Freelancer or Entrepreneur: The Distinction

Often times on my way to a client’s office in the morning, I will listen to a podcast or audio book to pick up something new. I recently stumbled upon Seth Godin’s podcast called Startup School. The title of the 1st podcast in the series is what called my attention: Freelancer or Entreprenuer? The podcast is very intriguing because it’s a class directed toward new entrepreneurs embarking on new projects: startups and so forth. He talks about building monopolies, the connection economy, and the distinction of an Entrepreneur from a Freelancer. Sounds good, right? It is, but it came with a bit of a reality check for me.

Towards the middle of the podcast, he makes sure that everyone in the room gets one distinction. A distinction which people have to realize about themselves which will define whether or not you have what it takes to be an entrepreneur:

“Are you a Freelancer or are you an Entrepreneur?”

A freelancer is someone who gets paid for their work, usually at an hourly rate. What will sometimes occur with successful freelancers (which I was one for a time) is that they find themselves with more work that they can handle. So they may decide to subcontract some of that work to 1 or more people, and now they call themselves entrepreneurs. Only one problem, if the freelancer goes on vacation, what happens. No income gets produced. What happens if one of the subs does a bad job. The freelancer realizes its cheaper and safer to just do the work themselves. This is obviously not how an entrepreneur typically thinks.

Entrepreneurs are the opposite of a company of 1. They are building teams of people and making them super stars while continually focusing the efforts around the vision: the company. They do many other things, but fundamentally, an entrepreneur and a freelancer are distinct from one another.

Another statement that Seth makes in several of these podcasts especially hit home with me.

“All Consultants are freelancers.”

Wait… what? I’m a consultant, are you calling me a freelancer? Well, am I building a team? Maybe. My wife says to me “how many resumes have you reviewed?” I’m like, “a few.” Doesn’t sound like an entreprenuer to me. “How many people have you contacted for talent?” Hm. None. The “aha” moment began to sink in.

At the end of 2011, I drafted a 1-page business plan which was very gratifying, but also very much written for one looking into a career as a freelancer. Now that I understand the distinction between that and an entrepreneur, plus the fact that I now work with a successful Consulting firm in the San Francisco Bay Area, I believe my 1-page business plan for 2013 will look a little different. We are doing some great work, we have passionate consultants, and there’s much room for growth. Look forward to seeing what transpires in the next couple of years. I’ll keep you posted. 😉

Do you have any ideas of what it means to be a freelancer or an entrepreneur? Would love to hear your comments.

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