On June 5th, the GMAT will be revised to include a 30 minute “integrated reasoning” section to the exam. Those of you still considering when to take the exam, follow the link for specifics on the changes and implications they may have for your score: http://poetsandquants.com/2012/03/04/timely-advice-from-the-guru-of-the-gmat/
This week marks that beginning of term B, the 2nd half of the fall semester following the final exams and presentations for term A that took place last week. The classes I’m taking this term are:
Negotiations: since the beginning of the program I’ve heard great things about this class and have been looking forward to it. It looks as if the majority of this class will involve conducting negotiations in the class (graded on success) and outside the classroom, which is exactly the kind of practical experience I think will prove invaluable.
Planning & Control: an accounting elective dealing with how best to distribute decision rights within a company, measure performance, and reward performance. Pretty vital stuff for any aspiring manager, and particularly relevant to recent events in the U.S. (e.g. Occupy Wall Street, say-on-pay, etc.).
Financial Statement Analysis: pretty much what it sounds like. The best part of the class is Professor Bulmash, who contributes both excellent insights and a degree of levity, thereby making my most quantitative class of the term highly engaging.
Within the last couple of weeks, it has been widely reported that admission applications have declined for business schools across the United States. Reasons cited are “concerns about costs and job prospects” among potential students. While I’m by no means an expert with regards to economic trends, as a current MBA student that applied and entered my program in the midst of the recession and will most likely be hitting the job market with similar prospects, I wanted to share some of my insights regarding whether now is a good time to apply for an MBA.
First, costs. While business school can be one of the largest investments you’ll ever make, it will likely be only more expensive in the coming years. Thus, if you are looking to apply to an MBA program, putting off your degree may raise the cost of your education significantly (not to mention the opportunity costs). Additionally, considering the recent decline in interest rates, the recession has allowed students to finance their education with lower interest expenses, increasing their ROI. When it comes to reducing your expenses, most MBA programs offer scholarships, graduate assistantships, stipends, and tuition remission. Students have also taken on personal initiatives; for example, many of my classmates have also chosen to continue their summer internships into their second year, allowing them to continue to earn part-time while gaining valuable experience.
Second, the job market. Is national unemployment overall higher? Yes. Does this mean less jobs for MBA grads in the coming years? Not necessarily. The Bureau of Labor Statistics has some interesting research regarding prospects by job type. Let’s take Management Analysts for example; BLS estimates this position will grow by 24% over the 2008-2018 period. While competition for these positions may be strong, students that can diversify their experience will be more successful (for example, Smith provides real world learning opportunities, such as part-time consulting programs for all current students).
Third, the students. The recession has required prospective students to more seriously consider their desire to attend business school and how it will complement their careers. What this means is however, those students that are sitting next to you in class are highly motivated, which will most likely translate to a better educational experience for yourself.
My takeaways are, if you do decide to apply for an MBA, be sure to:
- Have a very good understanding of the career you wish to pursue and begin targeting internship and job opportunities as early as possible. I can’t emphasize this enough, targeting your efforts early in the recruitment process will give you the time necessary to find the right job for you.
- Apply across a range of schools, allowing you to compare financial assistance packages.
- Target schools with strong linkages to a robust job market. Some U.S. cities have been hit more strongly than others in this regard, I can say however that DC has weathered this storm quite well, thanks in part to the highly diversified industries represented here.
I recently came across a website, “The Million Dollar Homepage“, which was created by 21 year old Alex Tew. Essentially, Alex created a website with a blank home page, and sold off each of the one million pixels for $1 dollar each to any interested party. The goal: to raise $1 million.
After reading around, I learned Alex had been accepted to a Business Management program in England, however needed a means to pay for his studies. I thought this was highly creative and a rather brilliant way to pay for his education. From a business point of view, Alex created an investment opportunity that traded on its limited window for joining (there are only 1 million pixels and they can’t be changed or resold) and spread via word of mouth of advertising. While the end result is pretty hysterical (+1 for including Waldo), reading through his FAQs, its interesting to see how he approached the challenge as entrepreneur.
Smith is back in session, electives are in full swing for 2nd years, and the class of 2013 have just completed orientation and are jumping in to their first semester. I’m really looking forward to this year (earthquakes and hurricanes aside) as I’ve taken the plunge and am now a dual-degree MBA/MS Accounting student. Between MBA courses during the week and my MS courses on weekends, this promises to be a challenge, but I know the highly quantitative and in depth MS classes will complement my MBA, particularly some of the softer skills I’ve gained through classes such as Leadership and Managing Human Capital. Dual degrees are a becoming ever more popular as it allows students to pursue two distinct though not necessarily unrelated fields of study simultaneously; while I think it places more pressure on the student to find that career that draws on both degrees, it also provides the opportunity for students to distinguish themselves in the pursuit of their career goals.
As my 1st year in the Smith MBA draws to a close, my thoughts are drawn towards my expectations 12 months ago. I had received my letter of acceptance from Smith and started making preparations for rapid change in lifestyle grad school was going to bring. Finding a new apartment, moving to college park, taking the required online pre-skills courses, going through orientation and meeting my classmates. And while I thought I had everything planned out, there’s only so much you can do to prepare.
