BEING AN ENTREPRENEUR requires a marketable idea, a lot of passion and perhaps an almost zealot-like commitment. But what's not necessary — and in some entrepreneurial circles, even scoffed at — is a master's degree in business administration.

That's the situation Kenny Lao, co-founder of Rickshaw Dumpling Bar, a chain of dumpling eateries in New York, found himself in after receiving his MBA from New York University's Stern School of Business in 2004. When conversing with fellow entrepreneurs and others of the restaurant-industry ilk, he rarely (if ever) mentions his prestigious schooling. "There can be a backlash against MBAs," he says.

While a business degree is good for boosting credibility with investors, "it's also something you downplay in certain company," Lao says. If the topic comes up, satirical ribbing and jeers usually follow. "People in nonconsulting industries tend to think MBAs don't want to get their hands dirty," he says. And being an entrepreneur, he adds, is definitely a grit-infused vocation.

However, the degree is also costly. Tuition alone ranges from about $4,000 to over $40,000 a year, according to Peterson's, an online education-services company. Many students take on hefty loans and wind up in serious debt upon graduation. While MBA candidates planning corporate careers can count on higher salaries to pay it back (some skip the cost entirely when current employers foot the bill), entrepreneurs who are technically "self-employed" don't typically enjoy such luxuries.

New York University B-school grad, Kenny Lao, at his 23rd Street Rickshaw Dumpling Bar location.

Joe Lassiter, a professor of management at Harvard Business School's entrepreneurship program, says the decision of whether to get a degree or not boils down to common sense. "If you are a young entrepreneur who's got a hot company that's growing, you should not get an MBA," he says. "You're investing time preparing for tomorrow rather than spend time doing what you need today."

While an MBA is not for every would-be entrepreneur, it usually doesn't hurt either — especially if you have the business bug but lack direction, says Lassiter. An MBA can provide the skills needed to build and grow a company, and connect a budding entrepreneur with mentors and future management team members. Plus, a degree can give you the confidence to move seamlessly from an elevator pitch to a corporate boardroom, he says.

Before you send out those applications, here are some considerations:

Think About What You'll Miss

In addition to tuition, consider the cost of not working while attending grad school. Students who quit their day jobs to attend full-time two-year MBA programs stand to lose about $107,922 in wages, according to a 2005 report from the Graduate Management Admission Council in McLean, Va.

For entrepreneurs, an even bigger concern than wages might be the loss of time and energy that could be spent developing their businesses. Take, for instance, Jeff Takle, who co-founded RentingYourHome.com, a web-based rental property management service, shortly before starting Babson College's one-year MBA program last May. While his business acumen has soared, his actual business has suffered. "I am not able to spend the hours and energy I need to spend on it," he says. "I can't go to all the conferences and the trade shows because, well, I'm trying to graduate." As a result, revenues have suffered, at least in the short term. "If I had spent the whole time last year selling, we'd have maybe doubled the customers that we have now," he says.

Use Your Time Wisely

Despite the constraints, starting a business while attending an MBA program may actually present the best of both worlds, says Barry Moltz, a business consultant, author and former serial entrepreneur. To really learn about starting a business, he says, it helps to start one. Of course, "until you are depending on that business to pay your bills, it is really not a fair test," he adds.

Students in MBA programs who launch a business have access to professors for business advice, and can sometimes incorporate their start-up into coursework.

For his part, Takle describes himself as "obsessively focused on tying everything I can to my own business during school." For instance, "every time there was a group project, I oriented everything to my company," he says. Classmates have helped him size up his industry's competition as well as devise a pricing strategy. And he's managed to find half of his current management team among his fellow students.

Pick the Right Program

Graduating from a top-ranked business school can certainly open doors. But for potential business owners, attending an institution that specializes in entrepreneurship often makes the most sense. A growing number of universities are catering to those with start-up dreams: Today, more than 2,000 two-year and four-year colleges offer classes or degrees in entrepreneurship, up from more than 1,000 in 1992 and fewer than 300 in 1980, according to the Kauffman Foundation.

Some schools, including Babson, Massachusetts Institute of Technology and University of Maryland, go a step further by offering business-incubator programs. These initiatives typically provide student business owners with a work space and access to computers, telephones and printers. Some programs offer students the chance to vie for seed funding. For example, Arizona State University's incubator program, which admits 10 to 15 student businesses each year, doles out $200,000 a year to worthy student business owners. For more on university incubators click here.

Some schools give out seed money through business-plan competitions. In 2004, Lao from Rickshaw won $15,000 worth of funding from NYU's business-plan contest. "It was a very rigorous process and it kicks your butt into gear," he says. While he might get the occasional snicker from MBA detractors, he's content that he walked away with a degree from a top business school, a stellar business plan and a track record that makes his fund-raising efforts even more potent.

"Starting Up," a weekly column written by Diana Ransom for smSmallBiz.com, follows entrepreneurs through the early stages of launching a business. Write to her at dransom@smartmoney.com.