A common mistake that people do these days is that they misunderstand the words freelancing and entrepreneurship. This term is not that surprising because as jumbled as they have become, it is easy to be confused. To clear up the misunderstanding, we will be looking at their differences by understanding what well-established freelancers and entrepreneurs have to say about it and why people think entrepreneurship is better than freelancing.
The meaning of entrepreneurship has become so muddled that even Forbes seems to have gotten it wrong. A Forbes contributor named Brett Nelson stated that “Entrepreneurs are those who identify a need – any need – and fill it”.
But this is very wrong, search for the meaning of the word on Google or in dictionaries, you will find something different. Entrepreneurs are those who set up a business or businesses by taking on financial RISKS in the hope for profit. The key word here is ‘risk’.
This is what many people ignore these days because if you ignore risks, then you get something that is entirely different and you move away from the world of entrepreneurship. Another mistake that people do is that they mistake independence with an enterprise. It is true that entrepreneurs are independent but that is also true in case of freelancers and business owners, and this is why the three may seem closely similar.
Taking Risks is the most important factor when defining entrepreneurship; entrepreneurs make a considerable risk when setting up their business. When you create a company, you invest a lot of money into it, and if it flourishes you begin to look for investment elsewhere too. The fact here is that you have to have nerves of steel to become an entrepreneur. There a common saying that only one in five businesses takes off, the other four goes to the dump.
The odds are not at all encouraging because opening a business usually requires to invest a lifetime of savings or probably having to mortgage a house. Imagine if these risks do not pay off, what then?
Freelancers, on the other hand, take almost no financial risks at all. If you are a freelancer, then consider your situation and what you do. In freelancing, you offer yourself, meaning your skills to your clients. Here, you don’t spend money for it, and therefore, you don’t risk your money. This is the key to clear the misunderstanding of the topic.
How each view Time
Time is a significant factor for freelancers because basically what they do is trade time for money. This is however not true for entrepreneurs. If you are a freelancer, you will see that you earn to pay for the amount of time you work and if you stop working, the inflow of cash will also end. But if you are an entrepreneur, you will earn money even when you are not working.
A former dot-com business executive
“Freelancers get paid for their work. If you’re a freelance copywriter, you get paid when you work. Entrepreneurs use other people’s money to build a business bigger than them so that they can get paid even when they sleep”.
See the difference? Consider well-known entrepreneurs like Bill Gates, Warren Buffet and others. Do they stop earning money when they do not work? They do not, but if you are a freelance writer, you only make money when you work on articles or such that your clients give you, but if you take a month off from writing, you will prevent yourself from earning too.
In short, the difference is that:
Consider another way of looking at things; if you are a freelancer, you are self-employed; you are not committed to one particular company or client. If you move a little past that, you can start hiring other freelancers to do jobs that you have no skills for then you run a small towards business ownership and lastly when you include the risk of money, you enter the stage of entrepreneurship.
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Why many consider Entrepreneurship the better option
So why do people feel themselves entrepreneurs even when they are freelancers? It is because even without knowing the exact difference, people view it to be the better option. Truth being said entrepreneurship is the better choice among the two albeit the higher risks. But even that hurdle can be overtaken through dedication and careful planning.
First off, as said before, as a freelancer, time dictates all. It depends on you spending the time of your choice that would control how much money you make. Just from this wouldn’t you want a world where you would keep earning even when you are not in active hours? This is enormous benefit entrepreneur has over freelancers.
Freelancers thrive in a market that is already huge, the bigger the market; the more significant your earning would be. But then you have another problem, with a market that big, you would also compete with other freelancers with skills similar to yours. That means that you have to have skills that overshadow all those other freelancers so that clients are attracted to you.
Forbes did get one thing right; business is all about finding people’s need and then finding a way to fulfill it. If you do see such a market where there is the need and the competition is low, then with the reasonable amount of planning and dedication, no one can stop you from being successful, and with success will come to a massive amount of cash inflow that you can never achieve being a freelancer.
Another benefit that entrepreneurs have is the ability to earn even when taking a vacation. Freelancers do not get to enjoy such luxury, the moment they decide that a holiday is in order, their income would stop. Day to day operations of a business is taken care off by managers and employees that enable entrepreneurs such luxuries.
In the end, it depends on you to choose which suits you the most. Entrepreneurship may seem very attractive because of the money, but keep in mind that you have to work a whole lot more than a freelancer if success is in your mind. It is not uncommon for startup entrepreneurs to work 52 hours a week whereas you do not need that much hard work as a freelancer in the beginning. Both require a significant amount of dedication but in the end, what doesn’t?
However, it is true that in general, entrepreneurship is better. Why? The answer is simple. You get to earn a whole of a lot of money, and you can scale up later on when the business gets bigger than you. So, now that you know the fundamental differences between freelancing and entrepreneurship, you can differentiate what you are and if you are a freelancer, try moving towards enterprise, trust me, it would do you well in the future.