Avert the Identity Crisis: Are You a Freelancer or an Entrepreneur?

November 30, 2016

You work out of your home office, set up a logo and website to represent your brand, take on new projects from clients each week and bill them accordingly. You’re a freelancer but—wait—you also technically own your own business, so doesn’t that make you an entrepreneur too? Safe to say, you find yourself with an identity crisis.

The titles “freelancer” and “entrepreneur” are often confused, but it’s the vision, motivation and goals behind each career path that really makes them quite different.

According to a Seth Godin post in The Startup on Medium, a freelancer is someone who gets paid for the work they produce, either by the hour or by the project. Freelancers typically operate in the services space—they’re writers, designers, consultants, legal advisors and trades professionals. Not limited to that list, freelancing is the simplest way to start a business.

An entrepreneur, on the other hand, according to Godin is someone who aims to build a business bigger than themselves. Their biggest focus is on using their resources (money and networks) to grow and scale their business while making a profit. Plainly said, their aim is to make money while they sleep.

Now, to dig deeper, below are 3 ways to help you determine if you have a freelancer’s mentality or the mindset of an entrepreneur.

1. Audit Your Day-to-Day Responsibilities and Tasks

The simplest way of figuring out if you’re a freelancer or an entrepreneur is by observing a typical work day. While both are considered “self-employed,” your day-to-day is a great reflection of your title.

Freelancers typically work alone and don’t have a team to support them. They exchange their time for money. That said, a freelancer’s earnings completely depend on the work only they produce. In addition, freelancers keep the lights on themselves—they manage and execute everything from client relationships and projects to their books.

On the other hand, entrepreneurs maintain more of a bird’s eye view of their business. Their day-to-day focus is on creating a business that scales and minimizing risk. Further, entrepreneurs don’t rely on their own labor to fill in gaps—the reason why so many entrepreneurs own multiple businesses. Instead, they hire expertise to execute according to the company’s mission. Essentially, staff is responsible for keeping the lights on, even when entrepreneurs sleep.

2. Find Out What Really Motivates You

We all know the common reason both freelancers and entrepreneurs ditch their desk jobs: for the freedom to follow a passion and the flexibility to act upon that passion. But with similarities aside, what really motivates freelancers and entrepreneurs respectively?

For freelancers, the main motivation lies behind the promise of getting paid for completing a task or project. The reason? Client payments essentially fuel their businesses. Since client work is typically the only source of business income for freelancers, they’re driven by the passion for their craft and the ability to offer services in their subject-matter expertise.

For entrepreneurs, they’re motivated by being able to identify a need and building a business to solve it—regardless of what that need may be. They’re the ones who are driven by the idea of making a dent in the world by tackling a common pain point through an enterprise.

3. Determine Your End Goal

Finally, ask yourself: “At the end of the day, what am I looking to achieve through my business?”

For freelancers, their goal is to build a business that’s manageable within their means. They’re the people who do the exciting work of finding new clients and taking on challenging projects. On the other hand, freelancers are also the ones doing the dirty work of letting the bad clients go and accepting the occasional downtime. Ultimately, they aim to grow their demand by maintaining a sustainable freelancing business and fostering relationships along the way.

Now, entrepreneurs are zeroed in on building a system and, sometimes, not just for one company. They understand the fundamentals of business. And, since they don’t hire themselves, nor bill for their time like freelancers, they rely on a staff of experts to keep the business rolling.

Now, we laid out the differences. In a nutshell, freelancers build a business that exchanges their services for money. Entrepreneurs build a business that turns a profit even when they sleep. So tally your result out of three and what’ll it be? Are you a freelancer or an entrepreneur?

Freelancer Versus Entrepreneur: Finding Common Ground

At the end of the day, the idea of “self-employment” is the common theme—and there’s proof in numbers. In the US, freelancers are part of what’s dubbed the gig economy. In 2015, 33% of the US workforce took on independent work, including freelancing. By 2020, that number is expected to rise to 40%. Similarly, about 14% of working-age Americans put on their entrepreneurial caps and started businesses in 2015, which was a record-high for the report from the Global Entrepreneurship Monitor (GEM).

Why? The idea of self-employment has evolved throughout the last decade. More people are ditching the nine-to-fives and taking on flexibility and freedom of running their own businesses—whether independently or with a team. From the same GEM report, more than half of the US working population are confident of opportunities to start new businesses. This is the first time that number has risen above 50%.

By taking a deeper look, freelancers and entrepreneurs aren’t quite as similar as we may have initially perceived. We can, however, confidently say they’re both part of a movement in the workforce. One that’s driving employees out of the monotony of the cubicle, and into a trending territory: self-employment.

about the author

Content Marketing Manager, FreshBooks Megan Santos is the Content Marketing Manager at FreshBooks. Before joining the team, she was the Editor of a national trade publication and has over 6 years of experience in writing and editing. Connect with Megan on LinkedIn and say hello!

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