Articles from Harvard Business Review

Why More MBAs Should Buy Small Businesses

Searching for a small business to buy and run instead of taking a more traditional post-MBA job like consulting is an idea that we’re seeing catch on at top business schools. At the Harvard Business School, for example, the number of MBAs who decide to look for a business to acquire right after graduation has gone from less than a handful a decade ago to more than a dozen, and in an occasional year, twice that amount. Stanford’s most recent study of search funds also reports a record number of active search funds. Still, we often wonder why more students don’t follow the entrepreneurship-through-acquisition path. One of the most common concerns that we hear as we advise our students at HBS is that searching for a business to buy — a full-time endeavor — is too “risky.” While everyone should surely weigh this choice based on their own individual circumstances and subjective preferences, we think that these concerns about “risk” are misplaced and that searching for a business is less risky than other career paths that are traditionally considered more stable. We put quotes around “risk” because we don’t think our students are focused on financial measures of risk — like the volatility of lifetime earnings — when they tell us that searching for a business seems more “risky” than taking a more traditional job. We don’t think there is much data to assess the actual financial risk of searching in comparison to other more traditional careers because there isn’t much historical data on financial rewards for either career. And, interestingly, while our students talk to us a lot about the “risk,” they don’t talk to us about the money differential; indeed, when they look at the business plans...

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