Why entrepreneurs still need to get a higher education (despite some buzz otherwise)

Among aspiring entrepreneurs today, the idea of skipping out on higher education in favor of diving right into building your startup has picked up a lot of buzz.

It makes sense. For one thing, as evidenced by the most famous founder drop-outs––Bill Gates, Steve Jobs, and Mark Zuckerberg––it would appear that a good idea can get you pretty far in its own right. Culturally, meanwhile, dropping out of college is sometimes perceived of a badge of honor among the entrepreneurially ambitious; it suggests a sort of audacity, a zealotry for your idea that translates (at least some of the time) into success.

Moreover, it’s understandable why ambitious, smart people might want to skip out on college. Many degrees today are theoretical in nature, in that they don’t actually prepare graduates for life outside of school, focusing instead on ethereal concepts. Plus, traditional college degrees are expensive––and why pay that money if the degree you’re obtaining isn’t even guaranteed to help you get a job, let alone start your own company?

The truth, however, is that people like Bill Gates and Mark Zuckerberg are exceptions when it comes to achieving success as an entrepreneur without a degree.

As Malcom Gladwell points out in his book, Outliers, there are a number of unique circumstances that resulted in those like Bill Gates, for example, ultimately succeeding. Most of us––even those of us with great business ideas––aren’t Bill Gates. For us, obtaining higher education is still the best thing to do.

And it’s not just smart in the sense that a degree can act as a kind of insurance policy should your nascent business not pan out. Higher education––if the education is relevant and affordable––is itself a critical tool that will improve your chances of success. (For proof, ask Jeff Bezos, Andrew Yang, Larry Page, Fred Smith, Herb Kelleher, Martha Stewart, or Vera Wang)

The problem, of course, remains that many universities today don’t equip students with the kind of skills they need. More they allow students a fun on-campus experience while saddling them with debt.

But there are some institutions operating that do serve their students so purposefully, and that are affordable for those looking to pursue entrepreneurial ventures in tandem. Nexford University, the online university of which I’m CEO, is just one example. In developing its curriculum, we surveyed Fortune 500 CEOs and studied startup founders who’ve experienced success, all in an effort to identify what skills entrepreneurs would actually need when starting then scaling a business. Likewise, we designed our tuition model so as to be payable via a flat monthly fee—like a Netflix subscription—such that students are never locked into any life-changing, long-term financial commitments. (Plus, the faster they finish, the less they ultimately pay.)

Graduating from such a strategically-designed school will equip you with skills that will prove critical while starting your business––and that are harder to obtain on your own by way of expensive trial-and-error on the job. Here are a few of the more impactful examples, all of which you should look for in a curriculum before you enroll.

1: Finance and accounting skills

Founders need to understand the principles of finance to do things like build a proper investor deck, raise money, and manage their startup from a fiscal perspective. This amounts to foundational knowledge.

Unfortunately, many founders––especially technical founders––are ill-equipped to do these things.

As a result, they make mistakes. And financial mistakes are, not surprisingly, expensive. Whether they result in you getting your costs or projections wrong, setting unrealistic expectations in terms of your valuation, or—possibly worst of all—not understanding cash-flow management such that you run out of money sooner than you thought you would, all these things can sink your ship before you even get the chance to sail. It’s wise to mitigate that chance.

2: Business law

Lawyers are expensive. And with a bit of knowledge around basic business law, you can do much more on your own than you probably think: from using widely available online templates to crafting your own operating agreements.

A basic understanding of business law also enables you to avoid making certain crucial legal mistakes that could cost you later. It’ll empower you to do things like correctly set up agreements with contractors, or comply appropriately with your state’s labor laws.

3: HR management

Screening, testing, and interviewing candidates––such that you only hire people who are the best fit for your team and your mission––is a science and an art. As is sustaining, encouraging, retaining, and developing your employees once they’re on board.

Accordingly, it’s imperative that you understand as the founder of your company what exactly goes into these more human-focused processes.

To not possess that understanding is, again, expensive. According to the Society for Human Resource Management’s 2016 Human Capital Benchmarking Report, the average cost of hiring a new employee is $4,129. Meanwhile, the cost of replacing an employee can be even higher––in some cases much higher. The cost of replacing an executive earning a salary of $100,000 a year, for example, can be as much as $213,000.

It’s prudent, then, to develop your own skills when it comes to things like expectation setting, retention, and inspiring your people.

Look, any time you start a company––and especially when you start your first––there will always be something of a learning curve. 

But a degree from the right sort of university will help you grow and succeed faster than you would otherwise on your own.

Further, if you’re earning your degree online and at a university that is truly focused on relevant skills, your education will be light on theory––meaning as you study, you’ll be able to spend more time on your startup. It’s for this reason that my team and I launched the NXU Entrepreneurship Scholarship last month: to accommodate folks who are planning on starting a business, but aren’t sure whether doing so without a college degree is the best idea.

Specifics aside, though, I will also share that I believe, sincerely, that learning how to learn will always be a critical and useful investment. So will investing in your ability to think critically and problem-solve.

Obtaining the right sort of college degree will amount to an investment in precisely these areas. And it very well might be worth it for that reason alone (though not at $40,000 per year!).

This article first appeared on Minutes Magazine.