Kaufman explained that some first-time entrepreneurs think that starting a business requires a lot of new things to understand and that only people with a business education can do it. But, he says, you don't need an MBA , which can cost up to $250,000 at top-ranked schools, to create a successful company.
"For better or worse, when adults decide that they're interested in business, the first thing they do is go to Google… type in the letters MBA and start looking for graduate business school programs and I think that's a mistake," Kaufman said.
Three popular industries that MBA students go into after graduating are consulting, finance and accounting, and technology, according to a 2024 report from the Graduate Management Admission Council. Kaufman says if you're trying to enter those industries, an MBA could be worth it as kind of an expensive interview. But for entrepreneurship, he said an MBA isn't necessary.
Kaufman says would-be entrepreneurs can skip the MBA because although business is complex, it's not complicated, and most ideas are "common sense and simple arithmetic." So even though entrepreneurs need to know and handle complex situations, running a business isn't about a six-figure degree — it's about how someone wants to create value in the world, in Kaufman's view.
Kaufman noted a prominent 2004 study from the Stanford Graduate School of Business and said, "If you're good enough to get in[to an MBA], you're good enough to do well regardless."
The First Questions to Ask When Thinking About Starting Your First Business (MBA or No MBA)
Kaufman says there are a few questions to start with when beginning your journey.
1. Is this a big enough problem that someone would pay money to solve it?
The answer will help you understand the market size for the idea, and its financial potential, he says. For example, if you were starting a candle-making business, you would think about why someone would buy a candle and at what price point.
"A lot of the things around value creation comes come down to making trade-offs between competing priorities," Kaufman said. "The perfect product or the perfect offering would deliver every single thing that the customer would like and it would be free."
2. How does your idea attract the attention of people who may want or need what this business provides?
Human beings are driven by certain fundamental drives, Kaufman says, so marketing could play into that.
"The packaging matters, the affiliation matters, the story matters," Kaufman said.
3. How will you ask for sales and what does the process look like?
This is the part where money ideally comes in and business owners convince someone to become a customer.
The end goal of a sale isn't just to get a customer, but to ensure that they're happy with their purchase and to get them to keep buying for as long as possible.
"I think there's an enormous amount of business knowledge and skill that you can develop on your own by understanding the most important concepts around what businesses are and how they work and using them in your day-to-day life, using it in the career that you already have, using it to start something new on your own," Kaufman said.
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