Entrepreneurship is something I’ve found fascinating ever since the 1970s, when the topic took on a new energy and business schools started to pick up on it. Back then I remember in particular going to a conference for bright people interested in being entrepreneurs. One speaker said his 43rd venture was the first to really work.
That made me realise that however good the idea and whatever the financial backing, starting a new business is never easy. I saw that again after leaving a senior position at Ernst & Young to set up the Graduate Management Admission Council, or GMAC. At the time, we had just four people, so one of my tasks at the end of every day was to take out the garbage. Somebody had to do it.
Getting a new enterprise off the ground isn’t all about enthusiasm, optimism and having what seems like a good business plan. Just as important – maybe more so in the long run – are hard work, long hours, 100 per cent commitment and being ready to turn your hand to anything.
Fortunately, from what I see, business school courses on entrepreneurship focus very firmly on the practicalities. They aim to level the “romanticism” about starting a business with the necessary degree of hard realism.
Figures show around 25 per cent of students taking MBA programmes say their future plans include setting up a new enterprise. As a priority, though, they must understand that any start-up is a function of the availability of capital, from bank loans and venture capital to private equity and angel investors.
Whoever puts up the money, however, doesn’t want to talk about ideas. They are looking for structure, timescales, projected balance sheets and prospects for a viable return on investment. The ideas must have market value and be executed well.
Of course, it requires a certain mindset to be an entrepreneur – the risk-taking, the energy, the willingness to put it all out there. One reason a lot of new ventures fail, however, is because they overlook basics such as cash-flow management, budget discipline and keeping tight control of receivables. The golden rule is it takes money to make money.
Therefore in any MBA programme, the curriculum for entrepreneurship has to help students with the most critical things. These include the principles of finance and accounting, understanding the supply chain, managing contracts with suppliers, and handling distribution, marketing and competition.
There is nothing wrong with the “follow your dream” theme. But being an entrepreneur in any industry is like running a marathon on a hilly course. It is a long slog with constant challenges, so schools should prepare students for that, both fiscally and mentally.
David Wilson is president and CEO of the Graduate Management Admission Council which oversees the GMAT selection test for postgraduate business courses
As told to John Cremer
