Okay, so you’re curious about why freelancing is a great way to start out as an entrepreneur.
You might be equally curious about why you’re finding it so hard to grow your freelancing business beyond you.
Or, you might be here because you feel like freelancing and entrepreneurship are basically the same thing.
If any of those things is true, you’re in the right place!
I started out as a freelancer because it seemed like the most natural first step to building a business that could grow beyond me. I anticipated a clear, step-by-step path to owning a 7-figure business. Imagine my surprise when I hustled my way up to six figures and promptly hit a growth ceiling. I was already working too much and couldn’t see a way to grow without working even more.
I was finally able to extricate myself from my predicament, but not without learning something important: freelancing and entrepreneurship are NOT the same thing, and to move from one to the other, I would need to make DNA-level shifts in how I showed up in the market, what I sold, and how I led.
It felt like dismantling my freelance business and using some of the same bricks to build something else entirely.
Working as a freelancer served me in some great ways, but it hamstrung me in others. I had to identify those extra obstacles and overcome them if I wanted to build the business I had in my head.
Do I regret starting as a freelancer? Not at all – it gave me really important building blocks that I needed. But I do wish I’d known what to expect.
If this sounds like your journey too, hopefully this post will point out the rocks in your path before you trip over them.
Let’s start by defining terms. How are “freelancers” and “entrepreneurs” different?
Turns out, they’re in the same ballpark, but the differences are really important.
An entrepreneur, according to dictionary.com, is “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.”
Meanwhile, a freelancer is defined as “a person who works as a writer, designer, performer, or the like, selling work or services by the hour, day, job, etc., rather than working on a regular salary basis for one employer.”
The key here is in the verbs. An entrepreneur “organizes and manages.” A freelancer “works.”
It’s the difference between being a doer, and being a leader.
The difference between those two things is substantial.
Some freelancers remain freelancers by design. Over time, they raise their prices, work with a smaller number of elite clients, and build a reputation for being the best of the best.
That can be a great, and very lucrative, strategy. It’s all about what you want.
I knew from the beginning that I wanted something else. I wanted to run the business instead of doing direct client work indefinitely. I wanted to create good jobs for other people. I wanted to be able to unplug for a month at a time while my business hummed along without me.
If that’s you, what you want is entrepreneurship.
So, how is freelancing a great way to start as an entrepreneur? And what obstacles should you prepare to face? Let’s dive in.
Benefits of freelancing as a path to entrepreneurship:
1. You have the choice to maintain full control of your business and avoid debt
Many startups, by which I mean companies that start out on an entrepreneurial path from day one, need funding externally. They may need to take on debt, or find investors who then have a measure of control over the business.
When you start out as a freelancer, it’s your own work that funds your entrepreneurial business. I started my business with $600 of my own seed money, and we’ve now generated many multiples of that in revenue. I was profitable in my second month and have remained so ever since; freelancing gave me the revenue to fund my business quickly.
2. Freelancing gives you the chance to experiment and find your niche
In the early stages of freelancing, most of us work with a variety of different clients on different projects until we find a place to plant our flag. All of that experience serves us well, giving us expertise, deep industry knowledge, and a strong reputation.
3. Freelancing helps you confidently define a signature process
By serving a variety of clients one-on-one, you’ll begin to iteratively discover your unique way to help your target audience get the outcome they’re seeking. You’ll be able to define a step-by-step process that you can confidently sell to your customers, and that clear process will make it possible for you to train a team to serve your clients in the same way.
4. Freelancing helps you learn how to manage yourself
Self-employment requires a completely different skill set than working for an employer. In a virtual environment with zero accountability, every decision weighing on your own shoulders, and a million ideas in your head that you’re now perfectly free to chase, it may take a while for you to find a process for managing yourself that works for you. In a weird twist of fate, you might find yourself missing some of the perks of having a boss. Shiny objects can completely derail you, projects can stay on the back-burner for years with no one to hold you accountable, and you might be exhausted by the pressure of making every decision yourself. Freelancing helps you become a good boss ,for yourself, so that you can more effectively lead others.
5. Freelancing trains you in several critical entrepreneurial skills, including marketing, financial management, and planning
Freelancing and entrepreneurship are alike in many ways. As a freelancer, you are still a business owner, and every skill you learn about marketing, finances, planning, and all the minutiae of running a business will serve you well as you lead an entrepreneurial business.
Obstacles for freelancers becoming entrepreneurs:
1. You have to transition from selling yourself to selling an outcome
As a freelancer, you likely spend time on sales calls talking about your background and experience. You’ll use “I” a lot. And for ongoing clients who are comfortable working with you directly, the shift to a team-based business isn’t an easy one. For new clients, you’ll need to learn how to shift your messaging to talk about your team, your process, and the outcome they can expect rather than talking about your own credentials. For old clients, the process of transitioning in someone new can take months…and some might not come along for the ride.
2. You build habits as a doer that will make it harder for you to transition to a leadership role
As a freelancer, you’re going to have to fight a number of unhelpful thoughts, like:
“I can do this myself better/faster/for free” (your time is never free, and the extra time you spend training another person could pay dividends for years to come).
“I know too much about this client – I can’t possibly transition all this knowledge to another person” (It will take time, no doubt about it, but just like you helped that client when they first signed up, your team can do the same).
“My skills are too unique – my clients have to work with me to keep the same value” (we all wrestle with this one, but a helpful shift is to find creative ways to bake your unique skills into a ,process, that your team can then utilize).
In addition to obstacles in your brain, you’ll have muscle memory to undo. You’ll naturally default to doing things yourself instead of empowering your team, and you’ll be tempted to be involved in everything they do. As a freelancer, you’ve built the entire business with your own two hands, and giving freedom and power to other people will be challenging.
3. You’re surrounded by other freelancers, making it harder to find role models who are growing larger service businesses
If entrepreneurship is your goal, make a point to seek out other entrepreneurs who are growing service businesses (product businesses work quite a bit differently, so you’ll find more relevant role models among service providers). Working only with other freelancers will make it harder to envision a different way of working.
4. Strategic planning will look very different
As a freelancer, you might be tempted to not ,do, strategic planning. You know what you want, and you just go get it. But if you want to grow something bigger than yourself, you’ll need to define a process that works for you to identify a vision and clear goals you can share, empowering other people to work alongside you to reach them.
5. You will need to learn how to separate yourself from the business
As a freelancer, you are the business, and the business is you. You’re selling yourself, the business’ money is your money, and you own everything that happens inside your business. This is a dangerous mindset as your company grows – it will make it impossible for you to make objective decisions, empower other people, recover from failures, or unplug from your business. The stress and weight can become very heavy, and your own business has the potential to take over your entire life if you’re not careful. Entrepreneurs are often tempted in the same way, but it can be especially poignant for you when you’ve built something so directly tied to yourself.
If I could start my business all over again, I would choose freelancing as my first step without hesitation. Everything I’ve learned along the way has been irreplaceable. But if I knew then what I know now, I would have taken steps earlier to address some of these obstacles and recognize the transition I would need to make to own a different kind of business. I hope that this post will give you the visibility you need to make a smooth, exciting transition as you learn to lead the business of your dreams.