Small Business Owners and Online College

| TBS Staff

Are you ready to discover your college program?

One-third of all small business owners in America are working without any college education, which sounds like a great thing if you’re trying to save money on student loans. Then again, half of all small businesses fail in their first four years, so maybe a little more education wouldn’t be such a bad thing.

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This is a dilemma faced by countless small business owners, some of whom bypassed higher education by choice, others by necessity. For many, the idea of balancing both — starting a business and working through college — simply isn’t practical. But the expansion and improvement of online college options is changing all of that. So the question is, as a small business owner — or an aspiring small business owner — is online college worth it for you? We’ll do our best to help you navigate that question.


There’s nothing quite so romantic as the self-made success. That’s the heart of the American Dream, isn’t it? Each of us has the opportunity to turn an idea into a reality, to start a business on nothing but a loan and a prayer, and to transform ingenuity into income. Small business owners are the lifeblood of our economy, those industrious entrepreneurs who charge boldly into the face of risk and adversity for a shot at personal freedom, financial independence, and perhaps even wealth.

Remarkably, more than 50% of the men and women categorized as small business owners are running their biz without a college degree. But is this really the best way to go? Is college a waste of time and money for the enterprising risk-taker? If you’re going to take out a loan, wouldn’t you be better off investing it in your dream, be it your first storefront, or restaurant, or a factory that makes windshield ice-scrapers? (Hey, who are we to judge your dreams?)

Well, don’t let us trample your vision. But before charging boldly, you should know that 50% of small businesses fold by the fourth year. You don’t need a degree in business administration to know this is a discouraging rate. And it means that all the money you invested in hand-molded rubber grips for your ice-scrapers is gone. (In retrospect, maybe Florida wasn’t the best place for that business idea).

Anyway, if you had taken a few business classes, you might have known more about identifying your consumer target, marketing effectively within your business sector, and managing your supply chain to comport with customer demand. While there’s no replacement for the on-the-job training that comes with a business startup, there’s also no replacement for the things you can learn on your way to a degree in business administration.

If a degree feels a bit abstract while you’re dealing with the concrete realities of business ownership, consider the tangible value of subjects such as financial accounting, human resource management, organizational leadership strategy, business ethics, commercial law, and the rise of automation. You need at least a passing awareness of these to run a successful business.

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The Mythical Unicorn

Of course, there is the tantalizing lure of the dropout billionaire, so evocatively captured in Steve Jobs’ famous 2005 Stanford University commencement speech. On dropping out of college, the late Apple founder said, “Looking back, it was one of the best decisions I ever made.”

I’m sure Stanford was thrilled to hear that. Still, fellow dropouts who may also own their own airplane hangars — think Mark Zuckerberg and Bill Gates — only reinforce the maverick image of the billionaire dropout. But is this really the likelier outcome should you eschew college in favor of a business startup?

I’ll save you the research; the likelihood verges on fantasy. These companies are called unicorns, a term invented by venture capitalist Aileen Lee to reflect the statistical rarity of a privately held startup company achieving a billion dollar valuation. As of April 2018, says TechCrunch, a mere 276 of these companies exist.

In spite of these high-profile unicorns, data tells a different story. According to one 2008 study, measuring the revenue of more than 500 tech startups, companies founded by college graduates generally had twice the average revenue and number of employees as the tech company owned by nongrads.

An article in SFGate observes that small business startups founded by those with no more than a high school education tended to underperform all other small businesses. The article later notes that college graduates enjoy 25% greater sales rates than the average startup by a high-school dropout, and that graduate students see 40% greater sales than their college grad contemporaries.

These figures underscore a fairly simple reality. Running a business is tough and complicated. The number of individuals with limited education who do become successful entrepreneurs is small. According to economist Scott Shane, author of 2008’s The Illusions of Entrepreneurship, a better education tends to create better access to external capital, lower failure rates, greater sales, better employment growth, and generally more profitable ventures.

