Will an MBA hel¥me as a business owner?

Q:I plan to get a master`s degree in optics and would like to own a business someday. Should I go for an MBA afterwards?

Jul 1st, 1996

Will an MBA hel¥me as a business owner?

Milton Chang

Q:I plan to get a master`s degree in optics and would like to own a business someday. Should I go for an MBA afterwards?

A:That`s an excellent idea. More and more engineers are enrolling in MBA programs now, and they are in great demand after graduation. But many good managers and successful business owners do not have an MBA.

There are significant benefits to getting an MBA. You can learn a lot in a short time because the information is presented in an organized fashion, and you can also develo¥personal contacts and build relationships with people in business. Perhaps a more pertinent question is when to get it. To¥business schools now require their students to have a minimum of two years work experience. Exposing yourself to the business world for a few years before going for your MBA will give you much better comprehension.

I ran a company for many years and took it public without any formal business schooling. Then I took an executive program designed specifically for owners and presidents of companies. That turned out to be an extremely valuable broadening experience. There I learned not only from books, but also from the personal experiences of others who were not necessarily book-smart, but were surely street-smart with the intuitions they developed. So, it`s never too late to go back to school.

Q:My partners have different ideas on the valuation of our software business. Should I be totally open with the investment banker we are talking to?

A:Yes, you should definitely be u¥front with your banker. How can a member of your team function effectively if he or she doesn`t have all the facts? Bankers are experienced in handling conflicts, and it would be beneficial for you all to get an impartial view.

There is one thing you should know, however. Anything you tell your bankers and accountants can be discovered in court should there ever be a law suit. In business matters, confidentiality privileges exist only for lawyers. So if you have strong concerns, talk to an attorney before you clue in your banker. If a problem does exist, an early cure can prevent it from getting worse.

Q:I came from Eastern Europe and will soon get my MS degree. I like integrated optics and fiber optics. Where should I look for a job?

A:First of all, talk to your professors for guidance. It`s hard to beat a personal referral. Jobs for engineers are plentiful as you look beyond research toward product implementation. I will send you some names of companies that I know are hiring. You can also look at directories for company listings in your field. And, of course, there`s the Internet.

You may want to attend technical conferences like OFC and CLEO where you can meet people face to face. These conferences usually have job postings to facilitate the search. Another approach is to target a city and visit several companies at the same time. It is a lot easier for people to grant you an interview when you`re already in town. Make sure you send a well-prepared resume and a personalized letter in advance.

As a newcomer to this country, realistically you will be less productive for the first year or two on the job than people who have English as their first language. This can be a big barrier to entering the job market. I suggest you get an objective evaluation of your language and project-management skills from your graduate school placement office. Indicating a willingness to accept a slightly lower starting salary can be a way to get your foot in the door.

Q:I am joining a small company and was given a choice to accept stock options for a reduced salary. How should I look at this?

A:Talk to anyone who owns stock options in a high-tech company that went public recently and you`ll learn that this can be an opportunity for significant financial gain. The value of stock in a private company is generally discounted from its real worth because there is no liquidity (ready market). Therefore, the event of going public can bring significant appreciation. Stock options in companies that have already gone public are generally less valuable because most stocks are adequately priced at the fair market value.

Consider this as an investment decision. In the case of a private company, you`d in essence be a venture capitalist. So you may want to talk to a few knowledgeable people before you take the plunge. For sure, you`ll want to avoid a company that is intent on remaining private, because there will be no mechanism for liquidity. In the case of a public company, you`d be like a speculator playing the market. To make an intelligent decision, I suggest you go through the same due diligence you would if you were buying a stock.

MILTON CHANG is chairman of New Focus, Santa Clara, CA. Each month he will answer questions on personal career matters, starting and running your own high-tech business, and manufacturing and operations. Send your questions to Milton Chang, New Focus, 2630 Walsh Ave., Santa Clara, CA 95051; tel.: (408) 980-8088; FAX: (408) 980-8883; e-mail: MMTchang@aol.com.

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