Want to get into business but unsure how entrepreneurs differ from freelancers?
In a nutshell, entrepreneurs own their businesses, and freelancers work in their businesses.
In this post, we'll explore the nuances that set these business paths apart.
Whether you're looking for more personal freedom or a career change, both options might appeal to you, but which should you choose?
Keep reading to get all the answers.
Entrepreneur vs Freelancer: What's the Difference?
The simple difference between an entrepreneur and a freelancer is this:
Entrepreneurs are the visionary builder and freelancers are the independent expert.
Let's break both of these down to help you understand what sets these two types of business people apart.
The Entrepreneur: A Visionary Builder
The entrepreneur can be referred to as the visionary
builder. They have a strong desire for change and a vision they believe they can achieve.
Merriam-Webster defines an entrepreneur as:
“One who organizes, manages, and assumes the risks of a business or enterprise.”
But there is so much more to an entrepreneur than owning or running a business.
They want to influence others to live or function better in the world so their target audience can achieve more freedom and independence.
In our entrepreneur mindset post, we defined the entrepreneur as a problem solver, innovator, and one who creates valuable products.
The difference between the entrepreneur and the freelancer is their vision.
Entrepreneurs know they can't do everything themselves, so they focus on strategy and building teams to move the business forward.
A good example of an entrepreneur is Jeff Bezos, and his innovation of the Amazon flywheel.
The Freelancer: The Independent Expert
The freelancer can also be known as the independent expert. They have a specific skill or craft and offer it as a service in exchange for money.
Merriam-Webster defines a freelancer as:
“A person who pursues a profession without a long-term commitment to any one employer.”
In other words, they are business people who work for a company independently, without a permanent contract or being employed.
That's because freelancers recognize the value of their skills and want more autonomy around pay and who they work with.
The biggest difference between the freelancer and entrepreneur is their expertise. Freelancers tend to be experts in something they've practiced and want to be paid well for it.
They're not interested in managing a team or scaling, they simply want to do the thing they're good at.
A great example of a freelancer is Evan Fisher, who made $1.8 million on Upwork in 4 years.
6 Key Differences Between Entrepreneurs vs Freelancers
There are a lot of ways entrepreneurs differ from freelancers, but these are the ones that stand out the most.
Mindset
The first big difference between entrepreneurs and freelancers is their mindset. Entrepreneurs will be comfortable taking on more risk, whereas freelancers will prefer something more predictable.
Entrepreneurs focus on growth and reaching their vision in less time. This requires them to hire teams (and sometimes freelancers) who do the work for them.
Freelancers focus on developing a high-income skill to earn a steady income. They might not be interested in making millions, but they can still earn more than getting a job.
However, both types will adopt a success mindset and some entrepreneurs start as freelancers.
Goals and Vision
The goal of most freelancers is to get paid to do something they're good at or that they love. Whereas entrepreneurs aim for scalability, impact, and wealth.
Freelancers want to earn a living and get back more time than they would in a job.
Entrepreneurs will hustle their way through challenging times to reach their vision. This could be early retirement, revolutionizing an industry, or creating sellable assets.
Scale and Growth
The next differentiating factor between entrepreneurs and freelancers is their focus on growth. Entrepreneurs want to grow their business, and freelancers want to grow their skills.
An entrepreneur will focus on hiring staff, creating better products, seeking investments, and entering new markets, all in aid of scaling the business.
Freelancers focus on developing skills to work smarter and increase their rates so they can work fewer hours.
Innovation and Creativity
When it comes to entrepreneurs, their creativity is channeled through leadership and innovation of products and services.
Entrepreneurs work to establish systems to make progress by consistently measuring results.
Freelancers, on the other hand, apply their creativity through their work and field of expertise. In terms of innovation, freelancers will often impart their knowledge to help clients work more effectively.
Control and Autonomy
Both the freelancer and entrepreneur strive for control and autonomy, but in different ways.
For example, freelancers like the flexibility of working wherever they like and with whom they like. They take on a solopreneur-type role and gain control by managing their time effectively.
Entrepreneurs, however, take control by hiring managers who can delegate most of the workload for them. They use their skill of leadership to communicate effectively to forecast business growth.
Income and Financial Stability
Lastly, entrepreneurs take more risks when it comes to finances. They understand that income can fluctuate but will do everything in their power to prevent failed startups.
This may include seeking investments, cutting costs, laying off staff, and investing their own time and money to keep the business alive.
Freelancers are way more risk averse, preferring to start small and work their way up to a stable income. They achieve financial stability through maintaining a consistent client base and increasing rates as their skills develop.
Freelancers will often have a full-time job in the beginning until they can replace their salary with their freelance work.
Entrepreneurship vs Freelancing: Pros and Cons
With any venture and path you take in business comes many advantages and disadvantages.
