There's no law saying you have to go to college to start a business. There's also a carrot and a stick that might lead entrepreneurial-minded members of Generation Y to want to skip college. The stick is that hiring prospects might be grimmer than they thought. A study released last month by the liberal Economic Policy Institute found that inflation-adjusted hourly wages for grads in 2007 was lower than in 2001. The carrot? All the examples of wildly successful entrepreneurs who dropped out of college and went on to make big bucks. Current young adults have grown up hearing about Bill Gates as the paragon of success. Why not try to follow in his footsteps?
As it turns out, there are a lot of reasons why future entrepreneurs shouldn't skip getting a college diploma. The entrepreneurial wunderkinds who find success without higher education "are exceptions to the rule," says Robert Litan, vice president of research and policy at the Kauffman Foundation. His organization's Index of Entrepreneurial Activity, which tracks the demographics of people who start businesses, has found that the age range in which one is most likely to start a business is 35 to 45. "The most frequent entrepreneurs are those with real-life experience, who have had exposure to markets and particularly niches of markets that they feel are not being well-served by their existing employer," Litan explains.
Having a regular job and working for someone else is what often gives budding entrepreneurs plenty of good ideas on how to strike out on their own. And academic research supports that this experience pays off. One study found that the survival prospects of solely-owned businesses are higher if the owner has four or more years of college. The bigger question, then, for an entrepreneur, is not "Should I go to college?" but, instead, "What should I do while I'm there?"
1) Study entrepreneurship while developing an outside niche. Tina Seelig, executive director of the Stanford Technology Ventures Program at Stanford University, says that while successful company builders have a natural inclination to be entrepreneurs, sometimes it takes education to bring that inclination to full bloom. "There are people who are natural athletes," Seelig says. "There are people who are natural musicians. That doesn't mean we don't try to teach them those skills."
Many colleges offer courses on entrepreneurship. The University of Arizona, for example, has an undergraduate major in entrepreneurship through its McGuire Center for Entrepreneurship. In Seelig's program at Stanford, students with any kind of major take classes that teach them how to think like an entrepreneur. She believes it is important that if someone is going to study entrepreneurship in college, that he also major in an unrelated subject such as science in order to have a specialty. "We think it's incredibly important to have a depth of knowledge in one discipline," says Seelig.
2) Expose yourself to as many different courses and experiences as possible. What if you don't go to a school that lets you study entrepreneurship directly? Seelig says she would advise trying to get as exposed to lots of different disciplines. Having broad knowledge can make it easier to identify opportunities as an entrepreneur. Hello, liberal arts education.
3) Consider even more education. Depending on your field of interest, going on to graduate school can help a lot. Litan says that the stakes are now higher for tech startups because the world of technology has grown so much more complicated and expansive. "If Bill Gates were asked if when he was 19 years old, could he create Google, he'd probably say no," says Litan, whose organization recently published a study that looked at founders of tech startups. It found that 31 percent of them had master's degrees and 10 percent had Ph.D.'s. In addition, the study found that having an M.B.A. meant that a tech entrepreneur on average founded a startup 13 years before others.