The first semester was a whirlwind of team assignments and exams that had my head spinning by the time winter break arrived. Thankfully, by spring semester I had just about completed my core courses and had moved on to the selectives. Internships applications became a full time endeavor on its own; researching, practice interviews with my career advisor, networking with employers. It was a challenge. I had to learn to be flexible, dynamic, and even impulsive to really take advantage of all the opportunities being offered. That said, I’m looking forward to this summer, catching up with friends and family and taking some time off (ok not really, I’m taking a strategy class over the summer). If the past 4 terms have been any indication, next fall is going to offer something completely new and unexpected. I’m looking forward to it.
Have a great summer,
One of the courses I’m taking in my final term of the year is “Business Ethics in a Global Context”. As a selective course for all MBA students, it’s designed to introduce ethical frameworks for decision making while exploring some of the more interesting ethical dilemmas companies have faced in the past. While our class rarely comes to an agreement, I think having the ability to ask the right questions is invaluable to managers, even if its difficult to arrive at the “right” answer. The framework we’ve been using attempts to assign responsibility for ethical situations by examining:
- The issues
- Causality: who has responsibility for creating the issues
- Awareness: are the actors aware of the issues they are creating
- Proximity: who is closest to the issues
The cases we discuss as a class typically involve multi-national enterprises (MNEs), which often face unique ethical dilemmas as their operations span over countries with different legal, ethical, and cultural values. In considering the steps for action, there’s an inherent tug of war between “the ends justify the means” (teleological) and adherence to rules (deontological) approaches.
I’ve enjoyed the rigorous debates we’ve had a class; particularly having the opportunity to listen to some of our international students who have first hand experience (e.g. my Nigerian classmate’s experience in the Niger River Delta in our class discussion regarding Shell’s operations in Nigeria).
In this final installment, I will briefly address how to prepare your presentation. A typical pitch will be supported by a powerpoint presentation, however it is important to note how best to utilize software such as powerpoint to enhance your presentation, rather than distract from it.
The key to utilizing presentation software is to keep it limited to mostly graphics: large pictures and graphs are best, while keeping statements brief. Large amounts of text only serve as a distraction as the audience will begin reading the text immediately, while ignoring what you’re saying. Keeping your presentation limited to graphics ensures that the attention stays on you, the entrepreneur. The last tip is to explicitly state the return your investment will bring to the investors in your slides; this a key statistic the investor will be looking for, placing it front and center will add weight behind your presentation (as a rule of thumb, investors are typically looking for 10x return).
Well that’s it for this series, I hope you’ve found this overview interesting and even if you’re not an entrepreneur, I think you’ll find they’re relevant to many aspects of the greater business world.
In my last post, I discussed Mr. Selvin’s presentation to my Entrepreneurship class covering the steps for how entrepreneurs secure funding from venture capital firms. In today’s post, I’ll cover Mr. Selvin’s tips for how to construct a persuasive and compelling business plan pitch to potential investors. The first step is to consider the content of the presentation, rather than rattling off financial data, one must create a “story” integrating 5 key elements:
- “What’s the problem?” This issue is related most effectively if it is a problem the venture capitalist can relate to.
- “How do we solve the problem?”
- “How big is the opportunity?” Define the market, potential growth, and other opportunities it could lead to.
- “Why you?” Why should the investor rely on you as an entrepreneur to lead this business model? What is unique and defensible?
- “How do you make money?” Surprisingly, many entrepreneurs don’t address this issue sufficiently.
The overarching thought in the venture capitalist’s mind throughout your presentation is WIIFM: what’s in it for me? A successful pitch will nail this on the head. These are the venture capital tips for today; in my next post I’ll discuss Mr. Selvin’s tips for the winning format for a business plan pitch.
Last Thursday, my Entrepreneurship & New Ventures class had the pleasure of inviting a guest speaker, Neil Selvin, to our class to speak to us about the venture capital process for those with small businesses and big ideas. Mr. Selvin is a highly experienced entrepreneur (leading numerous small tech companies) and was Director of Marketing for portable computers at Apple in the earlier 90s, helping launching the very first line of Powerbooks. He is also an Entrepreneur in Residence at the Dingman Center for Entrepreneurship here at the Smith School, where he assists current students with the the development of their business plans.
The first part of our discussion was geared towards establishing a framework for raising funds through venture capital. I was surprised to learn some of the statistics regarding the venture capital process: the average investor receives 800 pitches per year and sits on the board of 8 to 10 companies. This means the most valuable asset to a VC investor is time; they are looking for those rare but special investment opportunities, however must filter through a substantial number of business plans to find them, with each VC investor typically making one deal per year.
The whole venture capital process from the initial pitch to the final funding offer can be summarized as follows:
- Initial meeting with someone at the VC firm. An associate, an intern, whomever; the key is to have a personal contact/introduction. This is a very brief pitch with the intent of getting a second meeting.
- In depth explanation: this can take an hour to an hour and half and is the formal pitch to the investors.
- Due Diligence: if you make it to this round, the investors are interested, but want to check the facts for themselves. They go through every detail and talk to customers. 2 – 6 months to complete.
- Present to the Partnership: the business plan is presented to all VC partners at the VC firm and typically they must all agree to the plan before funding can go forward.
- Term Sheet: this is the formal funding offer from the VC firm, stating the amount they will provide and what they expect in return (equity %, etc.)
In my next post I’ll review Mr. Selvin’s tips for constructing the business plan pitch and some mistakes entrepreneurs can make. Thanks!