How to become an entrepreneur

BY Anastassia GliadkovskayaOctober 26, 2022, 10:54 AM
Illustration by Martin Laksman

Over the past decade, the U.S. has seen a growing number of people interested in becoming their own boss. Entrepreneurship was further helped along by changing consumer demands and the COVID-19 pandemic, which saw a record number of business formation applications filed in mid-2020. 

“Anyone can start a business. That’s not the challenge,” says Wesley Sine, professor of entrepreneurship and innovation at Cornell University’s SC Johnson Graduate School of Management. The true challenge in entrepreneurship, Sine says, is growing a business: “That’s really what takes knowledge, skill, and effort.” 

The good news is there’s more than one way to obtain the training experts believe is necessary to succeed as an entrepreneur—and no matter your background. The following four-step guide is one route to becoming an entrepreneur:

  1. Get some work experience
  2. Pursue a master’s degree
  3. Secure a strong business idea
  4. Don’t underestimate the importance of a team

1. Get some work experience

It’s a good idea to work in the corporate world or at a startup for a few years before embarking on entrepreneurship. Doing so will help you to better understand the market, spot potential business opportunities, and make connections—and prior work experience is often strongly encouraged as a prerequisite for MBA programs. 

At the Wharton School of the University of Pennsylvania, incoming students to the full-time MBA program have five to six years of work experience, on average. That same range applies for graduate students at the University of California–Berkeley’s Haas School of Business

“We feel that the work experience really adds to the dynamic in the classroom,” says Lori Rosenkopf, vice dean of entrepreneurship at Wharton and director of the school’s Venture Lab.

Another meaningful difference you can demonstrate is if you can show you’ve already tried to start something.

“Having some entrepreneurship experience always helps,” echoes Paul Cheek, senior lecturer at the MIT Sloan School of Management and executive director of MIT’s entrepreneurship center. It shows you’ve made an attempt: “You’ve kind of been through it.”

For those people interested in eventually starting, buying, or joining a new venture, Rosenkopf recommends looking at Wealthfront’s annual list of fast-growing startups. Working for one of these types of companies is an opportunity to see successful scaling up close and to potentially contribute in a meaningful way. 

2. Pursue a master’s degree

While anyone can start a business, education and training “improves the growth potential of the entrepreneurial venture,” Rosenkopf says. 

“An easy way to enter entrepreneurship is through the university system,” Sine says, who also co-leads Cornell’s interdisciplinary track on innovation, entrepreneurship, and technology. New ventures from universities have a 50% higher likelihood of success compared to the average new venture, Sine notes. 

Many top universities offer entrepreneurship tracks or courses within their MBA programs. They might also facilitate accelerator or incubator programs, along with competitions that can give participants a strong skill set and business advantage. 

For example, MIT offers a summer-long entrepreneurship accelerator: delta v. Among the startups launched from the program over the last decade, 75% are still in operation. 

“We provide a safe space to go explore and to fail,” Cheek says. That’s not a luxury everyone can get in the working world—and why choosing a school full of resources can be critical. Consider questions like: Does the school have a robust innovation center, and offer funding to student founders? 

“You want to see a nice facility where the entrepreneurial community can come together; you want to see a nice program of events,” Rosenkopf says.

What’s more, consider networking opportunities that could prove invaluable down the road. Does the program have an active alumni network, and one that is accessible? 

For example, Wharton’s program is designed to help students meet as many alumni as possible. For students with access to a large network, “it’s much easier for them to start to reach out. It’s not quite as cold of a call,” Rosenkopf notes. 

3. Secure a strong business idea

Think about a problem, who cares about it, how much, and why. This is applying the scientific method—making educated guesses—to business, explains Rhonda Shrader, executive director of the University of California–Berkeley (Haas) Entrepreneurship Program. From there, you can start to figure out a market-product fit, while still being willing to pivot and adapt to new ideas. 

While students often work on an idea while still in grad school, some entrepreneurs also wait until after graduation to attempt to execute fully. “Your first idea isn’t always your best one,” Shrader says. “School’s a great place to learn the skills, try something out—but that may not be the billion-dollar idea.” 

Some founders will inevitably need outside funding—and it would be prudent for them to have a deep understanding of venture capital. Berkeley-Haas offers courses on the topic, Shrader notes, though she also encourages students to participate in the Venture Capital Investment Competition, the world’s largest, in which student investment teams evaluate startup pitches and select a mock investment that is judged by real investors. 

This type of competition experience could be even more impactful and relevant to founders than an internship, Shrader says. Alternatively, students can practice managing money for a similar hands-on experience through their school’s VC fund, like Cornell’s Big Red Venture.

Entrepreneurship isn’t limited to founding a company; it may entail starting a new product line or department within an existing organization. And entrepreneurship programs have options for people who don’t come with an idea. Berkeley offers Lean Transfer, a course that pairs students with university researchers to help evaluate commercialization potential of university-patented intellectual property. Wharton’s Venture Lab offers numerous pathways for different roles, such as “joiner” and “explorer.” 

4. Don’t underestimate the importance of a team

Finally, it’s important to think about potentially bringing on a business partner or eventually expanding your team. “In today’s world entrepreneurship is not about the entrepreneurs; it’s about the team,” Cornell-Johnson’s Sine says. 

“Entrepreneurship is a long roller coaster with many highs and lows,” Cheek adds. Having a strong team early on increases your odds of success. Your team might come from your classmates or even your colleagues on a job. Either way, it is important to make connections early—you never know who might end up your cofounder, investor, or customer. 

“Your résumé still matters even when you’re going to start your own business,” Sine notes. “You still have to attract resources.” Without relevant experience, you’ll have a hard time getting someone’s trust. “When you’re a new venture, there’s lots of skepticism.” 

See how the schools you’re considering fared in Fortune’s rankings of the best master’s degree programs in data science (in-person and online), nursing, computer science, cybersecurity, psychology, public health, and business analytics, as well as doctorate in education programs and MBA programs (part-time, executive, full-time, and online).