Collaboration with competition, using a business mentor, just being yourself: these are some of the most important ways to overcome startup challenges, according leading entrepreneurs and IESE Business School.
Entrepreneurship is a buzzword at the moment and more MBAs are bucking traditional career trends than ever before. In the US, a record 18 per cent of MBA cohorts at some business schools have taken up entrepreneurship and in the UK, the Government-backed organization StartUp Britain predicts that 523,410 new businesses will have registered before the year’s end.
But one in three startups in Britain still fail within their first three years and competition across the world is fierce. After spending thousands on an MBA education, financing a startup is one of the biggest obstacles entrepreneurs face, according to Pinterest CEO Ben Silbermann.
A recent survey by The Times cited managing cash-flow as one of the largest challenges, flagged by 57 per cent of a straw poll of around 60 small businesses.
Debate still swirls around whether an MBA is essential for startup success. While many MBA entrepreneurs BusinessBecause spoke to claim that they wouldn’t have made it without business school, many others say it was useful, but not critical.
What is clear is that b-school can give you the skills and business networks to get a head-start in the startup world. Many business schools also offer incubators and some even subsidise MBA graduates’ income if they work for SMEs.
Although there is a high rate of failure, businesses are being established in record numbers. It is a fast-moving career path - and many entrepreneurs will have their hands on more than one project. MBAs may try out many different industries in search of their perfect venture.
But according to Ben, co-founder and CEO of Pinterest and one of the most successful new entrepreneurs, just being yourself is enough. “I think you have to be yourself,” he said. “When I first started Pinterest, I had a lot of entrepreneurs that I looked up to such as Steve Jobs and Richard Branson.
“I think there are a lot of lessons to learn but all those people are just themselves, every day. They made who they are into their strengths. I would say there’s a lot of ways to be successful, but just be yourself and try to compliment yourself with people that can help you fill gaps.”
Speaking at a Google event as part of Global Entrepreneurship week, Sir Richard Branson, boss of Virgin and one of the most successful entrepreneurs ever, agreed. He thinks business mentors can be “essential.".
“When I was fifteen or sixteen my maths was dreadful,” he said, surprisingly. “But my parents knew somebody who was an accountant and once a month they would help me make sense of my figures.
“It was somebody who gave up a couple of hours in the evening to make sure the figures stacked up. Today with things like start-up loan schemes, there are more mentors around then there used to be. I think as young people start up in business you can beg people for their time, keep asking questions, be a good listener and you’ll get a lot of help.”
Studying at business school is one way to develop mentors. Pedro Nueno Iniesta, Professor of Entrepreneurship at IESE Business School, says that studying an MBA will give you the skills to make it in the startup scene.
He gained a Doctor of Business Administration at Harvard University and is the Chair of Entrepreneurship at the Bertrán Foundation. Professor Pedro thinks MBA programs can develop students into entrepreneurs.
“I don’t believe entrepreneurs are born: there’s no genetic aspect,” he told BusinessBecause. “I think anybody can be an entrepreneur but of course you have to be committed, look for opportunity and sometimes this can be done better with a group of people.”
Many MBAs find their business partners while studying at b-school and today “most businesses are started by groups of people”, he added.
Pinterest may have swelled to over over 70 million users, but all entrepreneurial ideas start small. According to the company’s CEO, social media is important to get the word out about your business. But equally as important is word-of-mouth. “It took us a long time to get off the ground: our first users were friends and family,” Ben said.
“Pinterest spread by word and mouth but we were helped out by a blogger we met at a conference. Everyone today has things like Facebook and Twitter accounts, so people help things spread very quickly (on social media).
“It starts with having a product that you like so much that you want to tell somebody about it. So focusing on what that is and making it clear is the first step (in getting the word out).”
Asked how entrepreneurs can use social media to improve customer relationship management, Sir Richard said: “We treat social media very seriously and I’ve spent a lot of time on social media myself. If you can build a big following as the chairman, that helps because you can use it to deal with issues and get messages across. I’ve found that very helpful.”
Professor Pedro highlights the increasing competition that create challenges for MBA entrepreneurs. If you have a bright business idea, the chances are that someone else has it too. “There is plenty of money in the world so what we have today in entrepreneurship is more competition than ever in history,” he said.
“If somebody has an idea… they will probably will find that already there are fifty different things that are similar, and if the project succeeds, it will be immediately copied. There is tremendous competition.
“The key aspect for entrepreneurs today is either to identify extraordinary opportunities or go very fast and build as many possible barriers of entry as they can imagine.”
Competition is clearly stiff and collaborating with other entrepreneurs to build a team can be essential to success. But collaborating with rival businesses can also be beneficial, according to Sir Richard.
“Working with others is helping businesses a lot,” he said. “Collaboration is incredibly important in business. As businesses get better they end up competing with each other, but in the early days collaboration is essential.”
Demand for MBAs has increased and a record number of US graduates have reported being in full-time employment within three months of leaving business school. Although there is competition among startups, going down an entrepreneurial route can be a savvy decision.
Ben agrees that other people are just as important to making startups a success. “We are really the beneficiaries of other amazing people,” he said.
“We have about two-hundred people at the company and it’s quite a new group of people, so what we try to do is keep people focused on building an amazing product every day.
“But if you’re focused on making products that people love and are excited about, that’s a North Star. People can deal with the ups and downs of starting a company.”