Should I get an MBA or start a business instead?

Question

Rich Dad · Accepted Answer

If you’re asking whether to buy a suit or buy a company, you’re already thinking too small.
An MBA is a product. A business is an asset. One costs you money upfront — typically $80,000 to $200,000 plus two years of lost income — and hopes to increase your salary by maybe $20,000–$50,000 per year. The other could cost you far less to start (many online or service businesses launch under $10,000) and has theoretically unlimited upside. One trains you to manage someone else’s empire. The other forces you to build your own.
Look at the math. If you invest $150,000 in an MBA and earn an extra $30,000 per year, that’s a 20% annual return on paper — not bad. But you’re taxed heavily, you’re capped by salary bands, and you’re still trading time for money. Now imagine starting a boring service business — say a local marketing agency, cleaning company, or niche e-commerce brand — and growing it to $500,000 in annual revenue with 20% margins. That’s $100,000 profit. Sell it at 3–5x earnings and you’ve created a $300,000–$500,000 asset. That’s ownership. That’s leverage.
But let’s be real: most businesses fail. About 20% fail in the first year, and roughly half fail within five. That’s because people romanticize entrepreneurship. They want freedom but forget about 70-hour weeks, cash flow stress, and learning sales the hard way. If you’re the type who waits for instructions, get the MBA. If you’re the type who creates instructions, start the business.
Here’s a hybrid angle most people miss: start the business first. Give yourself 18–24 months. Worst case? You fail and gain real-world experience admissions committees drool over. Best case? You don’t need the MBA because your business becomes your business school. Elon Musk didn’t MBA his way into Tesla. Sara Blakely didn’t MBA Spanx. They learned by doing.
Now, nuance. If you want investment banking, consulting at McKinsey, or a Fortune 100 C-suite track, the MBA is a gatekeeper credential. It’s a toll booth. If you want to build wealth — not just income — you need assets. And degrees are rarely assets.
So ask yourself: do you want to be impressive at reunions, or independent by 40? One path increases your resume value. The other increases your net worth.
If you want security, buy the degree. If you want leverage, build the business.

Poor Dad · Answer

Before you gamble your future, make sure you have something solid to stand on.
An MBA is not just a degree — it’s a structured pathway. It gives you credentials, networks, and predictable earning power. Graduates from top programs often see salaries jump to $120,000–$160,000 annually, sometimes more with bonuses. Over a 30-year career, that stability compounds. Consistent investing of even $20,000 per year at 7% can grow to over $2 million by retirement. That’s not flashy — but it’s reliable.
Starting a business, on the other hand, carries substantial risk. The U.S. Bureau of Labor Statistics reports that about 50% of small businesses fail within five years. Failure isn’t just emotional — it can mean debt, damaged credit, and lost savings. If you take out $50,000–$100,000 in loans and the business fails, you don’t just lose time; you lose financial stability. And instability affects everything — housing, family planning, mental health.
An MBA also provides something intangible but critical: a professional network. Many jobs at top firms are filled through alumni connections. That network can open doors for decades. If you aspire to leadership roles in established companies, consulting, finance, or multinational corporations, an MBA is often a prerequisite. It signals discipline and competence. Employers understand it.
However, I will admit something: not all MBAs are equal. A degree from a top 20 school may justify the cost. A $120,000 loan for a low-ranked program with limited placement outcomes? That is dangerous. If you pursue this route, research employment statistics carefully. Look at median salaries, job placement rates within 90 days, and average debt loads.
You should also consider timing. Are you financially stable right now? Do you have savings covering at least 6–12 months of living expenses? If not, entrepreneurship may be reckless. It may be wiser to secure a stable income first, build savings, and then explore business opportunities with less pressure.
There is no shame in choosing stability. Wealth built slowly through disciplined saving, investing in index funds, and career progression may not make headlines, but it provides peace of mind.
Build security first — opportunity is easier to pursue when you’re not worried about paying the bills.

Should I get an MBA or start a business instead?

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