Are You an Entrepreneur or a Freelancer?

I was having an argument with a freelance colleague the other day.

Not a heated argument. Just a healthy discussion.

"Freelancers are NOT entrepreneurs," he kept insisting. "You're providing a customized service. So the client is the boss. And that makes you a service provider, not an entrepreneur."

What?? I'd never heard that argument before!

It didn't make any sense to me. And I was surprised to hear it from someone as experienced and successful as he.

It was so off-the-wall, I didn't even try to argue with him. Plus, I was in a hurry. (And this wasn't the reason for our call, anyway.)

But later that day, it got me thinking...

Did he have a point?

Sort of.

I'll explain more in a minute. But first, let's talk about the standard definition of entrepreneurship.

According to Dictionary.com, the word "entrepreneur" means...

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

By that definition alone, many of us are entrepreneurs.

If you're taking your freelance effort seriously, it's very likely that 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 don't have investors, a business loan or a board of directors?

No.

Employees, offices, inventory, a warehouse — those are all byproducts of the traditional entrepreneurial model.

But we've entered a new age. A one-person service-based business is now a viable model of entrepreneurship.

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

The only difference is that you don't have physical inventory, employees, a warehouse and an office.

Those "physical" clues are no longer a good indicator of whether or not someone's an entrepreneur.

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

The web has democratized access to resources, knowledge, information, talent, tools and marketing reach.

In the process, it has evened the playing field. And it has given each one of us 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 new statistics released by the U.S. Census Bureau, there were 30,174 “nonemployer” firms in the U.S. that brought in $1 million to $2,499,999 in revenue in 2013.

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

And according to an article in Forbes, the largest group in this category is made up of professional, scientific and technical services firms.

So here again ... are these people entrepreneurs?

I think they are.

But there's another important reason to think of ourselves as entrepreneurs. And it has all to do with mindset.

When you see yourself as an entrepreneur, you're much more likely to act as a business owner. And that alone tends to breed better decision-making.

For instance, you'll understand and appreciate the fact that business is not just going to come your way.

You have to find it. You have to hustle.

Your body of work won't do the marketing and selling for you. Because great art, in and of itself, is not enough to put food on the table.

With an entrepreneurial mindset, you'll do a better, more consistent job of promoting yourself and your expertise. You'll also tend to price your work more profitably. And you'll have a greater appreciation and recognition of your true value.

You'll be more mindful of your productivity and work capacity. And you'll periodically review every aspect of your business to ensure that you're getting the most value out of everything you do.

So, back to my friend and his claim that freelancers are not entrepreneurs.

Is he right?

It all depends on your specific goals and intentions — and how you see yourself.

If your intention is to keep yourself busy and keep mind engaged, there's absolutely nothing wrong with that.

But that just means that your practice is a hobby, not a business venture. It's not entrepreneurial.

Same thing if you do your work purely for the artistic value and not for the income it can provide you. There's great value in that approach for many people. I respect that.

But if you're serious about creating a business that generates a steady source of income ... and if you want to get the maximum amount of return on energy and time invested ... you would do well to think and act as an entrepreneur.

The most successful freelancers I know are very entrepreneurial. They have nearly as much (if not the same) business sense as they have talent in their chosen craft.

Want to be more successful as a solo business owner? Exercise your entrepreneurial muscle.

It will do you good.

What Do You Think?

As freelancers, are we entrepreneurs or just service providers?

Or does it depend? And if so, what's your criteria?

I'd love to hear your thoughts in the comments area below.


  • Barbara Saunders

    I think there's a more fundamental question lurking below this one. The real trap is not being a service provider as opposed to a business owner; the real trap is selling only labor, that is, having people pay you for activity rather than for whatever the widget is that they are buying.

    Consider this example: You are a writer. You write case studies and white papers. You work alone. Your case studies and white papers are successful; past clients will testify that they have converted leads into clients with the materials you've produced. You've devised some great templates -- good design, standard ways of presenting persuasive information. Those templates improve both the quality and the efficiency of your work.

    Now what do you sell? Sell yourself as a laborer by the hour and you get paid less as you get better. And you give a discount for something that merits a premium -- speed. Sell the service "case study writing" and you can charge for speed, set a price that lets you earn more as you become more efficient, and market more easily to boot.

    For many people, that kind of shift is enough to bring their income in line with their desires.

    • edgandia

      Great point. It's amazing how seemingly small shifts in our thinking have the potential to rock our world!

  • The whole "entrepreneur vs freelancer" question has been something I've wrestled with for a while. And after devoting a lot of thought to this question I've realized the question, "what is an entrepreneur" is usually glazed over as people rush to try to figure out it they are one or not.

    And the downside of not properly defining "entrepreneur" is that it derails and confuses discussions like this. In other words, if we all define entrepreneur differently then it's impossible to have any sort of coherent debate.

    I don't think the Dictionary.com definition does the best job defining it. It seems like they're describing a manager. Not an entrepreneur.

    I think Seth Godin's definition, while far from perfect, is more accurate. He says:

    "Entrepreneurs use money (preferably someone else's) 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."

