Are You an Entrepreneur or a Freelancer?

Have you heard the argument that freelancers aren’t entrepreneurs?

It goes something like this:

Freelancers are NOT entrepreneurs because they only generate income while they’re working.

Or this:

Freelancers are NOT entrepreneurs because they provide a customized service. The client is the boss. And that makes freelancers service providers, not entrepreneurs.

I must admit, these arguments don’t make sense to me. But they did get me thinking recently.

I mean … what is an entrepreneur anyway?

According to Dictionary.com, an “entrepreneur” is:

A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.

By that definition, many of us are entrepreneurs.

If you’re taking your freelance effort seriously, you’re treating it as a business. And you’re probably taking considerable initiative and risk.

Does it matter that you don’t have employees, physical products or a fancy downtown office?

No.

Does it matter that you sell a service?

No.

Does it matter that you don’t have investors, a line of credit with your bank or a board of directors?

No.

We’ve entered an age where a one-person service-based business is a viable model of entrepreneurship.

Just because you’re crafting a customized, made-to-order product (the client deliverable) doesn’t mean you’re any less of an entrepreneur than a furniture business that sells custom, made-to-order pieces.

One-person businesses are growing like crazy. And many of them are wildly successful.

The web has democratized access to resources, knowledge, information, talent, tools and marketing reach. And in the process, it’s leveled the playing field.

Today, each of us has the power to create the kind of leverage that used to require several employees and massive amounts of capital just 20 years ago.

Here’s a great example of that leverage:

According to U.S. Census Bureau statistics, 33,624 “nonemployer” firms brought in between $1 million and $2,499,999 in revenue in 2014!

(Not to mention nonemployer firms that brought in $2,500,000 or more.)

Those are some serious numbers for a one-person operation!

  • This is brilliant, Ed.
    Many solo freelancers earn more than the revenue per employee at some prestigious companies.
    I’ve read somewhere that revenue per employee at the hyper-prestigious McKinsey is around $400,000.
    And for that money, the typical associate works over 60 hours a week.
    Lots of freelancers earn that or even more working fewer than 40 hours a week. Granted, it may take a few years to reach that point, but it’s not bad if we consider that McKinsey started in 1926.
    So, if a freelancer can earn $400,000 a year after 91 years in business, he’s at least as smart as the Ivy League MBAs at McKinsey. If he can do it in less time, McKinsey should hire him to show the MBAs how to do it.
    Yes, sometimes size matters, but entrepreneurship is not cattle ranching. It’s not about headcount but retained earnings and lifestyle… the order changes from person to person.

    • chris

      I would love to know what line of business those $400K/year ‘freelancers’ are in – at that level they are likely to be incorporated and have a more grandiose title. But I do seriously wonder what kind of business they are in…I must be in the wrong business 🙁

      • they’re often in the business of selling info to other freelancepreneurs on how to earn $400k/year.

        • Freelancers making $400k or more a year are typically copywriters and marketing consultants who directly impact their clients’ revenue. The closer you can get to directly impacting revenue generation and profit improvement, the more you’ll earn.

          The percentage of freelancers who earn at this level is very small, just like in other professions. But they’re definitely out there, and I know some of them.

          RE: Michael’s comment about it often being people who sell information to other freelancers, I disagree. I’ve been teaching and training freelancers for 9 years and I don’t earn that. I also know most of the folks selling programs into this market and I know of only two who are at that level. Most people who sell info products are way below that.

          It’s a lot more challenging than most folks realize.

          • Apologies, as I meant that a bit more tongue in cheek than it came across. The ones who talk about how much money they make are (in my experience) also the ones selling info on how to earn large amounts. I’ve known plenty of independent service providers earning multiple 6 figures who just… provided their services – they weren’t broadcasting how much they made, so it’s harder to tell who’s actually “crushing it” (to borrow an overhyped, out of date phrase!) 🙂

          • You have a very good point, Michael. And the louder people brag about how much they are “crushing” it, the less spectacular the crush really is.

            I think, and I may be totally wrong, the people who are really crushing it, don’t make a big public display of bragging about it. They celebrate with their spouses, brag a bit to their parents (I certainly do) and that’s all.

          • Not sure there’s one “right” or “wrong” view on this, but your thinking lines up with my own thinking and experiences. 🙂

          • No worries, Michael. I didn’t take offense at all. I just wanted to clarify where I’m seeing that income level while also shedding some light on the realities of selling info products. 🙂

      • Chris, I think we’re in the right business, but we have room for improvement. And we have plenty of time to achieve it.

        And even if we don’t reach it, it’s worth aiming for it, I think.
        If we end up earning $200K working 30 hours a week, that’s pretty good too.
        I think it’s all about optimising income and working hours.
        Thoughts?

    • Thanks, Tom! Interesting take.

  • Katherine_Andes

    I do think there’s a distinction between an entrepreneur who creates a business with employees that can run without the founder; but, freelancers definitely have to have an entrepreneur mindset … so I do think we’re entrepreneurs, just a different kind.

    • Agreed! Good observation, Katherine.

  • Amber Taufen

    How do you feel about the term “solopreneur”?

  • Scott Souchock

    In some sense, who cares what someone else’s definition of entrepreneur is? I’m more curious as to who is making those remarks and why they’re making those remarks and what agenda they might be trying to push by making those remarks. Entrepreneur is just a label, as is freelancer, or any other term. Now, if we need to work together to solve a problem it is helpful to have a common definition because it helps us make distinctions, but generalizations such as this are, for the most part, irrelevant in my opinion. Event the term “success” can have many definitions: one person’s success may be a million dollars or more in the bank and flitting around the globe in private jets. Or success could be living life closer to family or nature.

    Now, to you point about mindset: yeah! I get that. We are bucking the trend of going to work for someone else, to do their work. We are seizing the reins of the horses pulling our cart and taking our work and our lives where we want. And that does require different thinking, a different mindset. To quote Apple’s grammatically incorrect advertising campaign from awhile back, entrepreneurs, solopreneurs, freelancers all “think different.”

  • Barbara Saunders

    There is a trick to this that’s important to keep in mind. Some of these “non-employer” firms have an assistant paid on a 1099 — or even off the books entirely. A person can be counted in this number while hiring a full-time assistant as a contractor and farming out most or all of the day-to-day work to a team of contractors. In some cases, this skirts the bounds of legality, as the solopreneur manages the contractors like part-time or full-time employees.

  • I think the biggest difference between a freelancer and an entrepreneur is a freelancer trades time for money but an entrepreneur is focused on systems, processes and how to scale a business which usually involves leveraging other people’s labour. While most freelancers have entrepreneurial attributes, they aren’t necessarily entrepreneurs in the truest sense of the word.