Freelancing vs. Starting a Business: Which is best for you?

 
Freelancing vs Starting a Business- Which is best for you? - stacy kessler.001 copy.jpeg
 

Freelancing vs. Starting a business: What’s the difference?

I recently worked with a new client who hired me because she wanted help making the shift from freelancer to business owner. She clearly understood the key differences between these two self-employed approaches and wanted to be thoughtful and proactive in how she went about the shift to really set herself up for success.

While on the surface it may seem that freelancers and business owners are similar, there are very distinct and very important differences.

Getting clear on where you want to operate can ensure that you are focused on the right things and seeing the results you want to see.

A freelancer may be much happier, more fulfilled, and more successful by switching instead to business ownership, though they should understand the implications of doing so and not take it lightly.

Conversely, a business owner that still acts like a freelancer is stunting a business’s potential for success.

Freelancing is often a transition period

Being a freelancer is great for certain season of life, but in my experience, people rarely remain satisfied with freelancing for the entirety of their careers.

Freelancing is often a stepping stone between being employed and starting a business.

When I shifted from doing independent gig work to starting my own business, it took a major mindset shift, but I’m so glad I did and never looked back.

Yes, being a business owner is hard work and there’s way more “back office” stuff, marketing, and sales to do. That said, there are so many incredible reasons to own your own business.

Let’s dig into the differences and determine if you’re ready to shift from being a freelancer to a business owner.

If you already consider yourself a business owner, this might also shine light on ways you’re still acting like a freelancer, limiting your business’s potential for success.

You see opportunities for innovation

Now don’t get me wrong, freelancers can be creative in their work, but they don’t often have the opportunity to innovate or change systems. A company that hires a freelancer usually knows exactly what they need and wants the freelancer to execute.

You’re ready to start a business

The best businesses are built by people who see an opportunity to do things better or different than they are currently being done.

If you’re feeling bored, trapped, or find yourself dreaming of ways to change the way your industry does things, it might be time to consider starting a business instead of freelancing.

You’re a business owner still acting like freelancer

If your business isn’t doing anything innovative, doesn’t have a unique point of view or point of difference, and isn’t in the mindset of always finding ways to learn and improve, then you’re not living up to your full potential. Here’s some tough love: if you’re just a me-too kind of brand doing things just like your competition, then what good are you doing for the world that someone else isn’t already doing?

If reading that last sentence felt a bit like a punch in the gut, it’s time to start doing the things your own unique way instead of doing what you think you’re supposed to do because that’s what everyone else is doing. The world needs whatever you are uniquely created to do and it’s your job to figure out what that is and deliver on it.

You want to serve a niche

Most freelancers I know take what they can get. I’m not downplaying the work in any way (and yes those with a lot of clout can sometimes be picky), but most freelancers are okay with (or even thrive on) dabbling in a little of this and a little of that.

To shift or not to shift

The most successful businesses are built around a niche.

If you have a heart for focusing on someone or something specific, you should build your own business around that in order to do it all the time.

You’re a business owner still acting like freelancer

If your business will work with anyone and just do what people ask you for, then you may as well be freelancing. If you try to please everyone and do everything, you will stand for nothing and be known for nothing.

If this feels like you, it’s time to figure out your specialty or niche so that you become a memorable expert and have the opportunity to become a well-known, well-respected, thought-leader and authority.

You want to increase your earning potential

Freelancing is pretty much, by definition, trading your time for money. You are normally paid by the hour or a flat fee for a completed project. Because of this, your earning potential is limited to how many hours you want to work.

To shift or not to shift

The most successful businesses charge for the value they provide instead of just being paid an hourly rate. Many also build systems, create forms of “passive” income, or hire people to increase their earning potential beyond the amount of hours they personally work. If you want to generate more revenue, then you definitely should build a business.

You’re a business owner still acting like freelancer

There are very few industries that should simply charge an hourly fee for amount of time a business worked on something. If this is how you’re doing things, you’re drastically undercharging for your value and have essentially done an insane amount of work to built a company for the sole purpose of employing yourself.

Wouldn’t you rather increase your profitability so that you can take home more income and invest more into growing your business?

You want to have a bigger impact

Sure a freelancer could write an amazing article that could change lives, but more often than not, the work you do as a freelancer is going to build into the company that hired you, not the greater good (at least not directly).

To shift or not to shift

If you have a heart for really impacting the greater good and are strongly driven by mission and purpose, it’s going to be more within your control to do that if you’re running the show as a business owner instead of being told what to do as a freelancer.

You’re a business owner still acting like freelancer

There is absolutely nothing wrong with making a lot of money (or wanting to), but if that’s the sole reason your business exists, it’s going to catch up with you. In today’s world, if companies want to be successful, they have to have a more meaningful reason for existing (in addition to making money - because otherwise it’s simply a hobby, not a business). Consumers can see right through brands that aren’t authentic.

If you have trouble figuring out or articulating the reason your business exists, it’s time to do some soul searching around your company’s mission, purpose, and vision.

Key Takeaways

Signs you’re ready to switch from freelancing to starting a business (and will be happier being a business owner):

  1. You see opportunity for innovation

  2. You want to serve a niche

  3. You want to increase your earning potential

  4. You want to have a bigger impact

Signs that you’re a business owner that still has a freelancer mindset (and is limiting the success of your business):

  1. Your business isn’t doing anything innovative, doesn’t have a unique point of view or point of difference, and isn’t in the mindset of always finding ways to learn and improve

  2. You don’t specialize or have a niche but rather will work with anyone and do whatever people ask you for

  3. You make money by charging an hourly fee

  4. The sole reason you exist is to make money versus being driven by something greater

Want to become a confident, badass business owner?

Download my free step-by-step guide to build a kick-ass business, perfect for the freelancer looking to start their own business or the business owner that still has some freelancing tendencies.

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stacy kessler - pathfinding strategist

Hey There!

I’m Stacy, an entrepreneur, strategist, and adventurer dedicated to helping entrepreneurs figure shit out and build kick-ass businesses.

You are meant to do important and amazing things in this world and I’m here to help.

 

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