    (By the way, here's a good video by Seth talking about the difference between freelancer and entrepreneur: https://goo.gl/pHw1zI)

    If you agree with Seth's definition than it would be hard to say that a freelancer is an entrepreneur. However, I believe freelancers can benefit from thinking like an entrepreneur (one of the reasons Ed's advice is so helpful is because I believe it's coming from an entrepreneurial spirit).

    But I do think if you get more excited about "building the machine" than about your craft, it's a sign you're wired to be an entrepreneur, not a freelancer.

    This is already too long (I could talk about this for hours!) so I'll just wrap up with a quote from the book Essentialism:

    "Jim Collins was once told by Peter Drucker that he could either build a great company or build great ideas but not both. Jim chose ideas. As a result of this trade-off there are still only three full-time employees in his company, yet his ideas have reached tens of millions of people through his writing."

    In the same vein, I believe you can either work on becoming a great freelancer or a great entrepreneur. But I think it would be very hard to do both at the same time -- and near impossible to try to do both at the same organization. However, you could try each for a season (Remember, Seth used to work as an entrepreneur but today he calls himself a freelancer).

    But the more I ponder this, the more I doubt the whole idea that you can successfully weave the two together to form some sort of beautiful tapestry. But then again, I've been wrong once before... just ask my wife. 🙂

    • edgandia

      Josh -- You've just made a super-solid argument! Some great points here. It would be so cool to have this conversation over a beer! 🙂

      RE: your comment ..."I believe you can either work on becoming a great freelancer or a great
      entrepreneur. But I think it would be very hard to do both at the same
      time..." I agree with you if we use Seth's definition. But the point I was trying to get across is that being more entrepreneurial in your business will only make you a better freelancer. You'll earn more in less time, and you'll work for better-quality clients, everything else being equal. Which is why encourage freelancers to think and act more like an entrepreneur than an artist.

      • Thanks Ed. And I agree that being more entrepreneurial will certainly help you in your freelance business. As I've implemented the "entrepreneurial tips" you've given I've seen my business grow. I do think we should continue this over a beer sometime... I'll let you know next time I'm in ATL. 🙂

  • rebeccabaisch

    IMHO your friend is right. Peruse most of the so-called "Job portals" or "freelance websites, and most of the people there refer to their clients as "my employer". What the freelancer movement was meant to be, and what it is, are two vastly different realms.

    Today, we have closely controlled sites (such as Upwork for example) where the "freelancers" have to provide the exact same documentation and adhere to the same restrictions as those imposed by any temporary employment agency, but without the portal owner having to be responsible for taxes, benefits, etc. The people who post the job orders, er, RFP's are not YOUR clients. They are attached at the hip to the management of these "freelancer" websites, that can and do restrict everything from proposal styles to when and how you are paid, to whether the prospective "client" even gets to see your "proposal". That's fine, so long as the freelancer understands what they really are, which is a temporary employee.

    Having said that, many people who freelance do consider themselves business owners, and conduct themselves accordingly.

    • edgandia

      Correct. If a freelancer views himself / herself as a "perma-lancer" (or permanent contract employee), it's going to be difficult to think and act in an entrepreneurial fashion.

      BTW, I agree that Upwork and the other job boards are commoditizing many aspects of freelance work. But that's just ONE segment of the freelance marketplace. The biggest and best freelance opportunities will almost always be outside of these tightly controlled communities.

  • Sue Dixon

    The way I see it, we are all entrepreneurs and being a freelancer is just one of the avenues to take. To take it further, I think of automobiles. Entrepreneur is the make and being a freelancer is the model.

    • edgandia

      Ohhh... I like that analogy, Sue!

  • Katarina Andersson

    Totally agree, we are entrepreneurs. Just the fact that being solopreneurs, needing to often many of us come up with all the sides of our business ourselves, looking for opportunities etc.,, just because we are not selling a physical product or having employees, I still say we need to be just as much entrepreneurial to get ahead. For example, among translators, the term entrepreneur is often an 'ugly' word. So you sometimes hear you can call yourself an 'idea submitter/project submitter' (propositore in Italian) but not an entreprenur. And among translators in Italy you do not talk about money. That's the most faux pas. And translators especially in Italy often have huge problems in being innovative and thinking of new ways of finding ideas for finding clients etc.

    • edgandia

      Great points. And interesting perspective RE: translators in Italy. I really think it matters how you view yourself and your work. An entrepreneurial mindset can make a big difference.

  • Lara Fabans

    I remember reading somewhere about how you wanted to be a consultant not an order taker. It's similar. You're either the expert or you're a cog. Mostly, I've been a cog and agree that I need to step it up to be a consultant/entrepreneur and guide clients to what they need.

    • edgandia

      That's another great way of looking at it. A freelancer might look at him/herself as a cog. But when you adopt an entrepreneurial mindset, you elevate yourself and your value.

  • Fayola Bostic

    I've been thinking about this a lot and I think that I understand where Ed's friend is coming from. Right now I see myself as a service provider. If I get sick or take a vacation, my income takes a hit. I will think of myself as an entrepreneur when my business makes money for me even when I'm not there for a while. Nothing is wrong with either life, it just depends on your goal and how you want to live.

