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How well can management consulting prepare me for entrepreneurship?

Anonymous A

Hey guys and girls,

My situation is the following: My long-term goal is to start my own business (non consulting related). But first I want to join a company, mainly to gain work experience and to save up some money.

What do you think is the best option for me with my future business in mind?? Working for...

  1. Management consulting firm (also considering I might not get into MBB)
  2. DAX company
  3. start up

Factors that I have in mind are salary, entrepreneurial experience and connections I might get to investors.

Feel free to share your opinions, adive and/or experience!

Thanks a lot in advance!

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Vlad replied on 11/06/2017
McKinsey / Accenture / More than 300 real MBB cases / Collected all Big 3 offers / Harvard Business School

Hi,

As a person who worked in BIG3, blue chips and a startup and currently launching my own startup I can probably provide some perspective:

1) Salary - Big 3 companies most probably will provide you with the higher salary or at least faster growth

2) Connections to investors - neither of these. 2-3 connections are not a game changer in raising money. Having 2-3 connections is almost the same as having no connections at all.

3) Entrepreneurial experience:

  • Launching a company from a scratch - neither of these options. You just do it yourself
  • Growing an early stage company - Both early-stage startup and consulting experience will help/ Startup experience will give you an idea of MVP, Lean, pivoting, solving chicken&egg problem, finding product-market fit, etc. Consulting will teach you how to make good materials for investors and how to be driven by numbers and calculate your finance
  • Growing later stage company - both later stage startup and consulting are relevant. Again, they provide you the different perspective and different set of skills.

Good luck!

Cameron
Expert
replied on 11/05/2017
Ex-McKinsey BA/Associate across Australia and UK // Graduate and MBA case experience

Hey,

You ask a very common question that unfortunately will never have a very certain answer! It will ultimately depend on the type of work you end up doing at a consulting firm (lots of operations work vs lots of due diligences give you very different skills), and also the area you want to start a business in.

Sharing my 2 cents, consulting gives you great skills to start and run a business, but is not going to give you those investor connections (as early round investors are typically far to small to afford top tier consultants). I have a number of friends who left McKinsey to start their own business - many are doing well as they have a clear view of what does and doesn't work, but as in any setting have taken a fair bit of time to build connections. Friends who moved straight into startup have much better connections but don't have the same experience to asses the correct decision for their company. Obviously consulting pays a lot more (unless the start up does really well). A top tier consulting firm on your CV can also help build credibility quickly.

Ultimately there is no right answer, but after 3 years consulting I definitely feel I have the skills needed to start and grow my own company (though I am happy working for someone else at the moment). Could I get funding as quickly as friends in the start up work, definitely not, but consulting gives many other advantages.

hope this helps

Cameron

Nuttachai replied on 11/04/2017

From my experience working 4 years as management consultant and a bit of experience working for start-up, I would say that consulting will definitely benefit you in starting your own business in future for 3 reasons:

  • First, it will shape how you think. You will be trained to be a real problem solver, to think strategically and logically. Very essential skill for any businesses.
  • Second, you will be amazingly good at presentation. As entrepreneur, you will have to present and pitch to potential investors and business partners very often. This skill will become very useful. I have a colleague who left consulting to found a start-up. He was able to attract a huge amount of funding from his outstanding pitches. Both his presentation slides and delivery are noticeable from others.
  • Third, you will have exposure to many industries at many levels. If you are lucky, you might be able to find the industry that you are passionate about and might meet company executives that would be your potential investors (But it quite a rare case, I actually haven’t heard of such story)

However, one of the most important thing needed for starting business, which consulting cannot offer is “Business Idea”. It is you and only you that can come up with business idea to make a successful start up. In term of monetary rewards, you will be able to save decent amount from working as consultant. Nevertheless, to start a business, you don’t actually need that much money, most funding should come from investors. If the business is good or looking good then there should someone to invest, right? Otherwise you might want to rethink about it. Working start-up, you will certainly learn how it operated as well as its working culture (which is totally different from consulting). However, this kind of thing can be observed and learned within a few weeks. The learning curve isn’t that high. What you will gain most would be connection. Start-up community is quite close-knit. Everyone kidda know everyone. But alternatively, you can just connect to these people from other ways.

In short, consulting will absolutely a good option. Try to look out for opportunity and business idea by yourself and make connection with relevant people.

Hope it helps!

Best,

Nuttachai