4 Ways to Graduate from Freelancer to Entrepreneur
According to a study commissioned by Upwork and the Freelancers Union, there are 55 million independent workers in the United States. But within this group, as many as 35% identify as “independent contractors” (what I call a “freelancer), while only 7% identify as “independent business owners” (which I call “entrepreneurs”).
In the growing gig economy, the line between entrepreneur and freelancer can be difficult to define, especially for creatives. On the surface, they share a lot in common. Flexibility. Control. Job satisfaction. Warby Parkers.
Even though it may not be obvious on the surface, there is a big difference between being a freelancer and being an entrepreneur. While freelancing gives you a degree of control over your work and life, entrepreneurship affords you the opportunity to make more money, get more recognition, have more creative control, and build something that can survive — and make money — without you punching the clock.
That’s not to say that being a freelancer is wrong or bad. After all, it is the lifestyle of choice for 19 million people in the American workforce. Daniel DiPiazza even explains here that freelancing can be a good first step towards entrepreneurship, serving as a testing ground for your skills in the marketplace. But wherever you are in your journey, being a freelancer needs to be a conscious choice, not a subconscious one.
If you are looking to make a shift, or if you are unsure of where you stand, I’ve laid out 4 ways to graduate from freelancer to entrepreneur.
Position Yourself as a Peer Professional
The nature of the relationship you have with your clients is one of the most subtle but significant differences between being a freelancer and being an entrepreneur. Freelancers use their skills — photography, design, filmmaking, copywriting, painting, illustration — to perform tasks for clients. They come to the table as commissioned artists, ready to produce work at the client’s direction and for the client’s vision. On the contrary, entrepreneurs use their skills to provide solutions and create value for clients. They come to the table as peer professionals, collaborators, and partners with a creative vision and point of view.
The difference here may seem semantic, but it's not. When your clients see you as a contractor, you become just another business expense that needs to be purchased at the lowest possible cost in order to keep the business profitable. But, when you position yourself toward your clients as a professional that creates value and solutions for their business, then you have the opportunity to charge fees that are commensurate with the value you create, not the labor hours you perform. This subtle difference can have a significant impact on your bottom line.
Generate a Profit, Not Just a Salary
Many creative entrepreneurs that I work with are primarily concerned with their ability to pay themselves enough to cover their cost of living. If you can bring in enough money to pay yourself a fair salary and keep the lights on in your office, that’s success. However, if you are only concerned with paying your salary, you don’t really have a business. You have what Andrew Carroll of the Get Orthogonal podcast refers to as “owning your own job.”
No serious business defines success as just making payroll. Businesses need to make profit. Not only does profit make your business more financially secure, but it also opens up opportunities to reinvest in projects, initiatives, and opportunities that will take your business to the next level. That can’t happen by just earning a paycheck.
Clarify Your Vision
I became a freelancer six years ago. After having my first baby, I felt like the flexibility and freedom of the freelancer lifestyle would be a better fit for me and my family. I didn’t have a clear sense of what I wanted to create, who I wanted to become, or where I saw myself in ten years. I just knew that traditional consulting wasn’t going to work anymore.
Having a clear and focused vision is a key difference between an entrepreneur and a freelancer. Freelancers take whatever work comes their way that will make them money. When I first started out as a freelance consultant, I did everything that would pay money, from financial analysis for large public utilities to personal financial planning. I was throwing wet noodles at the wall and hoping some of them would stick.
Entrepreneurs, on the other hand, are trying to build something, and they strategically say “no” to anything that would detract from that vision (even paying work). Their clarity of vision and focus makes it easy to structure their time, allocate resources, and evaluate opportunities. If you ask them what other companies or professionals they admire and want to emulate, they will have a list. If you ask them how much money they want to make next year, they have a number. If you ask them what they want to look back on in five years and be proud of, they can articulate those aspirations.
Having a vision for yourself isn’t about having a perfectly crafted masterplan that lays out every single step that will be required to reach your goals; it is about having a sense of where you are headed so that you can take just the next step.
“If I fail, it’s ok. I’ll just go get a job.”
If this is your mentality, you probably are a freelancer, not an entrepreneur. To sell your time isn’t risky. It may not be as stable as earning a W2 salary, but aside from that, there isn’t much risk involved. If you can’t bring in enough work to pay your bills, you just go and get a job.
Entrepreneurs have something on the line. They have thrown their time, resources, relationships, money, and reputation into an idea, and if it fails, it's going to cost something. If their business goes away, it will have an impact on them, their family, their community, and their colleagues.
Steven Pressfield, in his The War of Art, says, “For the professional, the stakes are high and real."
Be a pro. Take some risks.
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