It’s not that you can’t succeed in business without a college education. It’s just much harder and your odds much worse. With a startup failure rate of one in two, you’ll want to seek every advantage you can on the road to mere survival, let alone success.

If you still don’t think college is worth it, just take a survey of college graduates who own their own businesses. According to Entrepreneur, 68% believe college attendance made a difference in their success.

Watch Your Wallet

We’re guessing at least some of the other 32% of respondents overpaid for their education. But that need not be you. The reward for your entrepreneurial spirit is the freedom to choose any school that fits your budget and educational requirements. You don’t need a Harvard education or a tuition payment in excess of $50,000 to earn valuable knowledge in business administration or organizational leadership. In other words, your motives should have less to do with the college name printed on your degree and more to do with that college’s ability to deliver a current, comprehensive, and engaging education in business. Oh, and it really must be accredited. Beyond that, it’s all up to you.

Research suggests that, as a small business owner, you can reap all the necessary advantages for survival and success simply by pursuing a quality education focusing on topics relevant to your area of business. This is true whether you’re just graduating high school or your returning to college now that you’ve gotten your business off the ground. If everything goes according to plan, your actual degree will be of secondary importance to the knowledge that you gained on the way to it. So before you seek a college based on vanity or prestige, consider that a college that is at the very least reputable, comprehensive, and accredited will provide your foundational education at a fraction of the cost.

Our 25 Most Affordable Online Bachelor’s Degrees in Business Studies is a great place to start.

Ground Control to Major in Business

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If you’re already a small business owner and you’ve read this far, chances are you’re actively considering the value of a college education. But you’re probably also weighing the pros and cons, pondering just how in the world you could possible take classes while overseeing your sales team, meeting with your accountant, analyzing your inventory, and outlining goals for the coming year.

Maybe the better question is, how are you doing all that stuff without having taken some business classes? Not to undermine your innate intelligence, but the accurate answer is probably something like, not as well as you could be doing it.

Lucky for you, the possibility of doing both becomes more manageable all the time. As options for accredited online education gain both in reputation and access, the prospect of balancing business and education become more realistic all the time. In fact, taking online courses about business while actually running a business is a great way to strengthen your performance in both areas. You’ll find ways to apply your growing knowledge to advance your business, and ways to apply your real-world knowledge to improve your experience in the virtual classroom.

You’ll likely also find plenty of programs aimed specifically at the small business owner in terms of scheduling, flexibility, and course content. This is one of the distinct advantages of online education. Other small business owners share your scheduling and time-management challenges. Accredited colleges and universities are increasingly devising online education experiences to answer these challenges.

To make the most of your investment, you must adjust to the realities unique to online education. In truth, the greatest adjustment for most students is the discipline, self-motivation, and personal accountability required of this experience. As a small business owner, you’ve likely already honed these qualities in your working life. They’ll come quite in handy here.

To get started, check out the 20 Best Online Bachelor in Business Management Degree Programs or the 25 Best Online Bachelor in Business Administration Degree Programs.

Loan Wolf

Being an independent entrepreneur comes with deeper value than perhaps you realize. If you’re looking to attend college with the help of a financial aid package, your small business offers a perfectly legal and ethical path to maximizing your access to federal assistance.

When you apply for financial aid, the amount that you’re eligible for is based on a formula relating the cost of your education with your family income. Here, the lower your expected family income (EFC) relative to the cost of attendance (COA), the higher the amount of aid you may be eligible for without repayment obligation.

As a small business owner, you have a unique opportunity to maximize your assistance eligibility while still running a successful and profitable venture. In 2006, the Small Business Exclusion went into effect. Designed to help in “sheltering a family’s livelihood,” the legislation dictates that a family-owned and operated business with fewer than 100 employees can keep any and all assets tied into the family business separate from the calculation of an EFC. What this ultimately means is that, as a small business owner, you can increase the size of your federal aid package by associating the bulk of your assets with your business, as opposed to your personal estate.

For more tips on paying for school, check out The Student Financial Aid Source.

And to learn more about earning a degree in business, and the many options you have at your fingertips, read on.

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