Economic volatility is a fact of life – and an omnipresent one for business leaders and managers. With forces like globalization, shifting regulations, evolving tariff and tax laws, surges in supply and demand and technological disruption routinely upending the conventional wisdom that guides many business owners, the reality of economic instability means that all new entrepreneurs are assuming a significant risk by stepping into the fray.
The key factor that separates economic volatility from some of the other risk factors that businesses face is that economic volatility takes place on a significantly larger scale and involves drivers that the individual business owner cannot fully mitigate against.
With economic volatility taking place at a higher level than the average business owner can exert control over, how can entrepreneurs successfully navigate the choppy waters – maintaining stability and, ideally, profitability through uncertain times? The key is a business education as a foundational element of your entrepreneurship. While nothing can fully protect you from economic volatility, a business degree can prepare you to deal with the shocks in the following ways:
1. Showing you what risk factors you can influence and mitigate
Most business owners can’t control broader economic factors. What is in a business owner or manager’s control is how they respond to the pressures that economic volatility puts on businesses. This is crucial, since these factors can actually be more significant in maintaining the health of the business and ensuring profitability.
A business degree, particularly an MBA focuses on basic foundational elements of what makes a business successful, including:
- Cost management
- Projection of supply and demand trends
- How to create a compelling and comprehensive business plan
- Leveraging technology
Each of these factors is within the control of the entrepreneur, regardless of economic instability. By virtue of teaching these skills, they become easier to identify and hone in on when times get tough.
2. Giving you in-demand soft skills
In addition to business-related skills that an MBA affords students, these programs also teach a variety of what is called “soft skills” that are transferable to a variety of different applications. Skills like communication, collaboration, organization, leadership, the art of adaptive thinking, interpersonal influence and more can all play a significant part in navigating turbulent economic waters. By having these baseline skills, graduates can find productive, value-adding spaces in many different industries, allowing them to pivot if an economic reality closes certain doors.
3. Facilitating employment mobility and flexibility
Data from a recent Financial Times ranking of the best MBA programs for entrepreneurship showed that, while only 5 percent of MBAs start their own companies out of school, within three years of graduation the percentage goes up to 24.4 percent. This is up 5 percent from 2012’s numbers.
This dynamic – combined with the demand for business consultants – points to the variety of employment options graduates armed with an MBA have, as well as the mobility and agility they can rely on in times of economic volatility. If the current market seems too treacherous to start your own business, MBAs can work as a business consultant on a freelance basis, helping impart the lessons they’ve gleaned from their education. This is particularly crucial for entrepreneurs, as it allows them to take advantage of their education and continue learning and growing, while still maintaining an active presence in the job market and avoiding gaps in employment.
Even more important, an MBA affords graduates the ability to remain flexible. Even if individuals are reluctant to go into business for themselves in uncertain economic times – they may still pursue their own businesses in a sideline capacity, expanding and scaling them when the time is right.
4. Helping graduates make more money
Of course, navigating economic instability or uncertainty can be much easier if you have savings built up. Data from a variety of sources suggests that graduates armed with a business degree – particularly an MBA – earn higher salaries than their peers without one.
Figures from one 2015 report by the Graduate Management Admission Council, the organization that administers the GMAT, showed that the starting salary of an MBA continues to rise, with the median starting salary expected in 2015 for recent U.S.-based MBA graduates being $100,000 across the companies it surveyed. That’s an increase of $5,000 from 2014 and $45,000 more than what companies reported offering candidates with bachelor’s degrees.
BusinessBecause reports that, according to 2016’s annual year-end poll of employers by GMAC, 79 percent of employers expect to hire MBAs in 2017, up 10 percentage points from 2015. Salaries are also expected to go up: Fifty-eight percent of respondents plan to bump up MBAs’ starting annual base salaries either at or above the rate of inflation, about 1.7 percent.
By starting at a higher salary, these business degree holders not only can build their savings in case of emergency, but also set a higher benchmark for their salaries right off the bat. This gives the graduate more leverage in applying for high-end executive positions and a greater value proposition to prospective employers.
Ultimately, economic volatility isn’t going away anytime soon. The key to persisting and thriving in spite of market ups and downs is making sure a business leader is equipped with the skills, knowledge and experience to mitigate the worst of it and leverage the best. A business degree, particularly an MBA, is a crucial first step on the path to success.