Financial Articles

Employee vs Entrepreneur/Investor

The Village Spring Runs Dry.

This is a story about a spring that ran dry in a small mountain village. The leaders of the village gathered to determine how they would supply the village with clean water. About a mile away there was another spring and reservoir but it was too far for the villagers to travel.

One of the men volunteered to solve the problem by carrying water into the village himself each morning for a set fee. Since the need for water was clear, the leaders agreed to the offer and determined a fair price for each bucket of water delivered.

Early the next morning the "bucket carrier" started his new venture and began carrying water. It was hard work but he was pleased with the immediate pay for his work. He awoke every day and went back and forth carrying water. The more he delivered, the more he earned.

As the months went by, he began to think there had to be a better way. So, he bought buckets that could hold more water and were easier to carry. He bought better shoes and discovered a quicker route between the reservoir and the village.

The problem was, despite all his improvements, he still had to get up every day to carry the water.

A Different Solution

Some time later, another villager came forward with an offer to supply the water. He planned to build a pipeline from the reservoir to the village.

The leaders were skeptical but eventually agreed to the pipeline plan, especially since the new proposal would cost the villagers less for the same amount of water. So, while the bucket carrier continued his daily routine, the second man began work on the pipeline.

Building the pipeline was hard work through the rugged mountain terrain. The tools and materials were costly but he continued his project for many months.

Finally, the "pipeline builder" installed the last piece of pipe and ceremoniously opened the tap while a crowd gathered. Everyone cheered as they watched clean water flow into the village water tank.

How Things Changed!

The following day the two men's worlds changed dramatically.

The bucket carrier had to lower his prices significantly to remain competitive. He worked harder and yet found himself worrying about losing his job.

The pipeline builder, however, began enjoying the fruit of his labor. He stopped working long days and started enjoying the income his venture generated. He found the pipeline required minimal maintenance, so he was free to spend his days fishing and enjoying time with his wife and kids.

Many Years Later

Many years later, after both men had died, the pipeline was still supplying the village its water and the pipeline builder's children continued to enjoy the benefits of a father's entrepreneurial spirit.

Lets compare the two men and their ventures

First man - Bucket Carrier
Has to go to work each day to get paid, income limited by the hours he works. Competition forced him to work harder for less.

Second man - Pipeline Builder

Earns passive income from his investment in the pipeline, has lots of free time, income not restricted by his hours worked.

I think most people will see the advantage of building a pipeline

It doesn't matter how good you are at "carrying water" (your job). Nor does it matter how big your paycheck. You still need to get up every day and go to work to get paid.

The moral of the story is, learn to invest now so that you will reap the rewards later