Many on Wall Street are scared and miserable. Company stocks are plunging, 401(K)s are shrinking, bonuses are disappearing, coworkers are being laid off with each swing in the market — 110,000 so far in 2008 and estimates that it could reach 200,000 before New Years, according to the Associated Press. With Wall Street firms going the way of the dinosaur, the future prospects of employment are grim at best.

So what’s an unemployed Wall Streeter to do? A growing contingent is heading to business school. The former bankers, traders, and analysts hope that by earning an MBA, they can wait out the hiring drought and beef up their resumes at the same time. Already this year, North Western University’s Kellogg School of Management has seen a 22 percent increase in applications, according to The Wall Street Journal. Informational visits at the University of Michigan Ross School of business are up 200 percent, and Vertias Prep, a company that trains students for the business school admission test, the GMAT, has seen enrollments jump 50 percent.

If past trends are any guide, many of these fledgling MBAs will likely concentrate in entrepreneurship. These programs have exploded over the past decade. Between 1999 and 2003, the number of professorships for entrepreneurship studies in the U.S. grew from 237 to 406, or 71 percent, according to a 2004 survey conducted by the Kaufman Foundation. The number of institutions offering these programs spread from 300 in the 1980s to more than 1,600 in 2004, an increase of 430 percent, according to a study by the University of Indiana.

But Wall Street refugees looking to jump into the world of entrepreneurship might get a better education by taking out $200,000 small business loan rather than a student loan and creating a business of their own. Just ask Shep Murphy, the co-founder and owner of clothing maker Vineyard Vines. He and his brother, Ian, had great jobs on Wall Street that bored them silly. They longed for their happy childhood days on Martha’s Vineyard. How, they wondered, could they incorporate the island lifestyle into a business? Start their own. So they quit their corporate gigs, and with $8,000, started selling beach-themed neckties.

The brothers had no fashion experience and simply flipped through the phonebook looking for tie makers. None could be found, but after calling silk merchants and textile companies, they finally hooked up with a firm that made ties. Today, Vineyard Vines, a business that started with four sample ties in 1997, has swelled to a clothing company with 120 employees and $50 million in revenue, according to the fashion trade magazine DNR. And there’s not an MBA in the house.

Murphy said the biggest mistake they made was not starting the company 10 years earlier. But he admits that his experience on Wall Street gave him the financial skills and personal contacts needed to get his new business going. Jeffery Carr, a marketing and entrepreneurship professor at NYU’s Stern School of management, echoes Murphy’s sentiment. Carr says that a budding entrepreneur with a good undergraduate education in finance or experience in the world of business could easily skip the MBA and learn on the fly in a start-up. But without a good base, having a good idea is not enough. “It’s all about learning at the street level,” Carr says. “But you need a foundation to build on.”

Sometimes a partner is all you need to build that foundation. Carr suggests that entrepreneurs, especially those with a technical background in engineering or medicine, could find a partner to handle the business end while they focus on innovation. Don Weiss of Columbia School of Business agrees. He says that entrepreneurs are often “better off going directly to go,” if they have strong advisors or mentors.

So if you have a business idea, now could be the time to skip the MBA and opt for the hands-on learning offered by the real world. Even if the business fails, you’ll take a valuable “education” into the job market. As Richard Farson and Ralph Keyes write in their book The Innovation Paradox, today’s business environment often sees failure as a badge of honor. It shows boldness, creativity, and drive. “Not only is there little stigma attached to cutting edge entrepreneurs who go bankrupt, it’s even seen as a good source of business experience.” And you’ll certainly stand out from the hundreds of finance MBAs competing for the same job.

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BER Business Times is published by the Business & Economic Reporting Program in the Department of Journalism at NYU.

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