entrepreneuer vs employee

E. K. Vinod

Presents

www.technofirstonline.com

The Technology Career Magazine

Network Partner

in association with

Entrepreneurship

Employment

Once upon a time there lived two friends

Ramesh and Mahesh.

They had been friends since childhood. Now both of them have completed their studies.

Ramesh aspires to be an entrepreneur one day and started

working towards that

Mahesh wants to join a Multinational company and earn

good salary.

They selected their way of life after carefully studying the advantages and disadvantages of

entrepreneurship and employment.

The two friends spent long hours discussing and finally parted ways in different direction.

They also made a promise that they will meet once in a year and will measure the progress they made in life.

Ramesh an aspiring entrepreneur faced difficulty and delays in meeting various government requirements such as

registration of company, obtaining licences and registering the property.

According to World Bank report,

it takes minimum

35 to 52 days to start a business in

India.

The official costs of starting a business are high

and the process quite complex

involving no less than

13 procedures

About

50% of the entrepreneurs said

they faced problems while obtaining various

clearances and licences.

He was facing a tough dilemma…..

Then, one day Ramesh saw

TechnoFIRST magazine in a book shop.

It had a collection of visually compelling articles on the entrepreneurship from the experts.

His eyes lit up on seeing an advertisement of the campaign

‘I am an Entrepreneur’

He contacted TechnoFIRSTimmediately and

after two days he got a call inviting him to attend the seminar.

It was the most engaging, moving and inspirational seminar I have ever attended. Thanks to

TechnoFIRST and Technopark for inviting me to attend ‘I am

an Entrepreneur’ campaign.

Ramesh

Technopark Business Incubation Centre (T-BIC)

mentoring services, space to work from and even seed capital

Ramesh got

encouragement from

T-BIC and they offered

After one year both Ramesh and Mahesh met and narrated each others story.

Ramesh, the entrepreneur invested Rs.1,50,000 to launch the new business.

Meanwhile, Mahesh, the Employee invested nothing, incurring no debt or risk. If anything, he invested was a bit of time and photocopier expense in preparing a good resume.

Over the course of the first year Mahesh had a pretty big advantage in terms of income, with a salary that clearly exceeds the Rs. 20,000 owner benefit the Ramesh takes from the business.

Mahesh

Entrepreneur EmployeeStartup Investment Rs. 1,50,000/- Rs. 0/-

Year 1

Rs. 2,00,000/- Gross 10% Net

Rs. 20,000 Owner

Benefit

Rs.1,00,000/-

In Year 1 there is no arguing the fact a six-figure salary, even after taxes, exceeds the Rs. 20,000 owner benefit by quite a margin. Ramesh was willing to accept this.

In

Second year, things improve for both.

The Mahesh received a very nice raise of 5%,

and now has a salary of Rs. 105,000 annually.

Because of the healthy boost of gross revenues and greater efficiency, owner benefit has now more than doubled from

Year 1from

Rs.20,000 to Rs. 52,500.

Meanwhile, The Ramesh has done better in the business.

His gross revenues have increased from

Rs.200,000 to Rs.350,000

His net income percentage has increased from

10% to 15%

Entrepreneur Employee

Startup Investment

Rs. 1,50,000/- Rs. 0/-

Year 1Rs. 2,00,000/- Gross

10% NetRs. 20,000 Owner

Benefit

Rs. 1,00,000/-



Benefit

Rs. 1,05,000/-

Once again in Third year,

The Mahesh was a good employee and was rewarded with another salary increase.

His Rs. 108,000 pre-tax gross salary exceeds the Ramesh’s owner benefit.

But the gap is narrowing.

In two years Ramesh has gone from

Rs. 20,000 to Rs. 90,000 in Owner Benefit.

Entrepreneur Employee

Startup Investment

Rs. 1,50,000/- Rs. 0/-



Benefit

Rs. 1,00,000/-



Benefit

Rs. 1,05,000/-


20% NetRs.90,000 Owner

Benefit

Rs. 1,08,000/-

Ramesh again.

In terms of take-home salary, the Ramesh

has at least evened the score,

and possibly surpassed

Mahesh

Who achieved the greater hike in earnings?

After three years if we compare, the asset value the Employee’s job has an asset

value of ZERO!

Think about it.

Does an employee own a job?

No.

Does an employee own their office or work station? Someone else owns these assets

—the business owner!

Entrepreneur EmployeeStartup Investment

Rs. 1,50,000/- Rs. 0/-

Year 1 Rs. 20,000 Owner Benefit

Rs. 1,00,000/-

Year 2 Rs. 52,500 Owner Benefit

Rs. 1,05,000/-

Year 3 Rs.90,000 Owner Benefit

Rs. 1,08,000/-

Owners Business Rs. 2,70,000/- Rs. 0/-

Speaking of our entrepreneur, look at what happened to the market value of the asset that was created with a Rs. 150,000 investment.

Because the Entrepreneur worked hard and created a successful business,

he can now sell the business if he wishes.

It is now worth around Rs. 2,70,000 (rule of thumb is

3 x owner benefit).

The start of the exercise, the Rs. 150,000 investment seemed like a significant setback for

Ramesh,

while Mahesh enjoyed the comfort and ease of settling into a new office to work for a steady paycheck.

entrepreneurial bug in collegeSo, if you are bitten by the

it's time to stop making

excuses

start making

your campus dream true.

This is just the start of the story..…..