That degree will cost you $300,000 or more, counting lost earnings. Worth it, if you want to climb the corporate ladder. Not so much, if you\u2019re looking to buy or build most small businesses.<\/p>\n
Twenty-five years ago, <\/strong>after leaving his job as a Senate staffer, Alan Pentz spent two years earning an MBA from the McCombs School of Business at the University of Texas at Austin. He went on to build the Corner Alliance<\/a> into a $35-million-in-revenue government consulting firm and recently stepped back from running it day-to-day to launch The Owner Institute<\/a>, a coaching firm for other small business owners. Today, the 52-year-old Pentz offers this free advice to would-be entrepreneurs: Don\u2019t waste time like I did, earning an MBA. The best business education, he insists, comes from actually running a business, learning from mistakes, managing cash flow and employees and getting advice from people who\u2019ve been there.<\/p>\n Fellow McCombs MBA alumnus Liz Picarazzi, also 52, agrees the stuff she learned in class hasn\u2019t helped much in her current business, CITIBIN<\/a>, a Brooklyn-based maker of rat-proof outdoor trash bins, or at her previous startup, a handyman company, which she started in 2011 and sold in 2017 to focus on producing and marketing bins. She built the first enclosure herself in 2012 in her Brooklyn backyard because she wasn\u2019t able to find anything on the market that was durable or decent-looking enough to satisfy her or her picky handyman clients. Today, CITIBIN has a line of products that serves everyone from home and apartment owners to major cities, with bins installed in Times Square and dozens of other New York City locations and in Baltimore, Boston, Chicago, Hoboken and Philadelphia. Now, Picarazzi is dealing with new challenges, like planning for tariffs on foreign made products.<\/p>\n Even if the MBA hasn\u2019t been much help in her small business life, Picarazzi is still glad that four years after graduating with a B.A. in Russian and political science, she returned to school to get that business credential. Why? It opened the door for her to work corporate jobs for a decade, including more than six years at American Express. Those jobs, in turn, allowed her to pay off her student loans and realize that she wasn\u2019t cut out for the corporate world. \u201cI needed to go down that path to become an entrepreneur,\u201d she explains.<\/p>\n The experiences of Pentz and Picarazzi add some real life nuance to a perennial debate on LinkedIn<\/a> about whether earning<\/a> an MBA makes sense if you want to buy or build a small business. The wisdom that emerges: Get the degree if you’re aiming to make PowerPoints at consultant McKinsey; model leveraged buyouts at Goldman Sachs; or ascend to the C-Suite of a blue chip company. It\u2019s also a good choice if (like Picarazzi) you aren\u2019t sure where in the business world you belong, since the prestige and network of an MBA from a top school will help you launch your career. But if your goal is building or buying your own small business, particularly something like a chain of car washes, an HVAC business, or a maker of rat-proof enclosures, it\u2019s not obvious an MBA is going to help\u2013and it could even hurt.<\/p>\n Business school typically teaches strategy, finance, and management, along with case studies to analyze real-world challenges. That all comes at a steep price. Tuition averages $46,700<\/a> a year for an in-person degree, and for an elite school like University of Michigan\u2019s Ross School of Business it amounts to more than $70,000 per year. To this you should add the opportunity cost of two years of not making money and not actually running a business. (For reference, the average small business owner makes $99,979<\/a> a year, according to ZipRecruiter. Add in two years of lost lifetime earnings, and the real cost of getting an MBA is on the order of $300,000 or more.)<\/p>\n An MBA could cost you even more if you\u2019re trying to buy a business, Pentz argues. Flaunt a big name business credential and it\u2019s likely the seller will raise the price, he says. \u201cThey\u2019ll probably be like, oh, fancy boy\u2019s got a bunch of money.\u201d<\/p>\n George Tibil is always<\/strong> moving forward. The 36-year-old Romanian came to the United States in 2009 on a full tennis scholarship from the University of Buffalo. He earned a B.S. in business administration and M.S. in mathematical finance from Buffalo plus an MBA from the University of Memphis; worked as a tennis coach and adjunct business professor at Buffalo; and spent five years climbing the corporate ladder at Buffalo, New York\u2019s M&T Bank, rising to V.P. and head of a risk modeling team. In 2023, he quit the bank and took the entrepreneurial plunge, setting up a partnership with two Buffalo buddies to invest in, own and operate, small businesses. As a first step, they bought\u2013and Tibil runs\u2013a ServiceMaster Clean<\/a> franchise in Buffalo. He\u2019s expecting its revenues to hit $2 million this year, up from $1.1 million in 2023.<\/p>\n Looking back, Tibil says, he could have skipped that MBA. which he earned online in his spare time mainly to punch his corporate ticket. While the case studies and financial training were helpful, he says, he could have learned the same material on his own for a fraction of the cost. The real value of an MBA he says, is the network and cache it provides, but that doesn\u2019t help\u2013and can actually backfire\u2013in small business. When you\u2019re dealing with blue collar workers in a business like ServiceMaster, it can make building a rapport more difficult, he says. And like Pentz, he thinks it hurts you if you\u2019re haggling to buy a small business. \u201cI don\u2019t think it\u2019s in your best interest to mention your MBA.