Entrepreneurship vs 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, whereas 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 with a promise that they will meet once in a year and will measure the progress they made in life.

After one year they met and narrated each others story.

Ramesh, the entrepreneur invested Rs.1,50,000 to launch the new business by taking a bank loan. 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. 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.

	Entrepreneur	Employee
Startup 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 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. Meanwhile, The Entrepreneur has done better in the business. His gross revenues have increased from Rs.200,000 to Rs.350,000 and his net income percentage has increased from 10% to 15%—but look at what has happened to his owner benefit. Because of the healthy boost of gross revenues and greater efficiency, owner benefit has now more than doubled from Year 1 from Rs.20,000 to Rs. 52,500. Still, The Employee has an advantage in take-home salary, but Ramesh the Entrepreneur is building a business. He has more than doubled the owner benefit and is building the foundation for future growth.

	Entrepreneur	Employee
Startup 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/-
Year 2	Rs. 3,50,000/- Gross 15% Net Rs. 52,500 Owner Benefit	Rs. 1,05,000/-

Once again in Third year, The Mahesh who is a good employee 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.

Who achieved the greater hike in earnings? Ramesh again. In terms of take-home salary, The Ramesh has at least evened the score, and possibly surpassed Mahesh .

	Entrepreneur	Employee
Startup 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/-
Year 2	Rs. 3,50,000/- Gross 15% Net Rs. 52,500 Owner Benefit	Rs. 1,05,000/-
Year 3	Rs. 4,50,000/- Gross 20% Net Rs.90,000 Owner Benefit	Rs. 1,08,000/-

Moral of the story:

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!

• 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).

	Entrepreneur	Employee
Startup 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/-

• The start of the exercise, the Rs. 150,000 investment seemed like a significant setback for entrepreneur, while employee enjoyed the comfort and ease of settling into a new office to work for a steady paycheck.

• Within three years The Entrepreneur had built both cash flow and asset value that exceeded The Employee.

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

ET – The DNA for business excellence

This article is not about the movie ET the Extra-Terrestrial a film directed by Steven Spielberg but about Entrepreneurial Traits that is required in every person who wants to be successful in the field of business. Entrepreneurs are considered vital to the development of our economy since they create wealth and jobs. And while Technofirst through ‘I’m an Entrepreneur’ campaign are always on the lookout for ways to spark entrepreneurship in the campus, no one knows precisely what leads people to start their own business. Whether the entrepreneurs are ‘born or made’, is a question that appears to be the basic argument between nature and nurture. I strongly believe that the entrepreneurs are both born and made. Because when some people are born with natural talent and risk tolerance, entrepreneur-ship skills can be learned by everyone.

Let me share my own experience. I was born in a middle class family where both my parents were social workers. Their was no entrepreneurial culture in my family. Despite all the objections I became family first entrepreneur in 1987 after completing my college education. The year 1987 was still the licensed raj where elaborate licenses, regulations and the accompanying red tape that were required to set up and run business in India.

It's not that certain people are predestined to be entrepreneurs. In addition to in-born characteristics, there are important entrepreneurial skills that can be learned. Chief among these is the ability to see and articulate a vision, as well as to build and motivate a team. Unlike in-born characteristics, there are tools used in the application of these skills, such as opportunity identification, evaluation and communication, and consequently they can be learned from others and continually improved. We all can learn how to do it. But some personal characteristics will lead you to do better than others.

Below is an entrepreneurial assessment test, which will help you in your personal evaluation process. The traits detailed below generally identify who is and who is not cut out to be entrepreneur.

Rate each of the following 11 characteristics using the following scale.

+2	Very strong in this characteristic
+1	Possess this characteristic
0	Don’t know
-1	Have very little of this characteristic
-2	Do not possess this characteristic

Characteristics	+2	+1	0	-1	-2
1. Creative
2. Take Calculated Risk
3. Self-Confident
4. Dynamic
5. Like to Lead others
6. Market Savvy
7. Resourceful
8. Persevere/Determined
9. Optimistic
10. Knowledgeable
11. High Energy Level
Total						Grand Total =

Total your score for the eleven characteristics.

· Add the pluses and subtract the minuses.

· Your score will fall between –22 to +22.

· Below 15? Wait and try another day because if you’re between +10 and +15 you have leadership instincts that can someday put you over the top.

· A high positive score demonstrates you share many of the characteristics of successful entrepreneurs.

· Negative or low positive scores indicate you may not currently possess or rely on these characteristics.

· Low scores do not mean one will not be an entrepreneur.

For example, an individual tested or assessed has all the apparent attributes of an entrepreneur profile and then fails in their new venture they undertake, the mantel of an entrepreneur can never be worn because the word "Entrepreneur" embodies the word "Success".

