Career path or business: Which is the surest way to be wealthy
“What else are you doing?” this is a common question that employed people face many times.
“You can never get rich by being employed,” is an equally common phrase.
“When do you plan to branch out on your own?” your critics will prode.
And every time these words echo in your mind, you feel the pressure and before you know it, you have injected your little savings into some business just to feel like you are making strides towards road to financial independence.
However the question that begs is, "must you start a business to become wealthy?”
Alternatively, can one become wealthy purely by concentrating and investing in their careers?
The 2019 State of Side Hustle in Kenya (2019) by Viffa Consult lists five motivations behind starting side hustles- supplement salary (for those aged 26 to 30), meet an unmet need by current employer (31 to 40 years), investing disposable income (41 to 50 years), retirement plan (over 50 years) and bored at work (26 to 30 years).
Agriculture based side hustles are the leading in performance followed by hospitality, business services, entertainment and media, and retail.
Other areas where individuals have invested their money on side hustles are: transport, real estate, travel and recreation, education and financial services.
The survey shows eight (84 per cent) out of 10 employees with side hustle recorded an improved income by virtue of engaging in the business.
In 2020, during the onset of Covid-19 pandemic that saw thousands lose their jobs or get pay cuts, the firm reported that a third of Kenyans with side hustles were willing and ready to quit their day jobs.
While it is prudent for one to have more than one stream of income, somehow starting a business seems to be the go to idea for many with a steady flow of income.
While there are those who have acquired wealth from business, there is also a portion who have plenty on their name through their careers.
Wahome Ngari, the Chief Executive Officer Personal Finance Academy says this percentage is however small.
“It is a very small percentage. These are people who go to the very top –you know the chief executive officers who are paid well,” he explains.
Not cut for business?
The other group who get wealthy without necessarily starting a business he notes are sports people.
“I am sure you are well aware what sport people make and that is not a business. It is sort of their career,” he adds.
Innovators, he says, can also make fortunes without setting up a business.
“But for the bulk of the people that might not be the option,” says Ngari.
Ngari says the only option for the rest of the people is not necessarily to start a business to be wealthy. The idea is to have other revenue streams.
“It may not be a business. It may be other forms of investments,” he says.
“A business is a way of providing a solution to a problem in the society and people pay for it. So you do not necessarily have to do a business but go into other investments.”
He however notes that business is important for largely a lot of people.
Sarah Wanga, Head of Research AIB Capital, a firm that deals with trading of stocks and corporate finance, says while it is not a must for one to get into a business to be wealthy, there is a motivation behind it.
“Businesses offer a higher rate of return than a normal career,” she says.
“For a career, there is less risk and so the returns are lower. The lower the risk, the lower the returns and the higher the risks, the higher the returns.”
She says in a business one has to inject time and capital and take a risk that it will succeed.
Try the stock market
“But nowadays there are careers that pay pretty well so people have managed to be employed and become relatively rich,” she notes.
Wanga however points out that one should not depend on the income from their career alone.
“You might get a salary but how that salary works for you is very important,” she says.
“You can invest in a business or in stocks –and people have made a lot of money for instance Warren Buffet.”
Wanga says there has been a lot of interest for stock market from retail investors for the better part of 2020 and this year.
“We have heard of people who made millions especially in the United States,” she says.
“When you invest in the stock market you are basically investing in someone else’s skill –you are putting your trust in the management of a company. You do not have to start a business on your own,” she adds.
But how does one know if they are meant to be in business or career?
“There are those who are good in business; these are entrepreneurs and they know themselves,” says Wanga. “There are those who find it hard to start a business and have probably tried and not succeeded.”
“But if you know someone who is an entrepreneur, with the skill and proven to be successful, you can invest in that person. You do not have to be the one running the business. You can have a certain equity in that venture and that will help you,” says Wanga.
She says the safest way right now to put money if you do not have a business or do not want to run one is in public equity which is basically buying shares in a listed firm.
If your plan is to be wealthy through career it does not come easy either. Ngari says you have to align everything towards the career and it must be something you are naturally endowed, capable, and happy to do.
“You seriously invest in yourself – and when I say invest in yourself I mean if it needs you to have any kind or knowledge you must acquire it. If it requires any kind of skill you have to go out and look for that skill. It needs a very winning attitude for you to rise to the top,” says Ngari.
Ngari says it is important to sharpen your ability to be a team player.
“You cannot rise to the top alone. You must be able to work with millions of people,” he says. “The last area of self-investment is networking. You must build a network because for you to go to the top you need others; for you to stay at the top, you also need others.”
Whether business or career, Ngari says, if there is something that you do and enjoy, the kind that people see results and they affirm them, and within yourself you are convicted that that is the way to go.