in a highly competitive market such as the U.S., where millions of wage workers are prone to daydream about how they would fare if they quit their jobs to launch their own business.
We already know that half of these hopefuls will not be around to celebrate their fifth anniversary in business; now let’s look at some of the reasons behind this high rate of failure:
- More than 40 percent of business owners overestimated the market need for the goods or services they offered.
- Nearly 30 percent underestimated the ‘burn rate,’ which means that they ran out of operating cash.
- More than 15 percent did not formulate the right business plan or model, and another 15 percent did not execute adequate marketing and promotion.
Once we start digging deeper into the statistics, we find surveys conducted by the Financial Times that suggest entrepreneurs with Master of Business Administration degrees enjoy higher rates of success when they start their companies. The survival rates of startup companies launched by MBA graduates are a little higher than 80 percent after three years, and this is in sharp contrast to the overall stats compiled by the BLS. With this in mind, we can now look into the reasons why business owners should pursue MBA programs:
1. Getting a Truly Valuable Degree
Let’s say your version of the American Dream is more pragmatic than optimistic, which means that you are more likely to focus on the aforementioned BLS findings than the Financial Times survey; in this case, you will want to have a competitive degree that will allow you to get a good job with a high salary should your small business venture fail to take hold. Statistics would be on your side because MBA graduates in 2019 are earning, on average, annual salaries that are $25,000 higher than those of applicants without these degrees. In other words, your chances of earning $100,000 per year would be higher, and including an MBA degree in your resume would improve your chances of landing an interview.
2. Expanding Your Business Horizons
Should you fall into the category of business owners who decide to sell their companies for the purpose of seeking other opportunities, an MBA degree would come in handy. The knowledge you can acquire from MBA programs can help you gain deeper insight into your chosen business sector; plus, you would be aware of other opportunities you can pursue. To learn more about how MBA degrees can expand your business horizons, contact a Florida National University admissions counselor.
3. Achieving Greater Business Clarity
Getting back to the reasons so many American small business owners end up folding their own companies in just a few years, it is easy to see how lack of knowledge and experience played a part in their failures. When you start running into issues such as growing too fast or finding out that your business model was flawed from the beginning, the acumen acquired through your MBA degree can help you survive. Strategic thinking and business modeling are just two of the core courses in the FNU MBA program, which you can complete online and with the benefit of financial aid opportunities if you qualify.
4. Making Your Business Grow Online
Many American small business owners choose to follow traditional paths such as becoming a franchise or taking over an existing brick-and-mortar storefront formerly operated by relatives. While these two strategies still have the potential of being successful in the 21st century, they may face overwhelming competition if they do not have a strong internet presence. Modern MBA programs make e-commerce development and online business technologies a strong focus in their curriculum. Being able to take your business online could prevent your venture from becoming part of the failure statistics.
5. Becoming More Flexible
Getting too complacent with your business can be problematic if you underestimate the strength of your competitors. MBA graduates know about the importance of monitoring your competition and market conditions in order to avoid falling into the complacency trap. The bottom line of your financial statements may not always paint the entire picture, even if they are consistently in the black. Speaking of flexibility, this is one major benefit of the MBA program offered by FNU; you can get your degree online and at your own pace, and this is ideal if you are working or already operating your own business.
The Best Investment For Your Future Business is Today’s MBA Program at FNU
It is safe to say that business owners who pursue MBA degrees are actively working towards keeping their companies operating. When you are ready to future-proof your business ideas and efforts, take a solid first step by contacting one of our admissions counselors. For your convenience, FNU has two Miami campus locations should you prefer to take evening classes, but you can always combine them with online courses. Keep in mind that FNU is a private university accredited by the Southern Association of Colleges to grant MBA degrees. You can also see our graduation, retention and placement rates here.