The Difference Between a Freelancer and an Entrepreneur

Which are you? Are you sure? A freelancer is someone who gets paid for her work. She charges by the hour or perhaps by the project. Fre
December 16, 2008

Which are you? Are you sure?

A freelancer is someone who gets paid for her work. She charges by the hour or perhaps by the project. Freelancers write, design, consult, advise, do taxes and hang wallpaper. Freelancing is the single easiest way to start a new business.

Entrepreneurs use money (preferably someone else's money) to build a business bigger than themselves. Entrepreneurs make money when they sleep. Entrepreneurs focus on growth and on scaling the systems that they build. The more, the better.

The goal of a freelancer is to have a steady job with no boss, to do great work, to gradually increase demand so that the hourly wage goes up and the quality of gigs goes up too.

The goal of the entrepreneur is to sell out for a lot of money, or to build a long-term profit machine that is steady, stable and not particularly risky to run.

The trap is simple: Sometime freelancers get entrepreneur envy and start hiring other freelancers to work for them. This doesn't scale. Managing freelancers is different from being a freelancer. Managing freelancers and saving the best projects for yourself gets you into trouble. The cash flow gets you into trouble. Investors don't want to invest in you because you can't sell out if you're a freelancer at heart.

If you're an entrepreneur, it is impossible to succeed by using your own labor to fill the gaps. That's because your labor is finite. It doesn't scale. That's because if it's a job only you can do, you're not building a system, you're just hiring yourself (and probably not paying enough either).

The solution is easy. If you're a freelancer, freelance. Figure out how to do the best work in your field, the best work for the right clients. Don't fret about turning away work, and don't fret about occasional down time. You're a freelance for hire, and you need to focus on your reputation and the flow of business. Find partners if you like but keep the cash flows separate.

If you're an entrepreneur, don't hire yourself. Build a business that works, that thrives with or without you. It might not be good for your ego, but it will be good for your bank account.

Whatever you do, don't mix em up.