So you may be wondering how you can work on being an entrepreneur. Here’s a list of a few things that have helped me in the past,

• Realize that all of us have an entrepreneurially side to us,
• If you want to start a business, make sure that you pick something your really passionate about,
• Take small steps, and accept the fact that there are going to be set backs,
• Create a plan on how you’re going to deal with set-backs as they come up,
• Fine tune your idea by bouncing it off friends and family,
• Start making a plan on how you would like your business to start, and how it will grow,
• Constantly improve your skills, never stop learning, and.
• Try to have fun…the more fun you have the better off you’re going to be!

Finally remember, anyone can start a business. The secret is picking a venture that fits your entrepreneurial personality.

Harnessing the power of Synergy through Co-operative Entrepreneurship

The Bollywood blockbuster 0f 1960s Dilip Kumar starer movie Naya Daur (means New beginning) was a landmark movie of that period. The song Saathi Haath Badhana of Naya Daur was almost used like a National song in 60s.

Saathi haath badhaana, saathi haath badhaana

Ek akela thak jaayega mil kar bojh uthaana / Saathi haath badhaana

(Comrades, lend your hand! / Comrades, lend your hand!

One alone will tire soon, let us bear this burden together / Comrades, lend your hand!)

The word synergy means cooperation or working together. The song explains how we can foster synergy i.e. the combined working together of two or more parts of a system so that the combined effect is greater than the sum of the efforts of the part.

India has a rich history of co-operative movement. The co-operative is a form of organization in which persons voluntarily associate together on a basis of equality for the promotion of their economic interests. The co-operative movement has gone up from strength and today India has a strong movement catering to various sectors.

The philosophy of co-operation endeavours to empower isolated individuals who are individually weak , to come together in a democratic manner on the basis of equality to achieve the desired common economic interests.

Self Help group

SHGs are small informal associations created for the purpose of enabling members to

reap economic benefit out of mutual help, solidarity, and joint responsibility. The benefits

include mobilisation of savings and credit facilities and pursuit of group enterprise

activities. The group-based approach not only enables the poor to accumulate capital

by way of small savings but also helps them to get access to formal credit facilities. These groups by way of joint liability enable the poor to overcome the problem of collateral security and thus free them from the clutches of moneylenders.

The concept of self-help groups gained significance, especially after 1976 when Prof.

Mohammed Yunus of Bangladesh began experimenting with micro-credit and women SHGs. The strategy made a quiet revolution in Bangladesh in poverty eradication ‘by empowering the poor women’.

About 98 percent of the self help groups in Kerala are women groups. In some areas men groups and mixed groups also exist. There has also been an increase in the flow of funds for micro-enterprises through various promotional agencies. Though NGOs were the forerunners in this field, the early nineties marked a new era for micro-finance programmes in the State with the evolution of the Community Development Society (CDS) model women groups in Alappuzha. Further the setting up of Kudumbasree – the poverty eradication programme of the State Government – has given a boost to the SHG strategy.

Gujarat Co-operative Milk Marketing Federation

Shyam Benegal the famous Director of Parallel cinema, he is known for his art films, which were far different from the norms of commercial cinema of India. Manthan (only film ever to be sponsored by Indian farmers.) came to the screen courtesy, the Gujarat Co-operative Milk Marketing Federation.

The Film Mantan is about the progress of a team which set out to start a milk co-operative in rural Gujarat. Led by a veterinary surgeon (a character based on the now-famous Dr Kurien), the milk co-operative’s workers soon find their path blocked by greedy middlemen intent on exploiting the villagers. Of course, as always, the good guys win but the movie is a poster child for the then dreamy-eyed co-operative movement and the solution it provided to all social ills.

In today’s world, when the co-operative movement is limping and increasingly losing to the corporatized retail sector, the story of how the milkmen of Gujarat organized themselves to set up the flagship co-operative seems almost nostalgic and poignant.

Lijjat Papad

Lijjat Papad, is an award winning company with an annual turnover of Rs 500 crore. It was Started by a group of seven lower-middle class women in Mumbai 50 years ago as their entrepreneurial effort. What started with just seven women on a loan of Rs 80 has grown into an enterprise owned by over 42,000 women spread across 72 centres around the country.

The hallmarks of Lijjat's success were stringent quality, consistency in taste and hygienic conditions for preparation of papads, which are traditional Indian meal starters made of lentil, chickpeas, black gram, salt and oil.

The India Coffee Houses

The first Indian Coffee Workers Co-Operative Society was founded in Bangalore on 19 August 1957 under the leadership of the communist leader A. K. Gopalan along with the thrown-out workers of the Coffee board. These workers then took over the branches and renamed the network as Indian Coffee House. Today there are 13 co-operative societies in the country to run the coffee houses. These societies are governed by managing committees elected from the employees.

Entrepreneurial Drive

The liberalization, which was started in 1991, and the Information Technology boom of the mid-late 90’s, has been significant factors, leading to a wave of entrepreneurship sweeping through the country.

