While the first might look good, getting people to work for you actually makes you more profitable to the government, and of course, the universe.
Before we begin, I want to make it clear that everyone won't be an entrepreneur, you know? That too comes with a lot of responsibilities. If your personality suits working under a boss, I still advise you go for it.
In my next article, I'd be listing out some things no one ever told me about being an entrepreneur. The commitments, downsides, tussles and more. But till then, ride with me as I explain some things you will love to hear about entrepreneurship and being employed.
In this piece, I'd be using two fictitious names, Todd and Titus. Todd is doing a regular job (probably teaching) and earning a monthly salary of ₦150,000 while Titus just launched his business last year and making an average profit of ₦120,000 per month.
Let's assume Titus is a web-designer and charges ₦50,000 per website, and gets a ₦20,000 profit subtracting the charges for the host, domain and other fees, to make ₦120,000, he needs to create an average of 6 websites per month.
At the end of April, he sees the need to expand and increases his advertising budget, thereby reaching more potential customers. By the end of 2019, his web design firm starts getting over 15 jobs a month and he hires one person to assist him, whom he pays ₦50,000 a month.
Calculating his income, 15 x ₦20,000 = ₦300,000 (- ₦50,000).
His firm will be recording an income of ₦250,000.
Remember he'd still have some running costs to cover, like fueling his generator, paying house rent and advertising his firms.
If he uses ₦1,000 to buy fuel in a day and works for 28 days in a month, he spends ₦28,000 on fuel
Depending on the city, he might spend ₦15,000 on rent monthly (ie ₦180,000 per year), and
Minus another ₦50,000 which he spent on ads, you'd see that he spent ₦93,000 last month on running his business.
₦250,000 - ₦93,000 = ₦157,000
Todd still earned his salary of ₦150,000 while Titus recorded an average monthly profit of ₦157,000 at the end of the year.
As a salary earner, Todd will save any extra money by by depositing it into a bank, which in turn earns him an annual interest of 5%.
In the advanced world where you earn per hour, you'd have to calculate your income with the paycheck formula.
Paycheck = (hourly pay) x (hours worked)
Remember there are only 168 hours in a week, so basically you can't work for 500 hours no matter how strong you are.
According to TowardsDataScience.com, an average American man works 41.0 hours per week while the ladies work an average of 36.3 hours per week.
₦150,000/160 hours = 937.5
(To not complicate things, let's assume you're earning ₦1,000, which equals ₦40,000 a week)
Now as a employee, you're limited in the sense that:
You can't work 500 hours a week
You can't force your employee to pay you ₦15,000 per hour
You can't ask the bank to give you an annual interest of 100%
While Titus finds out that his firm is getting more jobs than he can handle and they've built an authority in the industry, so he hires more employees and increases his charges.
In a few years of running, he'd have built his portfolio, and gained some reputation. He won't be limited because as new businesses emerge, the need for websites increase. He won't be limited with time because he already had more employees, whose salaries are fixed.
Titus will now have oversee the running of his business while his employees do the jobs of creating the websites.
Titus can in the later run, decide to expand into mobile app development and social media management. Looking at his industry, you'd believe with me that his clients may also be needing the services.
I gave a very simple example above, but the same scalable variables exist in everything Titus works for which usually come from these three main categories:
• Owning a Business
• Stock Investing
• Real Estate
Notice, these are NOT earned income (job).
There are seven common streams of income:
• Earned income• Profit income
• Interest income
• Dividend income
• Rental income
• Capital gains income
• Royalty income
All of the above listed, except earned income are scalable and controllable in one way or another.
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