Employee vs Entrepreneur — Taking Calculated Risks
On this page 9 headings
Start here Out of 100 new companies, only about 15 are still alive after 3 years. Yet some of those 15 change the world. Should you take a job or start a business? There is no single right answer. But there is a smart way to decide.
High risk, high reward
- Entrepreneurship = high risk, high reward.
- Of 100 new companies, only about 15 survive 36 months.
- Why do the rest fail? Cash-flow problems, no customers, changing technology, or wrong assumptions.
- A middle path: join a startup as an employee, but think like an entrepreneur. You get some of the rewards with less risk.
Plan vs reality
| Your plan | Reality |
|---|---|
| A smooth, straight road to your goal | Ups and downs: speed breakers, a pandemic, a recession, climate change… |
Sometimes it’s a hockey stick: you dip first, then shoot up. But stay focused, and the end will be good.
Your three most valuable resources
| Age | Time | Money | Energy | Main worry |
|---|---|---|---|---|
| Up to 25 | ✓ | ✗ | ✓ | Worry about money |
| 26–50 | ✗ | ✓ | ✓ | Worry about time; no time for loved ones |
| 50–60 | ✗ | ✓ | ✗ | Health: reading glasses, diabetes, BP |
| 60–75 | ✓ | ✓ | ✗ | Can’t travel rough; need comfort |
Lessons:
- Don’t start a business when your energy is low (for example, after 60).
- People now live to 80–100. Don’t wait for inheritance: by the time you get it at 75, you won’t have the energy to use it.
- At 20–25, you lack money, but good ideas can raise money quickly.
Time
- Everyone has 24 hours. Sleep 6–8 hours every day, not less than 6 and not more than 8, even on Sunday. Don’t “catch up” sleep on weekends.
- An entrepreneur must be ready to work about 16 hours a day. An employee who works that hard is very likely to reach the top, even CEO.
- Rule of 10,000 hours (Malcolm Gladwell, Outliers): about 10,000 hours of focused practice make you an expert.
Money
Learning → Earning → Returning. Keep learning, and earning will follow. Then give back (through taxes, investing, helping society).
Energy
Power of the mind, good food, fresh air, positive thoughts, sleep, supportive friends and family. Stay away from negative people.
What an entrepreneur must know: the 7 business functions
You need vertical expertise (deep skill in your field) and horizontal exposure (some knowledge of every business function):
| Function | What you must understand |
|---|---|
| 1. Marketing | Reaching customers: B2B (business to business), B2C (business to consumer), digital. High-margin products (e.g. stitching a designer blouse; consulting). |
| 2. Sales | Selling your idea; pricing; product mix. Some things are given free to build a platform (like Android). |
| 3. Suppliers | For manufacturing: tier 1, 2, 3 suppliers. Don’t depend on just one. Control the cost of goods. |
| 4. Operations | Remove non-value-added work. Span of control about 1:7 (one manager, about 7 people). Do it right the first time; rework is waste. Hire the right people. |
| 5. Innovation | Business models change every few years: Nokia → BlackBerry → touchscreen phones. Protect ideas with patents (intellectual property). Be fast to market. |
| 6. Support | HR, finance, admin, security. Know ROA, ROE, ROCE (returns on assets, equity, capital employed), MIS dashboards, and the RACI matrix (Responsible, Accountable, Consulted, Informed). |
| 7. Leadership and management | In small and medium businesses, this can’t be delegated. You need clarity, focus and insight. |
Keep learning: free online courses (Harvard offered 67 free courses during the pandemic), YouTube, low-cost courses. Get a mentor or coach. Spend at least 1% of your income on upgrading yourself every year.
Taking a calculated risk
- Don’t put all your money in the business. If you have ₹100, risk only about ₹20. If you lose it, you still have ₹80 and can recover in 2–3 years.
- Make sure your family can run the home for a while without your income.
- Don’t start at 60: energy is too low. (The lecturer started his business at 45.)
- Smart path: work for 5–6 years, learn how business works, find a real problem and a burning need, then start.
Lecture example — the employee who thought like an owner S. D. Shibulal was part of the early Infosys team. He stayed an employee for many years, later became CEO, and built great wealth. You can be an employee and still enjoy an entrepreneur’s rewards.
In one line: Entrepreneurship is high risk and high reward; build skills first, risk only part of your money, and start while your energy is high. Exam words: entrepreneurship, calculated risk, 15 of 100 survive 3 years, time–money–energy, rule of 10,000 hours, learning–earning–returning, horizontal exposure, vertical expertise, B2B, B2C, span of control, patents, RACI matrix, MIS.