That may sound like a straightforward question, but the answer certainly isn’t.
Small businesses have been called, “the lifeblood of the U.S economy”, and for significant reason: research by the US Small Business Administration (SBA) reported that the U.S. economy is made up of about 44% of small business owners.
While this impressive number has gradually declined in a collective national GDP sense— from 1998’s 48% to 43.5% in 2014— the gross small business GDP has steadily grown by around 25%. That’s nearly 1.4% annually. As such this significant source of capital means that small businesses are a continuous presence driving innovative technologies, job opportunities, and overall economic growth. Taking these numbers into account demonstrates a number of qualities about small business ownership and the amount of education that may be needed before launching a small business.
As with most of life’s complexities, there are a myriad of paths and opportunities that can arise as one reaches and works toward personal goals. When it comes to launching a small business, there are also plenty of individual factors which need to be taken into account before actually putting such a goal into action and seeing it through long enough for a business to (hopefully) become successful.
The collective common opinion held by most Americans for generations is that the more education one has, the more successful and financially stable that individual is likely to be. It is easy to understand why that has become the subconscious presumption.
Education and Its Effect on Financial Earning potential.
There is little position to argue against the point that, in today’s competitive business world, individuals — entrepreneurs or otherwise— need to have a solid and often very diverse knowledge base to be able to encourage success in life or small business ownership. Of the many tools that contribute to this question, education rises easily and obviously to the top of the list.
Plenty of studies have been done over the years which consider how education levels affect earrings over a lifetime. The U.S Bureau of Labor Statistics reported in 2020 that there are significant correlations between educational levels and an individual’s median weekly earnings. Bachelor’s degree holders median weekly earnings came to $1,248; Master’s degree holders rose to $1,479 a roughly 16.5% increase; Doctoral (PhD and DrPh) and graduates’ earnings per week came to $1,883 which is 33.7% more.
What should also be considered is that about 23.5% of the population have earned a bachelor’s degree and only 14.4% make up the combined percentage of advanced master and doctoral degrees. Most of these numbers and levels of success (from a monetary value) are only considering the general income earned, not the source.
That means these numbers apply to people who are employees or small business owners. Those income differences are due more in part to individual abilities to apply for, negotiate, and earn higher salaries. While these numbers do give a clue to earning potential, they may or may not directly influence the success of a small business.
Education and Its Effect on Entrepreneurial Success
The following needs to be said outright: education on any level does not guarantee entrepreneurial success. There are too many factors personally, professionally, and economically that have their own marked effects on the potential success of a firm. However, education does provide individuals with knowledge, wisdom, resources, and training that contributes greatly to the potential of success.
Again, generally speaking, there is research that suggests that higher levels of modern education do correlate to success in business because, according to the Bureau of Economic Research, businesses founded by college graduates are just more likely to succeed. Much of this has to do more with learned, developed skill sets that are a companion to continuing education, things like problem solving, logic, financial intelligence, resilience, and social intelligence.
Additionally, the networking possibilities, the connections with other educated and driven people means that the network of resources can be greater than those who do not have those social spheres.
Conclusion
In summary, while there are certainly measurable elements between educational levels, median weekly earning potentials, and success in business, the translation of those very generalized research initiatives do not demonstrate a direct correlation to success in small business.
Being that there are so many complex personal and economic factors constantly shifting to play off of each other, it would be safer to say that while continuing education is important, it is just one of many other factors that may have a significant contribution to success in small business ownership.