\u201d<\/p>\n Anecdotal stories casting doubt on the value of an MBA are backed by at least some research. In 2022, the Foundation for Research on Equal Opportunity (FREOPP), a non-partisan think tank, analyzed<\/a> the return on investment (ROI) for nearly 14,000 graduate degree programs, based on the Department of Education\u2019s College Scorecard, which shows median earnings for each program four years after graduation. In this study, investment is calculated to include both tuition and opportunity cost and the return is the projected cumulative extra income over a lifetime. The analysis found that the median master’s degree offers a net ROI of $83,000. However, this average masks significant disparities: masters degrees in engineering, computer science, and nursing often yield returns exceeding $500,000, while the MBA frequently falls short, with more than 60% of such programs providing no positive ROI.<\/p>\n That hasn\u2019t sapped the popularity of masters in business (which includes, but isn\u2019t exclusively the MBA)\u2014they\u2019re far and away the most popular advanced degree, according to data from the National Center for Education Statistics<\/a>. In 2021-2022, more than 205,000 business masters were conferred, 50,000 more than the second most popular curriculum, education. Since 1970, the number of business degrees awarded has increased ninefold, while education degrees have less than doubled.<\/p>\n Applications for MBA programs were up more than 8% for 2024-2025, according to the Graduate Management Admission Council<\/a> (GMAC). Business degrees really started to take off in the late 1990s, thanks to globalization and a more financialized economy. As companies grew, so did the need for people with skills in management, finance, and marketing. Now, an MBA is one of those degrees that can go places other degrees can\u2019t. It\u2019ll help you land a job in almost any field, from tech to industry, while a health or education degree probably won\u2019t.<\/p>\n But what works for big companies doesn\u2019t always apply to small businesses.<\/p>\n Tibil acknowledges <\/strong>there are exceptions to his generally negative view of MBAs. He cites programs like Stanford\u2019s ($82,455 annual tuition<\/a>) or Babson\u2019s ($73,710 for the first year, $43,050 for the second<\/a>), which were among the first to offer entrepreneurial tracks, as schools where the MBA aligns more closely with the needs of those who want to become entrepreneurs by acquiring small businesses.<\/p>\n Paul Oyer, The Mary and Rankine Van Anda Entrepreneurial Professor at Stanford’s Graduate School of Business and author of Roadside MBA: Back Road Lessons for Entrepreneurs<\/a>, has been teaching at Stanford for 29 years. By his own admission he\u2019s biased, but he believes that the concepts taught in business schools\u2014like scaling, managing costs, and defining markets\u2014are universally valuable, even for small business owners.<\/p>\n What sets Stanford apart, Oyer says, is its focus on taking traditional small businesses, such as HVAC companies, and showing students how to scale them. It also exposes students to an entrepreneurial ecosystem that\u2019s hard to match anywhere else, especially given Stanford\u2019s proximity to Silicon Valley.<\/p>\n Oyer suggests those looking to go into small business consider the content of an MBA program carefully. He believes that a traditional two-year program can be extremely valuable for someone with the ambition to grow a business, but it may not be the best fit for someone just looking to be their own boss. He advises looking for programs that offer practical, high-intensity exposure to entrepreneurship. At Stanford, for example, the Start-Up Garage<\/a> class gives students the opportunity to test business ideas, work on unit economics, and figure out what will scale. Oyer also notes that 20-25% of Stanford graduates go on to start new ventures, and others join firms like Alpine Investors, a private equity firm which focuses on acquiring and growing small businesses.<\/p>\n While Stanford offers a unique focus on scaling small businesses, Babson has its own take on what makes an MBA valuable for entrepreneurs. John Hallal, an adjunct professor at Babson and founder of Network Blue<\/a>, a consulting firm that helps small businesses grow, has spent 15 years teaching at the school just outside Boston. He says the right program can help individuals understand how to search for small businesses to buy, source deals, and operate small businesses effectively. He advises students who want to go into small business to look for programs with strong entrepreneurial ecosystems and hands-on learning. At Babson, for example, students get exposure to small and family-owned businesses (partly from case studies, partly from joining a student body that more than most hails from family business backgrounds), helping them learn how to handle real-world challenges.<\/p>\n \u201cMany schools are reporting that entrepreneurship is among the top career choices\u201d for their MBA students, Hallal notes. While that\u2019s certainly not proof that an MBA will pay off for a would-be business owner, it does suggest that at least some would-be entrepreneurs think it\u2019s worth the investment.<\/p>\n MBA skeptic Alan Pentz isn\u2019t swayed by the idea that any program can truly replicate the experience of diving in headfirst. While an MBA can teach you how to read financial statements, the reality of small businesses is often far messier, Pentz says. Many don\u2019t have textbook-perfect financials, and things rarely go according to plan. In Pentz\u2019s words, most deals to buy a small business don\u2019t happen until, basically, \u201csomebody dies.\u201d<\/p>\n That said, Pentz does acknowledge one situation where an MBA might actually make a difference. \u201cThere\u2019s got to be a use case, right?,\u201d Pentz says while smirking. \u201cWell, maybe if you were targeting a business to MBA students.\u201d<\/p>\n \nMore from Forbes<\/strong>ForbesHow To Hire A Navy Seal To Run Your Small BusinessBy Brandon Kochkodin<\/a>ForbesThe Best Small Businesses To Buy NowBy Brandon Kochkodin<\/a>ForbesMeet The Influencer Helping Small Business Owners Stay SaneBy Brandon Kochkodin<\/a>ForbesSmall Business Loans Could Be Easier To Get, Thanks To This EntrepreneurBy Brandon Kochkodin<\/a>
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