Investing In Your Startup V Sticking to Your Job Connundrum

Post his joining a well known IT company in 2011, after being offered a 35% hike on his current salary,
By theopinionatedindian May 31, 2017, 10:07 IST

Post his joining a well known IT company in 2011, after being offered a 35% hike on his current salary, Raj Malhotra (we couldn’t have come up with a more stereotypical name) was on cloud nine. With annual appraisals averaging at around 15%-20%, Raj was dreaming with his eyes open. He & his wife – Simran (Duh!), who was also working for an IT company, were thinking of buying an expensive flat & starting their family. At 20% hikes YOY & 35% hikes whenever they jumped jobs, they would live lavish lives & retire rich. By end of December 2012, Simran & Raj moved into a fancy apartment with their newly born child. Although

high paying IT, telecom sector companies are now downsizing



the pay hikes that year was not as per their expectations, they told themselves that, things would definitely change for the better next year. A year later, they promptly bought a new car as well, after all they could afford it, with Raj’s new job at another IT company. Raj’s new company, was known to be a good paymaster & an employee friendly organisation. But the couple was shocked with another dismal pay hike during their appraisals, the next year as well. With their several EMI’s, they were barely left with any disposable income & barely no money to plan their trip abroad. The Malhotras weren’t lucky enough to post minute by minute updates of their vacay abroad on social media, like many of their friends were. We will work harder to get that promotion & then holiday abroad, they promised themselves. But, as luck would have it, instead of getting a promotion, Simran lost her job. The family’s income was nearly halved. Raj is now the sole bread earner for the family.

This horrifying story of the urban couple is similar to a lot of Indians, not just from the IT sector, but across all sectors in India. Post liberalization, Indians were accustomed to humungous appraisals & insane salary hikes on “jumping” from one job to another. All this has come to an abrupt halt, with downsizing in several companies. The average Indian appraisal is now reduced to 5%-7%, a far cry from the 20%-35%, that corporate Indian professionals are accustomed to. On the other hand, we are flooded with news items of people quitting their cushy jobs, or taking a small loans from family & friends to invest in their startup, only to magically get funded by investors, thereby turning the gutsy startup founder into a millionaire overnight! Which has made several Indians ask themselves ” Should I quit my job, & invest in my startup?”

In today’s scenario, it is a given that you have to be hard working & give your 100%, barring which neither will you succeed in business or in a corporate setup.

The Opinionated Indian examines pros, cons of each alternative & helps you arrive at a decision

Sticking to Your Job

Pros:

  • Like they say, “Salary at the end of the month is the biggest addiction”. No business can offer you the kind of security that a corporate job does. Home Loans, car loans are easier to get.
  • Your kid’s admission to top notch schools is a given. You have a fair idea, how much money you will retire with.
  • Even during a recession, you will continue to make decent money ie as long as you don’t get sacked.
  • Your income will mostly keep growing YOY.
  • Depending on the company you work for, you get perks such as incentive trips abroad, chauffeur driven car, money to buy a car, house etc.
  • You are responsible only for your profile ie the finance head won’t have to get into sales & vice versa
  • Companies today pay execs handsomely. You may end up making way more, than what you would make out of running your own business.
  • Pension & PF benefits.

Cons:

  • The harder you work the richer your bosses & company promoters get. Even if your company doubles its profits, you will make a puny part of those earnings.
  • You will always have a boss, who will tell you what to do
  • There will be pressure to keep growing the company YOY.
  • You may get sacked, without prior notice.
  • You may have to deal with office politics for promotions & good appraisals.
  • You may get transferred to another location.
  • Your company may make your work 14-15 hours a day for a pittance.
  • Your job might get monotonous.
  • Getting leave will always be a headache.
  • You can never be in the top 2% of the world’s richest or even super rich, if you are working under someone.

Investing in Your Startup

Pros:





  • quit your job & invest in your startup if you are confident about its concept

    You are your own boss. Nobody tells you what to do. Walk in/out of office when you want to

  • Your are an employer, not an employee
  • The harder you work, the better will be your returns.
  • No pressure to keep expanding your business. You can slow down, if you are content with your turnover.
  • You can borrow from your company for personal expenses & pay it back later.
  • No fear of ever getting sacked or office politics or appraisals.
  • Sky is the limit. You may end up, becoming a billionaire, if your concept is potent enough.
  • You decide when you want to holiday & for how long.
  • You leave something significant for your children or heirs. Your kids will have a solid foundation to rely on.
  • A salaried job will never get you the kind of respect that running a successful business will get you.
  • You can appoint a CEO. You can then sit back & relax.

Cons:

  • Your business may not work out & you may end up losing all the money invested.
  • Your business is your baby. You will have to be invested in mentally & physically, slogging 6-7 days a week, for it to succeed.
  • Angel Investors may put undue pressure on you to grow the company at an unrealistic pace.
  • You are responsible for the incomes of all the people in your company.
  • You may have to get into every aspect of your business, till there are enough employees to handle the various issues.
  • Your employees will always turn to you, for the final decision making. A decision will have to be made by you in seconds.
  • Your vision may/may not align with your CEO’s.
  • After making millions in one year. your business may run into losses or just break even for the next few years.
  • Not suited for everyone.
  • If it is a family business, you may have to take your parent/relative’s approval for literally everything.

Our Verdict

We are programmed to look only at the successful people & ignore the failures. Behind every successful entrepreneur are 100’s if not 1000’s of unsuccessful ones. Besides it takes a certain breed to survive in business. Unless you have a killer business idea & are ready to slog day in & day out for your business to succeed, it is better you stick to a job. Business is not suited for everyone. If you are not very motivated, are gullible, or laid back or not to ambitious, please do not venture into your own business & take up a corporate job.

But, if you are convinced that you concept will work & you are motivated to go all the way, please do go for it. else, you will always wonder, how your life would have turned out, had you taken that chance.

One option is, will be to do a bit of both. There are millions of part time business ideas, that you can try. The best way to earn more money & or be independent is to take up a teaching job. A teaching job over the weekend, can add up to 20% of your monthly income. With the growth in the number of colleges in the cities across the country, there is an acute shortage of quality teachers. Other lucrative ideas include, renting your property, or selling insurance. If a part time job doesn’t excite you & you have money to spare, you can invest in a startup through a crowd funding website like investmentnetwork.in or wishberry.in. This should satiate your urge of investing in a startup.

Lastly, the best thing one can do is spend 10-15 years at a big company & then join a small/medium sized startup with good funding as their CXO. If the startup grows, you grow with it at a rate which will never be possible in a well established company. Perks may include ESOP’s ie stock options – something even a big company may never be able to provide. In the event of the startup not taking off, all you need to do is look for another job. Remember to spend time speaking to the promoters before taking up that offer to join the startup, as a lot depends on the person running the show & the concept idea. Well funded startups can are known to offer 2X salary growth to their employees, so remember to ask for it!