A Freelancer makes money through hard work and effort; an Entrepreneur makes money by putting the use of someone else’s money, hard work and effort, while he sleeps!!
If you are one of those who are planning to start something of your own, then this article, that states the difference between entrepreneur and freelancer will help you decide.
Do you think a Freelancer can be an Entrepreneur and vice versa? Let’s find out…
Today’s work style has completely changed from what it was 10 years ago. Jobs today are more about making money quickly and evading the monotonous 9 – 6 shift. It’s no longer about permanency and security. Job changing is the latest ‘Mantra’.
In a 2017 job report, it was noted that the average career of an American lasts for just 4 years and that a person changes at least 11 jobs throughout his career span.
With permanency and job security no longer being criteria for job search, more and more professionals do prefer to be Entrepreneur or go Freelance.
Words from Leader – Become an Entrepreneur or there’s an alternative
[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#838383″ txt_color=”#fff”]Entrepreneurs are those who identify a need, any need for that matter and try to fill it with effective solutions. They are creative, innovative and challenging… and they take bigger risks to move up the ladder.[/mks_pullquote]American entrepreneur and author, James Altucher, who has co-founded more than 20 companies, says that this could be a great idea. There’s no point in ‘wasting your creativity, energy and hard work to a faceless corporation’. So it’s better to start on your own and be an Entrepreneur.
But there’s a problem…
People often interchange the terms ‘entrepreneur’ and ‘business owner’. We presume that Entrepreneurship refers to running your own business.
But the truth is setting up a business does not mean you are an entrepreneur. You could run a coffee shop or a freelance copywriting company; that makes money by the way, but you still wouldn’t be an entrepreneur because you wouldn’t be taking on a significant financial risk.
Let’s talk about the Alternative!!
So if you can’t be an entrepreneur, yet you want to utilize your skills and experience in the most profitable, innovative and revolutionary way, then become a Freelancer.
As a freelancer, although you are not an entrepreneur, you do get many advantages of entrepreneurs; #1 is being your own boss. As a freelancer, you can also fill any need, creatively.
Let’s look at the difference between Entrepreneurs and Freelancers. This will help you to decide which option is the best fit for you.
Difference between Entrepreneurs and Freelancers
Entrepreneurs– They find a gap in new markets and discover a need. They find solutions to meet the need and take risks with their own or investor’s money to set up a company to fulfill the needs.
E.g. – The most popular Facebook. Back in 2004 Mark entered a new market, and discovered the need for better and enhanced online social networking. He took risks and invested in building Facebook. He was a freelancer too. He worked from home with his friends.
Freelancers– They also discover needs but in already established markets. They also use their creativity and skills to fulfill those needs but without any investment or risks involved.
E.g. – Web Development is an already established market and there are many businesses that need web development services. Freelancers look for clients who need the services and work for them in exchange for payment. No risk involved.
This was the basic difference between Entrepreneurship and Freelancing. However, we have rounded of other key difference between entrepreneurs and freelancers.
|Freelancers are hired to fulfill work.||Entrepreneurs hire to build a business.|
|They sell their skills and workforce.||They sell their total number of skills and workforce.|
|They get paid for the hours they work.||If their business is successful, they will earn round the clock.|
|They have to work hard for every opportunity and project (6% more than normal employees and entrepreneurs).||They have to work hard (double the hours freelancers work) in their initial business stage and reap benefits for a longer period.|
|Freelancing is skill based.||Entrepreneurship is more about ideas and visions.|
|They have to use skills (writing, photography etc.) to deliver projects.||They have to pursue their creative vision and change their idea into reality to procure needed results.|
|Freelancers sell services like web development, content writing, software application development etc.||Entrepreneurs sell products that need to be created, developed and marketed. Digital products like new apps, technologies etc. also fall under this category.|
|Freelancers cannot build. For example, if you can’t make English muffins, your client will hire someone else.||Entrepreneurs can build anything and everything. They need money and people.|
|They work as an individual. At the maximum, they hire assistants.||They work as a team. Entrepreneurs hire all the necessary employees to grow their organization.|
|Freelancing is mostly sole proprietorship.||Entrepreneurship can be sole proprietorship, partnership or joint venture.|
|They can serve 2 – 3 clients at a time as the labour force is lesser.||They can serve more than 10 clients at a time due to the bigger labour force.|
|They earn professional income.||They earn business income, including shares, incentives, and compensation income.|
|Freelancers can work from home.||Entrepreneurs need to have a fully functioning office space.|
|They incur few or nil expenses in their profession.||They incur huge capital expenditure and working capital including materials, salaries, rent, bills, taxes, and insurances.|
|They are less likely to incur debts as they seek freedom and flexibility in work.||They are more likely to incur debts because they take bigger financial risks.|
|They have better work-life balance.||Their work life balance will improve once their business sustains and succeeds. They will have stressful early business years.|
|Profit margin is very less.||Extensive profit margin, if business is successful.|
|They will have minimal but stable income.||They earnings are limitless, but their income is also unstable and fluctuating,|
|Freelancing doesn’t require extensive planning. One can start or stop freelancing anytime he wishes.||Entrepreneurship requires strategies and long-term and short-term planning. Entrepreneurs cannot close a company just like that as it is a tedious process.|
|They face less Government compliance issues.||They face many Government compliance rules and policies such as tax filing, licensing and legal documents.|
What we see from the differences here is Entrepreneurship is not an easy task; it’s harder than full-time employment and freelancing. But it is far more profitable. Once you start reaping the benefits of a successful empire, you will enjoy a luxurious life. The rewards are better than freelancing.
However, freelancing gives you a simple and stress-free living. Although it doesn’t provide a 5-star life, it does offer you contentment, peace of mind and more than enough income. And what’s more, as a freelancer you will get more time with your friends and family.
Whatever it is, be it, entrepreneur or freelancer, ultimately you have to fight for your career and achieve ultimate success.