    • edgandia

      Hi Fayola. Good point! But what if you found other ways to create real leverage in your business, even if you had to do some work for it. For example, if you could set up some of your services so that they net 3X - 5X the revenue they used to net? You could do that by creating some productized services, for example. So we're not talking about adding staff or anything.

  • Maria

    Great question, Ed! Because of the way the marketplace has evolved, perhaps people use "freelancer" and "entrepreneur" interchangeably, but there's always been a difference in my mind between the two. It's not a question of success. Freelancers can do very well by freelancing, as your colleague's (and others') experience shows, and entrepreneurs can fail. However, it seems to me entrepreneurship is not just about producing income; it's about seeing business opportunities and creating value where there was none.

    • edgandia

      Good point!

  • My gut reaction was, "I'm not a freelancer, I'm an entrpreneur!" Yet I own a freelance busines... I can see where it's all about the mindset. My goal is to never become a freelancer. That to me is the point where you get comfortable, you stop learning, and planning, and strategizing... sounds like a death wish for a freelance business owner.

    • edgandia

      Good point. It definitely IS a mindset thing.

  • Huh. If freelance writers are not entrepreneurs but in actuality are service providers, what does that make companies that provide some type of service? For example, Verizon and T-Mobile provide services such as internet, WiFi, and cell coverage. If I am indeed the 'client', then why the heck did I go through hell with a wireless provider whose name is not listed in this comment? I most certainly was not treated like the BOSS!

    I agree that it is your mindset. For example, I've heard some freelance writers say that they feel like employees with multiple bosses. However, you will find that CPAs, lawyers, etc. do not feel this way and have no problem charging YOU $300 or more per hour for their professional services. They are entrepreneurs. Some even have multiple office locations.

    • edgandia

      For a lot of people, *staff* is the key differentiator between a freelancer and an entrepreneur. But as I commented to Fayola, there are other ways to create leverage in your business (to multiply yourself and your efforts) without having to hire staff or other freelancers.

  • GREAT post, Ed! I am a freelancer, a self-employed business owner, AND an entrepreneur! I started out 7+ years ago with just me, a pitiful looking (as I look back now) static one-page website that I made myself (LOL), and my beloved Toshiba laptop. I now have THREE related companies, a full-time virtual assistant, several as-needed contractors, a MacBook Pro, MacBook Air, iPad Retina, iPad Mini3, iPhone 6+, Samsung Note3, a home office, an office in a cool co-working community, and clients in fourteen countries. Besides, here in the States, if you can't show a profit in 3 of the last 5 years on your tax return, the IRS calls it a hobby--you have no choice. I have lots of things I like to do for "hobbies". But do you want to make a full-time income and lifestyle for yourself or not?!?!?

    • edgandia

      I'm with you and RuPaul! Right on! 🙂

  • Mary Ann Bella

    I think you identified an issue for many solopreneurs and contractors who see themselves as "only" service providers. As you point out, they do provide a service, but they forget who is actually running their show. It's not the client because deciding to work with this client keeps the solopreneur securely in the driver's seat. A related issue is that people tend to think in terms of "projects," not building a long term sustainable business and income. Someone once told me that the reason for building a business should always be to sell it. That kind of thinking brings a harsh reality moment to a "one project at a time" thinker. Perhaps it's better to ask, what am I doing to build a business that someone else could buy and operate successfully on their own?.

    • edgandia

      That's a great litmus test ("could you sell it?"). Read that in an article recently. I think that test could be applied to some businesses (to determine if they really are entrepreneurial) but not all of them.

      But that question brings up another similar question. What if the thing you love best about your freelance business is the thrill of building something. Maybe you're not married to the craft (writing, design, translation, etc.) as much as you are the act of building something. What that freelancer be an entrepreneur?

  • Henry Bingaman

    I think the real distinction should be between self employment and entrepreneurship. If you’re happy creating stable income for yourself as a freelancer, or franchise owner, or corner store operator, or coffee shop owner - then you’re self employed. I can totally respect that and it can be a great life. If you’re driven to find leverage points and grow revenues and expand your business - whether it’s a solo business or you have employees - then you’re an entrepreneur.

    • edgandia

      Hey, Henry! Great way to look at it! It has a lot to do with those leverage points. And as I've mentioned to others, they don't have to be about hiring staff. There are so many other ways in today's economy.

  • I agree it has to do with mindset. The advice along the way that's helped me the most is the exhortation to take my freelance business seriously — to treat it as a business and not a hobby. To think like an entrepreneur.

    I can always do "art" on the side as a hobby!!

    Great post, Ed!

  • Kathy Mercure

    I agree! Hear hear! I am every bit as entrepreneurial as a bricks and mortar business... perhaps more, because I am not selling a tangible product. I'm essentially selling my knowledge and putting it to work for my clients. And besides, just because I am a solopreneur now, doesn't mean I won't some day have staff and support people as I spread my expertise globally. How much more entrepreneurial can one get?!

    • edgandia

      Preach, Kathy!! 🙂

      • Kathy Mercure

        Haha!