Indians have entrepreneurial capacity. However the society and government are not very encouraging towards entrepreneurship. To a large extent, the Indian society is risk averse. People usually seek secure and long-term employment, such as government jobs. The physical infrastructure needs to be improved. Social Attitudes, lack of capital, inadequate physical infrastructure and lack of government support are major factors of hindrance.

In a tightening job market, Technopark, Trivandrum in association with Department of Science and Technology (DST) and Department of Scientific & Industrial Research (DSIR) , TechnoFIRST and Aircel is going an extra mile to encourage entrepreneurship among students in campus by offering mentoring services, space to work from and even seed capital through their ‘I am an Entrepreneur’ campaign. Many students feels that starting a venture on their own is a better option than waiting for a job to come.

So, if you are bitten by the entrepreneurial bug in college then it's time to stop making excuses and start making your campus dream true.

Is getting an M.B.A. worth the investment?

Perhaps the most decisive moments in a students' life are the times he or she has to decide upon the future course of action they need to follow in their career. Considering the number of options / courses / streams now available, this task of selection becomes all the more difficult. 

A Master's of Business Administration (MBA) a three letter magical word is an advanced degree offered by most business schools to college graduates. MBA coursework teaches students essential skills for the corporate world by focusing on both the technical (e.g., finance and economics) and personal (e.g., leadership and management) abilities. Earning an MBA has become an essential step in establishing a successful career in the business world. Some companies are willing to sponsor their employees' education, either while they are working part-time, or during a hiatus from their employment (with a contract to return afterwards). 

Today most business people in management positions have MBAs. While it is possible to achieve success in the business world without an MBA, not having a degree from a top business school can be a severe handicap because so many people continue their education and training. Both the quantitative and qualitative skills taught in MBA programs are qualities that are in high demand in the real business world. If you decide not to pursue an MBA, it is possible that you are making a decision that will hinder your future success in the corporate world.

As Indians continue to climb the economic ladder, the composition of their spending will change considerably. In a pattern witnessed in many other developing countries, discretionary expenditures, such as mobile phones and personal-care products, will take up more room in the nation’s shopping basket. The middle class in India currently numbers some 50 million people, but by 2025 it will reach to 583 million people—some 41 percent of the population. These households will see their incomes balloon to 51.5 trillion rupees- 11 times the level of today and 58 percent of total Indian income. 

When America's middle class was growing, they bought homes where as Middle class in India put a tremendous amount of investment in education. In rural areas, families emerging from poverty is making educating their children a top priority, while higher-income urbanites is spending more on better-quality education, university degrees, and study-abroad programs. 

Before taking any decision regarding admission for MBA and before one can calculate a personal ROI (return on investment), one should think about the skills, values, and interests, and how this degree could help. Once it’s known where to end up, it’s easy to know more precisely what the potential return is.


Return on investment (ROI) can be used as a primary tool for forecasting and evaluating the benefits of doing MBA. Any investment can be evaluated by three measures: 
• The breakeven point, 
• The internal rate of return, and 
• The net present value. 

The Breakeven point (BEP) represents the number of years it takes for the income from an investment to pay for the investment. For example : In 2009, a 23-year old who had earned a full-time MBA had invested an estimated Rs. 10,00,000 in the degree — Rs. 6,00,000 in tuition, plus Rs. 4,00,000 in lost compensation or opportunity cost (money lost for time you take off from work). He could expect to pay that off in 8 years. 
 
One thing that should be considered while calculating your ROI is the ranking of Business School. The top-rated MBA programs from IIM’s which is not only the most reputed management institute of India but one of the best business schools in the world offers a very strong return on investment and they provide the greatest potential to maximize the future earning power of somebody who graduates from that program.

The Internal rate of return (IRR) is the effective interest yield that results from the investment. If a student paying his tuition fees for the MBA as an investment and the extra money that he earns over the course of his career as return on that investment, The effective interest rate that one is getting is the internal rate of return. The industry average comes to around 18%. So, that is, in layman’s terms, for every Rupee put into tuition for an MBA degree, one can expect a return of Rs. 1.18. 

The Net present value (NPV) of an investment is the present (discounted) value of future cash inflows minus the present value of the investment and any associated future cash outflows. 

NPV accounts for the time value of money by expressing future cash flows in terms of their value today. It recognizes that money has a cost (interest), so that you would prefer to have Rs. 1.00 today to having Rs. 1.00 a year from now. If you earn 10% interest on your money, Rs. 1.00 today will be worth Rs.1.10 a year from now. Or, turning that around, the "Present" value of Rs. 1.10 one year out is Rs. 1.00. Subtract the initial investments from Present value, it is called NPV. One should not make an investment that's estimated to produce a negative NPV. The bigger the NPV—other things being equal—the more attractive the investment is.

Finally in conclusion one can say that deciding to pursue MBA can be a solid investment in once career, with the sacrifices being time and money