As someone interested in both learning more about business for myself and educating others on options to increase their income to build wealth faster, I found the concept very interesting.
Table of Contents:
The Value of Formal Education
There is a popular narrative in American culture. Our parents tell us to do well in school so we can get into a good college. We should then go to college and get a degree.
We are told that following this path will lead to a high paying job and prosperous life. People selling this narrative will cite statistics like the higher lifetime incomes of college graduates compared to those with only a high school education.
But there is a newer narrative, growing in popularity, that college is a waste of your time and money. Popular writer James Altucher is one of the most outspoken voices for this argument. He cites the fact that inflation in higher education costs is greatly outpacing general inflation.
He argues that most people “afford” college by burying themselves in student loans, which handcuff them for years or even decades. Worse yet, many graduates don’t end up ever working in fields related to the degrees they spent so much time and money to obtain.
Is A College Degree Worth The Cost?
So is formal education valuable and necessary, or is it a waste of your precious time and resources? As with most arguments, the truth regarding the value of a degree likely lies somewhere in between the extremes.
The necessity of a formal degree is highly dependent on the field you are looking to work in. Frank Abagnale Jr., portrayed by Leonardo DiCaprio in the popular film Catch Me If You Can, found out you can get into pretty big trouble if you just walk in and start doing jobs like being a commercial airline pilot, doctor, or attorney without the formal training and credentials required. However, in many other fields, this relationship is much less clear.
Do You Need a Business Degree?
Kaufman is in no way ambiguous with his opinion on this question. He states that when asked for a recommendation of whether or where you should get an MBA, his answer is always the same five words: “Skip business school. Educate yourself.”
He makes the familiar arguments that MBA programs are too expensive and do not guarantee a high paying job. However, he goes a step further. He suggests that MBA programs teach things that range from outdated and worthless to damaging and dangerous.
He states that even successful MBA graduates are lacking in some basic skills. These people who often manage the world’s largest companies, often emphasize “financial wizardry” to improve short-term results. He argues many MBA grads are divorced from the processes that create a company’s actual long-term value. He even blames such practices for the bubbles the burst during the crises of the early 2000’s and in 2008.
Emphasizing Sound Principles
Kaufman emphasizes that “The Personal MBA” is not meant to be a cheaper way to obtain the same information taught in MBA programs. Instead, it focuses on teaching critical concepts and principles traditional MBA programs underemphasize. His stated goals are to teach readers to ask better questions and actually start doing. This, he argues, is better than getting bogged down in complex theory.
The book hits the mark in being actionable. It is specific and clear enough. And I have already started to apply the principles in the book as I prepare for my first entrepreneurial endeavor.
At the same time, many of the principles are so universal that I have applied them to my personal life, outside of business. I have educated patients in my physical therapy practice about locus of control. I considered several finance concepts when evaluating our recent home purchase. And I applied the concept of slack to time and financial resources in planning our early retirement.
The book is organized into three sections. The first five chapters break down the five essentials that every business must have: value creation, marketing, sales, value delivery, and finance. The second section focuses on psychology with chapters on the human mind, working with yourself, and working with others. The final three chapters focus on business systems, with a chapter devoted to understanding, analyzing and improving them.
I like the book’s organization and emphasis on sound, concise principles. These make it one I anticipate holding onto forever and referencing often.
Beyond the Book
Kaufman acknowledges that you can not adequately cover every business concept in detail in a single book. However, he addresses this concern by maintaining a list of the “99 Best Business Books” on his website. He updates the list periodically as he continues his own education.
Kaufman’s “Personal MBA” is an introduction to business. It can help overcome the information overwhelm associated with learning about such a broad topic.
His reading list then guides you to the next steps to take once you know what you don’t know or have identified your areas of weakness. He organizes his recommendations into 27 categories, including marketing, sales, and finance and accounting.
We each have to calculate the opportunity costs when considering the amount of time, money and energy it would take to obtain a particular degree. This we need to factor those costs against how much a degree will increase our earning power.
Traditional degrees do still have value, particularly as a screening tool for larger and more traditional companies. Without a degree, it can be hard to get a foot in the door at companies with standard recruiting and hiring practices.
However, many of us are not looking for a traditional job or do not want to spend the capital required for a traditional degree. It is important to understand that there are other options to more traditional schooling.
The Personal MBA (Insert affiliate link) is an excellent introduction to business concepts for those looking for an alternative way to educate yourself to start a business or progress in your career. You can get all this information in your spare time and apply it immediately–no formal courses required.
I will personally be taking the self education path as I launch into my next phase of life. I would recommend if you’re looking for ways to increase your business knowledge and increase your earning power to start by checking out The Personal MBA.