Here are the pros and cons of becoming an entrepreneur vs a freelancer.
Pros of Entrepreneurship
- Freedom: The potential to work more or less hours and even location.
- Flexibility: Have the flexibility to pivot, expand, and what you work on.
- Control: You have total control over your company.
- Scalability: Easy to scale when the right team and systems are in place.
- Impact: The ability to make an impact on the world and employees.
- Growth: The capacity for rapid personal and professional growth.
- Earning potential: You have unlimited earning potential.
Cons of Entrepreneurship
- Greater responsibility: You're responsible for the success and failure of your business and employees.
- Long hours: It's very common to work more hours than a regular job, which can result in more stress and work-life balance issues.
- Financial risk: Income can be very volatile, especially in the beginning.
- Requires self-discipline: You have to be self-motivated and always on the ball.
Pros of Freelancing
- Total independence: Choose where you work and how often, work remotely or as a digital nomad.
- Client freedom: Pick the projects that excite you the most, and pivot your messaging to attract potential clients.
- Diverse opportunities: Get to choose from a number of one-person business ideas in any niche you like.
- Low startup costs: Find work for free on sites like Upwork or ProBlogger Jobs.
- Start alongside your job: You can build up your client base and income whilst working a job, providing you with financial stability.
Cons of Freelancing
- Inconsistent work: Work might not always be consistent, and can take some time to reach a stable income.
- Isolation: Working alone can become lonely and isolating.
- Lack of benefits: No employer-provided health insurance, retirement plans, or paid vacations.
- Need to market yourself: Need to promote yourself consistently to find new clients.
- Administrative overhead: You have to manage every aspect of your business, including finances, taxes, and contracts.
Steps to Become an Entrepreneur
If you think entrepreneurship is the right path for you, you'll need to know how to get started.
Here are the steps involved to become a successful entrepreneur:
- Know your strengths: Use your strengths and creativity to find opportunities that match your ideal market and solutions you can offer.
- Choose your niche: Find a niche you're interested in that you know you can help.
- Search for problems: Start networking and look for potential problems you could create a product or service for.
- Create an offer: Create a clear and compelling offer that your audience needs. The book $100M Offers is a great resource for this step.
- Validate your offer: Contact friends, family, and acquaintances to see if anyone will be interested in your product or service to validate the idea.
- Create an MVP: Once validated, create a minimum viable product or service that you can sell to people interested.
- Grow an audience: Start networking on social media and pitch your idea through content marketing.
- Create a business plan: Create a solid business plan to define your goals and projections for your business.
- Secure funding: Seek people willing to invest in your business for marketing, product development, and hiring people.
- Build a team: Start hiring people who can help you grow the business.
- Develop systems: Put systems in place to automate processes, save money, and increase customer satisfaction.
- Scale: Use profits and investments to scale your team, marketing budgets, product development, and reach a wider audience.
Steps to Become a Freelancer
Think freelancing will suit you better and want to know where to start?
These are the steps you can take to become a successful freelancer:
- Define your offer: Create an offer that is relevant to your skill set. Did you know $100M Offers is also available as a free course?!
- Select an audience: Choose an audience by niching down. The riches are in the niches.
- Set your pricing: Aim for higher rates by packaging a premium service to premium clients. Your offer can also help establish better pricing.
- Create a portfolio: Offer your service to friends or family or start your own projects to build a portfolio. Create a simple website to showcase your work.
- Get your first client: Get your first client by lowering rates or exchanging for testimonials.
- Put yourself out there: Market your service on social media. Build a following and collect leads. A lead magnet is a great way to get people interested.
- Join freelancing sites: Join sites like Fiverr or Upwork to find work or apply on job boards like Pro Blogger Jobs.
- Develop your skill: Keep learning and developing your skills to gain confidence and increase your rates.
Entrepreneur vs Freelancer: Which Should You Choose?
By now, you should know the clear differences between entrepreneurship and freelancing. But which one is right for you?
If you have a burning desire to own or manage a business, hire employees, and work towards a big vision, then entrepreneurship is the best option.
But if your burning desire is to work with clients on a skill or craft you enjoy, then freelancing is the way to go.
A third option is to start as a freelancer and transition into entrepreneurship. This can be helpful if you have a job, have a low budget, and want to minimize risk.
Whichever you choose, be patient, and don't forget to have fun!
Entrepreneur vs Freelancer in Conclusion
Entrepreneurs and freelancers are quite different paths in business.
Entrepreneurs focus on innovation, and freelancers work closely with clients on projects they enjoy.
One owns or runs the business, and the other works in the business. The one that's right for you comes down to preference, skills, financial resources, and mindset.
If you want to connect with others on their business journey, consider joining the Niche Pursuits Community. You get access to weekly calls from successful bloggers, freelancers, and 7 and 8-figure entrepreneurs.
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